Over the past several months, Assemblywoman Kristin Olsen (R-Modesto) has been adamantly calling for a reduction in corn-based ethanol requirements contained in the Renewable Fuel Standard – the federal program regulating the minimum volume of renewable fuel that must be contained in transportation fuel sold in the United States.
Although Olsen claims that the standards are nearly impossible to achieve while negatively affecting dairies in California, others view the standards included in the RFS as a pathway for the U.S. to lessen its reliance on foreign oil.
International renewable fuels and biochemicals company Aemetis focuses on the acquisition, development and commercialization of innovative technologies that replace traditional petroleum-based products by the conversion of first generation ethanol and biodiesel plants into advanced biorefineries. Since 2011, Aemetis has operated the ethanol biorefinery in Keyes, focusing on the benefits of energy independence, renewable fuels and high-value, lower cost feed products.
Company spokesperson Andy Foster says that the reduction in requirements of the current mandated levels of ethanol in gasoline could have several consequences for private investments, the environment, and the nation as a whole.
“The proposed reduction could reverse years of significant progress in reducing America’s reliance on foreign oil, as well as real gains made in reducing pollution through the use of lower carbon, higher octane fuel ethanol for transportation fuel,” said Foster. “The proposed reduction could also have a chilling effect on private investment in next generation biofuels that use feedstocks other than corn, like cellulose/agricultural waste, waste grease and vegetable oils, algae and other technologies that are used to produce renewable fuels.”
According to Foster, private investment is essential for these technologies to be commercialized.
“The government backing away from its commitment to the Renewable Fuel Standard sends a very negative signal to private investors who are looking to quickly accelerate the advanced technologies beyond conventional ethanol,” said Foster. “Put simply, the proposals are grossly misinformed and will have the net effect providing a huge win for oil companies who resist any change to the status quo.”
In November, the Environmental Protection Agency, who oversees the RFS, proposed easing the annual RFS requirement for ethanol in gasoline, acknowledging that the current mandated levels specified in the 2007 law are difficult to meet. Although Olsen applauded this proposal by the EPA, Foster says that it could mean an increase in control by big oil companies.
“Less ethanol or other renewable gasoline substitutes means more dominance by Big Oil,” said Foster. “The RFS has been a huge win for consumers and a significant reduction in the use of oil/gasoline in our nation’s fuel supply.”
A decrease in ethanol requirements for transportation gasoline could also mean higher prices at the pump for consumers, says Foster.
“Ethanol is priced $1 below wholesale gasoline, so the current 10-percent blend has helped keep prices down at the pump,” said Foster. “Additionally, California’s ethanol producers have created thousands of jobs throughout the Central Valley, and we pay millions of dollars in taxes that support schools and other essential services.”
Although Aemetis has seen prices go up and down over the past three years that they’ve operated the Keyes biorefinery, the company continues to believe that the benefits to the area outweigh any negatives.
“Aemetis Keyes ships out daily over 1,100 tons of high-protein, lower fat animal feed to hundreds of dairies in the surrounding area at a discount to corn and other feeds,” said Foster. “We also sell high quality corn oil extracted in our production process to local poultry feeders.”
Olsen, on the other hand, has attributed the rising price of corn and ethanol to the loss of hundreds of dairies in California. Although Foster acknowledged the increase in corn and ethanol prices, he says that it is a phenomenon common in all commodity-based industries.
“Corn prices are largely driven by weather as well as international markets, and the use of corn for ethanol production in the U.S. has overall declined,” said Foster. “That said, Aemetis Keyes is aggressively working to use other non-corn feedstocks like grain and sorghum.”
In 2013, the biorefinery processed over 50,000 tons of grain sorghum while continuing to work with California farmers to develop a local grain sorghum crop to reduce their use of corn imported from the Midwest.
“We are also working to implement non-food next generation technologies to produce ethanol, biodiesel and other fuels,” said Foster. “However, a change to the RFS could significantly delay or eliminate our efforts to transition to alternative feedstocks and technologies.”
A hearing on domestic renewable fuels is scheduled for Thursday in Washington D.C. by the U.S. Senate Committee on Environment and Public Works, where the issue will continue to be discussed and debated. House member Bob Goodlatte (R-Va.) is expected to offer a bill alongside Peter Welch (D-Vt.) that would eliminate the corn ethanol requirement and impose a 10 percent cap on the amount of ethanol that can be blended into conventional gasoline. Senators Dianne Feinstein (D-Ca.) and Tom Coburn (R-Okla.) also have a bill that would eliminate the corn ethanol mandate completely.
“We are grateful for the support of Congressman Jeff Denham and other elected officials who see the benefits of energy independence, renewable fuels and high-value, lower cost feed products,” said Foster. “Reversing the RFS would be a significant setback for lower fuel costs, cleaner air, and overall job creation and economic development.”