It was food makers vs. feed growers – something of a proxy war in the larger food vs. fuel fight – and the feed folk won.
The EPA on Friday rejected a request by several states – livestock, pork, poultry and dairy producing states, mostly – to waive the federal renewable fuel standard, which requires that transportation fuel sold in the United States contain a mandated amount of ethanol.
Ethanol in the U.S. is made overwhelmingly from corn, and in this drought year the industries that use corn for feed had argued that siphoning off a huge portion of a smaller-than-normal crop and putting it in gasoline tanks was tightening supplies, driving up prices and generally making life miserable if not impossible for them.
EPA said sorry, we can’t help.
“Economic analyses of impacts in the agricultural sector, conducted with USDA, showed that on average waiving the mandate would only reduce corn prices by approximately 1 percent,” the agency said in a statement.. “Economic analyses of impacts in the energy sector, conducted with DOE, showed that waiving the mandate would not impact household energy costs.”
This year, the renewable fuel standard requires blenders to work 13.2 billion gallons of ethanol into gasoline. In a normal year, that would eat up about 40 percent of the corn crop. Due to drought, however, this year’s crop has been forecast to come in around 25 percent smaller than normal, so theoretically ethanol is eating up a much greater proportion.
Nevertheless, the EPA said the RFS just doesn’t have a whole lot of influence on the market. Quoting from the decision [PDF]:
EPA’s analysis shows that it is highly unlikely that waiving the RFS volume requirements will have a significant impact on ethanol production or use in the relevant time frame that a waiver could apply (the 2012-2013 corn marketing season) and therefore little or no impact on corn, food, or fuel prices. We analyzed 500 scenarios, and in 89 percent of them we see no impacts from the RFS program at all.
The battle over the RFS led to a lobbying donnybrook in Washington, with the various players in the biofuels industry squared off against food producers, who were also cheered on by oil interests who have long despised the blending mandate.
The EPA said that during a six-week comment period that ended in mid-October, nearly 30,000 comments were submitted.
A coalition of livestock, poultry and dairy organizations expressed outrage at the EPA decision.
“How many more jobs and family farms have to be lost before we change this misguided policy and create a level playing field on the free market for the end users of corn?” the group asked in a press release. “It is now abundantly clear that this law is broken, and we will explore remedies to fix it.”
On the other side of the argument, it was party time.
“Despite millions of dollars spent by Big Oil and Big Food to shamelessly attack American-made ethanol, it comes as no surprise EPA denied the requests to waive the RFS because the facts are on our side,” Brian Jennings, vice president of the American Coalition for Ethanol, said in a statement. “EPA considered the flexibility built into the RFS, precedent established in 2008, and data which proved waiving the RFS wouldn’t remedy the harm of the drought in making the right decision.”