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Politics Biden’s electric vehicle ambitions leave ethanol sector on edge

18:40  04 may  2021
18:40  04 may  2021 Source:   politico.com

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President Joe Biden’s infrastructure plan outlines his vision for a low-emissions future based on massive investments in electric cars. The biofuels industry wants Biden to bankroll them, too.

a close up of a bicycle: President Joe Biden has targeted electric cars as key to his green ambitions, and major automakers in the U.S. have also announced their own targets. © Drew Angerer/Getty Images President Joe Biden has targeted electric cars as key to his green ambitions, and major automakers in the U.S. have also announced their own targets.

Corn growers and producers of ethanol — the corn-based renewable fuel that has long enjoyed special status as a government-mandated ingredient in gasoline — would get only a tiny slice of the funds proposed in the infrastructure package, despite Biden’s assurances that he views them as key to reducing dependence on fossil fuels. So now they’re turning to their traditional allies in Congress to get themselves written in.

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“To not see [biofuels] listed as part of an infrastructure piece, I’m hoping is just an oversight and a misunderstanding — because I know that there’s support for it,” said Rep. Cindy Axne, the only Democrat in Iowa’s congressional delegation. As co-chair of the Congressional Biofuels Caucus, she introduced legislation, H.R. 1542 (117), in March to expand access to higher blends.

The pushback illustrates the political challenge facing Biden as vehicle technology changes and environmental concerns mount. The biofuels industry is influential among both Democratic and Republican lawmakers from farm states.

Ethanol production supports more than 300,000 jobs concentrated in rural areas and added about $43 billion to U.S. economic output in 2019, according to the Renewable Fuels Association, a lobby group for ethanol producers. Reminders of its political importance come every four years, as presidential candidates in both parties fawn over ethanol during the primary campaigns ahead of the crucial Iowa caucuses.

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“In the long run, ethanol’s a dead-end fuel,” said Scott Faber, head of government affairs at the Environmental Working Group. In the interim, Faber said, ethanol is still useful while the transportation sector is dependent on gasoline and other liquid fuel.

New electric vehicles make up just 2 percent of the vehicles on the roads in the United States. But Biden has targeted the cars as key to his green ambitions, and major automakers in the U.S. have also announced their own targets. General Motors, for one, said it would shift to an all-electric future by 2035, while Ford recently announced a new battery research and development center in Michigan to help speed up its electric vehicle production.

Federal support for ethanol remains politically sensitive, given the industry’s outsize influence in farm states. Biden has tried to make inroads among farmers and rural voters, but agricultural groups remain skeptical of his climate agenda.

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Farmers and ethanol groups say the Biden administration has many tools at its disposal to boost their industries without undercutting its push for electric vehicles.

“There’s so much low-hanging fruit for the administration right now,” said Emily Skor, CEO of Growth Energy, a biofuel trade association.

Not least of all, Skor said, is tightening annual requirements under the Renewable Fuel Standard. The policy, known in the industry as RFS, requires renewable fuels to be blended into transportation fuel by a certain volume. Biofuels backers say it was undermined by Trump administration policies that gave numerous exemptions to small refineries that claimed the cost of blending in the fuel hurt them economically.

A worker fills up a fuel truck with biodiesel fuel on Sept. 2, 2005 in Berkeley, Calif. © David Paul Morris/Getty Images A worker fills up a fuel truck with biodiesel fuel on Sept. 2, 2005 in Berkeley, Calif.

Biofuels are cleaner-burning when compared with gasoline, and industry-funded research from Environmental Health & Engineering Inc., Harvard University and Tufts University found that the carbon intensity of corn ethanol is 46 percent lower than conventional gasoline.

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Biofuels groups are hopeful the Biden administration will more stringently enforce the RFS program, in part by cutting its issuance of exemptions from blending requirements.

“You do that and you’re immediately going to infuse more biofuels in the fuel supply, and that’s going to reduce [greenhouse gas] emissions. You can do that like snap your fingers, tomorrow,” Skor said.

So far, the Environmental Protection Agency under Biden is giving biofuels more expressed support than the Trump administration did. For instance, the agency changed its position — now backing biofuel advocates — in a closely watched federal case against oil refiners that made its way to the U.S. Supreme Court. The agency, however, also extended the deadlines for refiners to comply with their obligations under the RFS — a move the biofuels industry did not support.

EPA Administrator Michael Regan has pledged that biofuels will be a key component of the agency’s overall climate strategy. He will make a swing through Iowa on Tuesday, including to tour the Lincolnway Energy ethanol plant and to hold a roundtable with Agriculture Secretary Tom Vilsack and agricultural community leaders, according to EPA spokesperson Nick Conger.

During a Senate hearing last week, Regan said he was speaking with the agriculture industry on the future and evolution of corn ethanol — though he stopped short of saying what that future will look like.

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“There is no intent in terms of exclusion when we talk about the promising future of electric vehicles or when we talk about the promising future of advanced biofuels,” Regan said. “The reality is, as we talk about these promising futures, we have to deal with here and now.”

Vilsack, an Iowa native, has repeatedly said biofuels are a key piece of Biden’s plans.

He has already steered a small amount of federal money toward biofuel projects, like helping gas stations offer higher blends of ethanol and including processors in USDA’s latest round of pandemic relief programs. Vilsack is also quick to talk up the potential for biofuels in air and sea transportation.

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But Biden’s biggest legislative proposal so far, the $2.5 trillion infrastructure blueprint, includes only a vague reference to supporting research and development for biofuels.

Rob Walther, vice president of federal advocacy at biofuels producer POET, said that based on continuing conversations with congressional allies and leadership, the company is confident “the plan was an opening bid in order to set the vision of bold climate action.”

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“You could take away that it was very electric-vehicle driven,” Walther told POLITICO. “On the other hand, we have a solution for the problem they are trying to solve, and so we expect to be a part of those discussions in the future.”

Transportation Secretary Pete Buttigieg recently acknowledged that biofuel supporters “need to be in these conversations and at the table” as the infrastructure legislation comes together.

Farmers who grow feedstock for biofuels, like corn and soybeans, are also closely watching how Congress fills in the details on Biden’s infrastructure spending plans. As electric vehicles gradually decrease demand for liquid fuels, it could lead to a growing glut of corn — about 40 percent of the U.S. crop is now used for ethanol. And that could cause a sharp drop in prices.

“The discussion between how electric vehicles will fit into our transportation network and how higher blends of ethanol and biofuel will fit into our transportation network seems to be going on side by side, rather than a competition,” said Mike Stranz, vice president of advocacy for the National Farmers Union. “We’ll be in touch with lawmakers and the administration as [the infrastructure package] comes together.”

Including money for biofuels in the legislation could also help Biden appeal to Republican lawmakers. Sen. Chuck Grassley (R-Iowa), a long-time ethanol supporter, has called for a bipartisan approach to infrastructure — but he’s demanding that farmers and biofuel producers are included in the effort.

“Pres Biden promised [to] fight climate change [with] ‘good paying jobs that can’t be outsourced’ but no mention of American biofuels?” Grassley tweeted last week. “U.S. leads world on low-carbon biofuels supporting rural jobs + green revenue for farmers. His program to [have] all cars electric will cut 43k ethanol jobs in [Iowa].”

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Faber, of the Environmental Working Group, rejected the idea that the rise of electric vehicles is a threat to farmers.

“We’ve got other belts and suspenders to support the price of corn,” he said. “The fact that ethanol is going to go the way of the stagecoach is not going to impact, ultimately, the long-term prospects for grain prices.”

Biden in April released new targets to cut greenhouse gases by at least half by 2030 and pushed research and development into “very low carbon new-generation renewable fuels for applications like aviation and other cutting-edge transportation technologies across modes.”

The mention earned praise from ethanol groups, though the Renewable Fuels Association cautioned in a statement that “renewable fuels can do far more than decarbonize aviation and other off-road markets.”

“I think everyone agrees, including the White House, that we’re going to be using hundreds of billions of gallons of liquid fuels in internal combustion engines for decades to come,” Geoff Cooper, president and CEO of the Renewable Fuels Association, told POLITICO ahead of the Biden announcement. “So while we’re building out the infrastructure to support more electric vehicles, we should also be building out the infrastructure for lower-carbon liquid fuels.”

Biofuels groups say there are several priorities they’d like to see in the infrastructure package, including a USDA-managed grant program that gets regular funding to help gas stations offset the cost of upgrading their infrastructure for higher biofuel blends.

“If there’s going to be tax rebates and incentives for electric vehicles, there ought to be rebates or incentives — not at the same scale — for flex-fuel vehicles that can use up to 85 percent ethanol,” Cooper added.

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