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Ag Industry Divided over Future of RFS

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Ag Industry Divided over Future of RFS

 

Chris Hurt
Chris Hurt

“The RFS is one of the most important laws ever written that impacts agriculture,” is what Purdue AG Economist Dr. Chris Hurt told a House subcommittee on Wednesday. The House Energy and Commerce Committee, Subcommittee on Energy and Power, hearing was entitled “Overview of the Renewable Fuel Standard: Stakeholder Perspectives.”  Hurt testified the RFS mandate has led to more corn acres being planted, along with an increase in feed and food prices.  “This law has had some pretty large impacts on the demand for grains,” Hurt said. “In this case, it was a very rapid increase in demand mandated by law.”

 

Ethanol industry groups disputed Hurt’s assertions. Tom Buis, CEO of Growth Energy, said in a released statement: “A critical fact that was absent from today’s testimony is that only three percent of the world’s grain supply is used in the production of ethanol. Furthermore, the true culprits behind rising food prices are the oil companies. A recent study by the World Bank outlined how crude oil prices are responsible for 50 percent of the increase in food prices since 2004.”

 

Oil and livestock groups want Congress to scrap the RFS, but Neil McKinstray, head of the ethanol division of the Andersons, told HAT that the RFS may need to be modified but not done away with, “The RFS as it stands today has enough flexibility to allow the EPA to manage the situation.”  Dr. Hurt said the slower than anticipated development of cellulosic ethanol means the mandates in the RFS will not be able to be met. McKinstray says the future should not be predicted from the past as the ethanol industry is making advancements every day, “We are using new technological advancements which allows use of less water and less energy to make ethanol, and we are even using different parts of the corn plant.”

 

National Corn Growers Association President Pam Johnson spoke on the impact of the Renewable Fuel Standard on the agricultural sector. “The Renewable Fuel Standard is doing exactly what it was intended to do,” Johnson said during her testimony.  “It has positively impacted the agriculture sector by creating jobs and promoting rural development, reducing greenhouse gases, and allowing our nation to grow our energy at home.” Johnson stated the ethanol industry has created opportunity in rural America allowing her two sons and a growing number of young farmers to be able to return to the farm after college.  She also pointed to benefits to rural communities because of the RFS.  Her community in rural Iowa has been able to build a new fire station, remodel the hospital, and hire additional teachers because of the economic activity created by the local ethanol industry.

 

On Tuesday, House Energy Committee Chair Fred Upton said the current system can’t stand and expressed hope that a discussion would start that considers a host of potential modifications and updates to the RFS. Upton said the end goal would be a system that works best for the American people. It was reported Monday that Upton will direct his staff to start drafting reform legislation over the August recess. Reportedly, Senate Democrats are looking at the RFS as well. At the same time, Fuels America is running a new advertising campaign in defense of the RFS. The ads say the RFS allows the US to have control over its energy future. The ad campaign, which is targeted to policy makers in the nation’s capital, also points out that diversifying fuel sources to include more renewable fuel will help increase U.S. economic and national security and ensure a healthier environment.

 

The Renewable Fuel Standard, a 2005 provision of the Energy Policy Act, sets targets and timetables for certain biofuels to be added to the nation’s transportation fuel supply. It was expanded under the Energy Independence and Security Act two years later, setting requirements that 16.55 billion gallons of biofuels be produced in 2013 and 36 billion gallons by 2022.