Corn Ethanol and Market Share
- Jul 7, 2018 12:51 am GMT
Over the past few months we’ve talked about problems with the Renewable Fuel Standard (RFS) and the risks its mandates for higher blends of ethanol in fuel may pose to vehicle engines and fuel systems, as well as to service station pumps and storage tanks. But backers of increased ethanol use – major corn growers and the Renewable Fuels Association (RFA) – claim that the science detailing these risks is irrelevant, that the concerns of environmental groups, consumer safety advocates like AAA, food groups, state regulators and the oil industry are unfounded and are designed to protect the oil industry’s fuel market share. Yet, as we’ll discuss here, it appears that RFA’s main concern about the RFS is its market share – which may explain why the group frequently is so willing to ignore facts. [Editor’s Note: Geoff Cooper of the Renewable Fuels Association responds in the comments section below.]
Take this comment letter that RFA sent the EPA on April 7. RFA wrote:
EPA should revise its proposed 2013 cellulosic biofuel standard to better correspond with current expectations of actual 2013 cellulosic biofuel production volumes.
EPA should partially reduce the 2013 advanced biofuels standard, as sugarcane ethanol imports are unlikely to be available in sufficient volume to meet the requirement.
Essentially, RFA recommended that while EPA should maintain its overall volume mandate for ethanol use in 2013, the agency should reduce both the cellulosic biofuel and advanced biofuel share within the overall mandate, to match the production expectations for those two. Of course, if EPA followed that course, the only possible result would be a greater share for corn ethanol within the overall mandate. Basically, RFA would kick cellulosic and advanced biofuels producers to the curb while protecting the interests of corn ethanol producers. And RFA wants to lecture others about market share!
Let’s be clear: If RFA’s goal is to reduce oil consumption through use of home-grown fuels, as it claims, it should support cellulosic and other advanced biofuels. But RFA’s clear intent is to increase the market share of corn ethanol. If production levels of cellulosic and other advanced biofuels are going to be below EPA’s previous estimates, the logical course would be to reduce EPA’s overall ethanol use mandate accordingly – not maintaining the same overall target so that corn ethanol can make up the difference.
In a recent post, energy blogger Robert Rapier did a good job identifying the irony in RFA President Bob Dinneen’s market-share claims:
Dinneen says this is the way Congress envisioned the mandate working: more and more ethanol over time in a gallon of fuel, and less and less petroleum. “This is about market share,” Dinneen says. “This is about their profitability; it’s not any more complicated than that.”
Apparently, irony is lost on Dinneen … because it’s also about the ethanol industry’s market share. It’s about their profitability. Or does Dinneen want us to believe that his motives are as pure as the driven snow?
With the recent move detailed above, it’s clear RFA will attack anyone who stands in the way of a government-mandated increase in their market share. (After a series of attacks on the oil industry, we were beginning to think that RFA was trying to make it personal.)
Even without a federal mandate, the oil industry will continue to buy ethanol and blend it into gasoline in volumes that are economic and safe for marketers to store and dispense and for consumers to use in their automobiles. But the RFS requires more than that, which is why it should be repealed. While to RFA this is a fight over market share, for the oil industry it is an opportunity to protect consumers from the unintended consequences of an outdated policy.
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