Ethanol's Future Uncertain

LAVISTA, Neb. (DTN) -- Nearly three months into a new presidential administration, many ethanol industry leaders still are unsure what the future might hold for ethanol and federal policy.

Federal climate-change and low-carbon policies are being virtually erased at the U.S. Environmental Protection Agency -- meaning ethanol's low-carbon profile when compared to fossil fuels may be meaningless to future policymaking decisions and laws such as the Renewable Fuel Standard.

A de-emphasis on greenhouse gas emission reductions may at first seem alarming to an ethanol industry that has positioned itself as a low-carbon alternative to gasoline.

The change in attitude at agencies like the EPA, however, has been palpable, speakers at the Nebraska Ethanol Board's Emerging Issues forum in La Vista, Nebraska, said Thursday.

Nebraska Gov. Pete Ricketts, a Republican who chairs the Governors Biofuels Coalition, said the new EPA headed by Scott Pruitt already is changing how it treats state-level partners.

"Under the last administration, they didn't want to hear from us," Ricketts said. "With them, it was their way or the highway."

In the coming weeks, Ricketts said he hopes to arrange a conference call with Pruitt and Iowa Gov. Terry Branstad to talk about a variety of issues related to ethanol.

During the first few months of President Donald Trump's administration, Ricketts said he has seen a willingness among a variety of federal agencies to communicate with the state of Nebraska.

"They are seeking our input," he said. "I think that attitude is pervasive throughout the administration. We still have work to do. We still have to see results coming from this EPA. They have a different attitude about the role governors play. It seems like EPA is now actually listening."

CLIMATE POLICY GONE

Doug Durante, executive director for the Clean Fuels Development Coalition based in Bethesda, Maryland, said the Trump administration's move to wipe out climate policy may alter the way the ethanol industry should position itself.

"The things we brought to the table aren't there," he said, referring to changes in federal policy. "At the federal level, the whole dynamic has changed."

While ethanol's carbon advantages may seem meaningless to the new administration, Durante said the industry's place in manufacturing and the jobs it creates are both advantages.

Though climate policy has been turned on its head, Durante said there are signs the new administration will be willing to help the industry in other ways.

On March 30, the president signed an executive order essentially ordering federal agencies to identify policies that may be a "burden" to domestic energy production.

Because there are so many important EPA personnel positions yet to be filled, Durante said it is difficult for the biofuels industry to convey its message to the agency.

"We have to really be careful and see how it's going to go," he said.

The future of renewable energy programs within the U.S. Department of Energy and USDA likely hang in the balance, Durante said. With USDA, for example, the biofuels industry has benefitted from the agency's research for making the industry's case on a number of issues.

"With EPA, it's like peeling back an onion," Durante said. "It's all EPA. They control everything in this country, and they have for some time."

Even with talk about reform or repeal of the Renewable Fuel Standard continuing in some circles of Washington, Durante said there are reasons to be optimistic biofuels will continue to grow despite federal policy.

States on the West and East coasts are setting or already have low-carbon fuel standards, and many companies continue to push green initiatives with or without the Trump administration's support.

When it comes to corn ethanol, Durante said he believes the industry is safe regardless of RFS changes. Although the policy is on track to sunset in 2022, he said chances are it will survive.

REFORM APPETITE

Amy Davis, a Washington, D.C., lobbyist for Novozymes, said although there continues to be talk of RFS reform, there seems to be no real appetite for it in Congress.

"I really do see reforms of the RFS are unpopular if not impossible," she said.

Possible reforms circulating among D.C. circles include capping ethanol in gasoline at 9.7%, just allowing the RFS to sunset in 2022, and changing the point of obligation from refiners and importers of gasoline to ethanol blenders.

"If we were to scale back ethanol to 9.7%, refineries would be laying off people," Davis said. "That's not popular in Congress. If someone is telling you to pass a (new) RFS and put renewable fuels in a better place, this Congress is not going to pass another RFS.

"I just don't think this is the political climate where things are going to get better for us."

Davis said the industry needs to work to build a broader coalition beyond the Corn Belt.

There is a broad swath of Congressional leaders who don't have ethanol plants or corn farmers in their districts. That presents an opportunity to connect with those lawmakers on issues related to improving air quality through the use of ethanol, for example, Davis said.

With the reversal of federal climate policy, Davis said, there seems to be more interest among environmental groups to listen to what the ethanol industry might have to offer in terms of clean air benefits.

Jim Stark, vice president of investor and media relations for Omaha-based Green Plains Inc., one of the nation's largest ethanol producers, said his company has a "pretty strong belief" that the RFS will stay intact beyond 2022.

"We as an industry have to come together with a unified message," he said.

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @toddneeleyDTN

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