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Ethanol, ping-pong, and the energy bill

October 11, 2007

Posted by Nathanael Greene in Moving Beyond Oil , Solving Global Warming

Tags:

biofuels, ethanol, legislation, markettransformation, RFS

The Wall Street Journal has an article today about the ethanol industry's waning clout on Capitol Hill (subscription required). The article points the finger at high food prices and the meat and grocers associations. Food prices are obviously an important issue, but I'm inclined to agree with the acting secretary of agriculture when he's quoted saying that "'clearly ethanol demand is having an impact' on food-price inflation, but the impact isn't as dire as some suggest." High energy prices are also clearly having an impact on food prices and I'm not particularly concerned if the meat industry's profits get squeezed a bit. They have been the main beneficiaries of an agricultural subsidy system that has encouraged farmers to grow massive amounts of corn and soy and sell it at prices that generally don't cover the cost of production. A little reality in meat prices would be a good thing for the environment and probably for American's waistlines.

Later in the article, the oil industry is mentioned, and let's be clear if there's a major force pushing back against any increased requirement for renewable fuels it's the oil industry. But the following quote from the article is also accurate:

"We've certainly had discussions" with the oil lobby, says Jim Presswood, a lobbyist for the Natural Resources Defense Council. Mr. Presswood notes that his organization has also talked with food and livestock groups to search for common ground.

I have very mixed feelings about it, but we've had a hard time getting Congress to recognize that there are good ways to make biofuels and bad ways and that we need environmental safeguards and performance standards as part of an increase the renewable fuels requirement or we'll get the bad ways and all the environmental impacts that come with them. So, yeah we've talked to these folks, but in the end, we're not headed in the same direction.

For example from the article:

"Our single biggest priority is for Congress to reject a new renewable-fuels mandate," says Jesse Sevcik, vice president of legislative affairs at the American Meat Institute, a meat and poultry trade association.

We want new biofuels policies; we just want them done right.

Which brings me to this article from Roll Call: "It's 'Ping-Pong' for the Energy Bill." (Subscription required.) I've written before about our hopes for good renewable fuels policies emerging from conference. Now it looks like there won't be one. Between an increase in vehicle fuel economy standards, a renewable electric standard, and a potentially good renewable fuel standard, this energy bill has a lot of promise. We need to work hard to get it right, but we need to get it right. If leadership from the House and Senate work out an energy bill through the ping-pong process, I'd say our chances of getting good biofuels policies go up.

In the WSJ article, Eric Washburn, legislative counsel for the American Coalition for Ethanol, notes that without an energy bill there will be a "natural barrier to growth in the industry." Combine ethanol prices being down for a least a few quarters (see my post and this post) and the pushback covered in the WSJ article with the environmental community's interests in getting CAFE and RES, and the time is right for corn growers, the ethanol industry, and the green groups to work together on getting biofuels right (see this fact sheet). The end-game is coming, let's get our ping-pong paddles out and get serious.

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