FarmPolicy

August 21, 2019

Biofuels; Farm Bill; Climate Issues; Nutrition; Trade; Animal Ag; and Financial Reform

Biofuels

DTN writer Todd Neeley reported yesterday (link requires subscription) that, “Ethanol industry advocate Growth Energy on Thursday called for the gradual phasing out of the 45-cent ethanol blenders’ tax credit, while redirecting a portion of what amounts to billions of dollars toward building ethanol infrastructure such as blender pumps, flexible fuel vehicles and dedicated pipelines for ethanol.

“Growth Energy CEO Tom Buis said in a conference call that doing so would allow for the end of the blenders’ credit — or the Volumetric Ethanol Excise Tax Credit (VEETC) — and the industry to compete on its own in the open market.

“‘We no longer have a problem producing ethanol,’ he said. ‘Our challenge is infrastructure barriers. We’re saying the buck stops here.’”

Mr. Neeley explained that, “Ethanol industry groups appear to be divided on the issue.

“Immediately following the Growth Energy press conference, the Renewable Fuels Association, the American Coalition for Ethanol, the National Corn Growers Association and the National Sorghum Producers offered a joint statement in support of current proposals to renew the blenders’ credit. In addition, the groups said there already are programs in place to support ethanol infrastructure development.

“‘There can be no question that the current tax policies to support the evolution of America’s ethanol industry have been successful,’ RFA President Bob Dinneen said in a statement. ‘Now is not the time to add uncertainty and complexity to the energy tax debate.’”

Yesterday’s DTN article noted that, “Former Iowa Republican congressman Jim Nussle, who serves as an advisor to Growth Energy, said the ethanol industry cannot afford to get lost in the shuffle if Congress decides to pass energy legislation this year.

“‘Industry groups may rush in out of fear and beg for a one- or two-year extension (of the blenders’ credit),’ he said. ‘If it is the typical debate, the fear factor will come in. If lawmakers are looking for solutions, we just want to make sure they see options from ethanol.

“‘If it’s the typical energy debate year, everyone will hunker down in the bunker. We want ethanol to be prepared for a creative debate.’”

“Growth Energy made the announcement one day after a Congressional Budget Office report raised doubts about the energy and environmental benefits from the $6 billion spent last year on biofuel tax credits.”

Reuters writer Charles Abbott reported yesterday that, “A group of ethanol makers on Thursday proposed a phase-out of U.S. ethanol subsidies worth $6 billion a year if some of the aid is used in the interim to install ‘blender’ pumps and build biofuel pipelines.

“The group, Growth Energy, also asked that automakers be required to build flexible-fuel vehicles that can use gasoline containing up to 85 percent ethanol. The commonly sold blend is 10 percent.”

Mr. Abbott pointed out that, “U.S. support for ethanol, popular in the Farm Belt as a home-grown fuel, may be at a turning point. Congress has been unable to extend the less-costly biodiesel tax credit, and major ethanol incentives expire at the end of this year.

Senate Energy Committee chairman Jeff Bingaman said on Wednesday the high cost of incentives ‘should prompt Congress to critically examine whether it is appropriate to extend’ the 45-cent a gallon tax credit for ethanol. Backers have proposed a five-year extension at a cost of more than $30 billion.

“Growth Energy outlined its plan as Democratic leaders in the Senate sought consensus on a long-term energy bill.”

The Reuters article noted that, “POET chief executive Jeff Broin said the petroleum industry enjoyed many tax breaks. ‘With a blender pump on every corner and a flex fuel vehicle in every garage, ethanol can compete against oil without the tax incentive,’ he said.”

Philip Brasher reported yesterday at The Green Fields Blog (Des Moines Register) that, “The ethanol industry is split over what should be done with the subsidy for the biofuel.”

The chairman of the House Agriculture Committee, Rep. Collin Peterson, D-Minn., has been floating a similar idea to Growth Energy’s. But a rival ethanol group, the Renewable Fuels Association, is joining the National Corn Growers Association and the American Farm Bureau Federation in arguing that the subsidy should be instead extended the way it is. Unless Congress passes an extension, the 45-cent-per-gallon tax credit is due to expire at the end of this year.

The dispute comes as the Senate is considering taking up an energy bill that could put limits on some greenhouse gas emissions and promote renewable power and biofuels.”

Mr. Brasher noted that, “The American Farm Bureau Federation also joined the corn growers and RFA in a statement opposing the Growth Energy plan.

“Growth Energy did not specify how much the ethanol tax credit should be reduced or how much should be devoted to incentives for pumps.

The so-called blender pumps would be capable of delivering fuel with varying blends of ethanol and gasoline, depending on the motorist’s wishes. Most gasoline now contains about 10 percent ethanol, the limit allowed by the Environmental Protection Agency for conventional cars and trucks. The pumps could cost about $23,000 each, according to the Agriculture Department. The EPA is considering a petition from Growth Energy to raise the limit to 15 percent.”

With respect to blender pumps, recall that a June 30 news release from Rep. Adrian Smith (R-Neb.) stated that, “Reps. Stephanie Herseth Sandlin (D-SD) and Adrian Smith (R-NE) introduced the Consumer Fuels Choice Act of 2010. The legislation would increase the use of clean renewable biofuels by providing grants to defray the cost of installing blender pump infrastructure. A ‘blender pump’ is a fuel pump capable of dispensing at least three different blends of gasoline and ethanol, as selected by the pump operator.

“The spread of blender pumps around the country would allow a much larger group of consumers to choose varying blends of ethanol and gasoline for their vehicles. Nationwide, most of the approximately 165 stations which currently have blender pumps are located in the Midwest.

“The Consumer Fuels Choice Act will authorize grants of 50 percent of the cost of installing blender pumps and storage tanks for the sale of ethanol fuel blends, including E-85 fuel. Nebraska, a leader in ethanol production, lags behind in fueling stations with only four. South Dakota currently has 49 locations with about 95 blender pumps.”

Meanwhile, a news release from yesterday by the National Farmers Union stated that, “National Farmers Union (NFU) is encouraged by Growth Energy’s recently released ‘Fueling Freedom’ plan. The plan calls for redefining the current ethanol tax credit by redirecting a portion of those funds to support building out the infrastructure of distributing ethanol, and shifting the remaining portion from the oil companies to domestic ethanol producers.

“‘The plan released by Growth Energy sends a message to the Senate that something needs to be done in the way of energy policy,’ said NFU President Roger Johnson. ‘NFU supports this approach and is looking to Congress to move on this issue.’”

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In related news, Jay Heflin reported yesterday at The Hill’s Energy Blog that, “A draft of the Ways and Means green energy jobs bill costing approximately $22 billion surfaced in the Capitol and along K Street on Thursday.

The draft is by no means the bill that Ways and Means Chairman Sandy Levin (D-Mich.) hopes to mark up next week, but rather a list of ideas that could be incorporated in the final legislation.”

The Hill update noted that, “The ethanol tax credit is extended for one-year, but at a reduced rate, from 45 cents to 36 cents per gallon, costing about $3.8 billion, according to the JCT [Joint Committee on Taxation].

Biodiesel and renewable diesel tax credits are reinstated for 2011, which the JCT estimates will cost $2 billion.

“The draft provides tax credits for buying heavy trucks that either run off natural gas or are hybrids.”

Farm Bill

DTN Political Correspondent Jerry Hagstrom reported yesterday (link requires subscription) that, “House Agriculture Committee Chairman Collin Peterson, D-Minn., wants Congress to finish the farm bill by late 2011 or early 2012 to make sure the Obama administration implements the bill.

“Peterson had earlier said Congress should be sure to finish the bill before Sept. 30, 2012 when the 2008 bill expires. But in a speech to the National Corn Congress on Wednesday, Peterson said time had been lost in the implementation of the 2008 bill due to the shift between the Bush and Obama administrations. ‘There may or may not be a change of administration but if there is we should have a system in place,’ Peterson said.”

Mr. Hagstrom added that, “Peterson also told the corn growers he understands that ethanol may matter more to them than the farm bill. Peterson said he is troubled by the delays at the Environmental Protection Agency and the Energy Department in approving gasoline with a higher ethanol content. But Peterson praised Agriculture Secretary Tom Vilsack for his work on ethanol. Vilsack ‘really understands ethanol,’ Peterson said. “he is trying to get [White House aide Carol]Browner, [EPA Administrator Lisa] Jackson and [Energy Secretary Stephen] Chu to do what they should.”

Peterson said that he had brought all the players on ethanol together for a meeting, including the American Petroleum Institute, ethanol groups and convenience store and gasoline station owners. ‘They say they like ethanol but they are headed in different directions,’ Peterson said.”

Climate Issues

Darren Samuelsohn and Coral Davenport reported earlier this week at Politico that, “Closed-door meetings between a select group of environmentalists and a handful of electric utility executives may determine the fate of climate change legislation in the Senate.

“Majority Leader Harry Reid’s top energy aide, Chris Miller, nudged the small group to the bargaining table earlier this month in the hope they could resolve more than a decade of dispute on Clean Air Act regulations and reach agreement on a first-ever cap on greenhouse gas emissions.

“So far, sources close to the talks said, the two sides are holding firm in their demands. The power companies want relief from the air pollution rules as a price of entry into negotiations if they are going to accept a mandatory carbon limit that won’t apply to other industries. The environmentalists are saying no.”

The article noted that, “While Senate staff are not in the room, a failure to reach agreement among this critical subset of interests may drive Reid to drop greenhouse gas caps altogether from the bill headed to the floor in less than two weeks.”

Reuters writer Timothy Gardner reported yesterday that, “Two U.S. business groups [the National Rural Electric Cooperative Association and The American Chemistry Council] opposed on Wednesday the latest version of a climate change proposal circulating in the U.S. Senate, saying it was unfair to power companies and would hurt energy-intensive industries.

“Senators John Kerry, a Democrat, and Joe Lieberman, an independent, have crafted a draft bill focusing on capping greenhouse gas pollution from electric power utilities first. It scales back previous ambitions for a broad attack on emissions.

“The plan would launch a ‘cap-and-trade’ market in which utilities that cut pollution could sell credits to companies that do not. It expects overall emissions limits would be achieved because the cap on all utilities toughens over time.”

Meanwhile, Darren Samuelsohn reported yesterday at Politico that, “Democratic Sen. Ben Nelson of Nebraska said Thursday he would not support a procedural vote later this month to begin debate on a climate bill that includes a cap on electric utility emissions, a declaration that underscores the tough climb that Majority Leader Harry Reid will have in trying to cobble together a 60-vote supermajority on the controversial issue.”

And The Washington Post editorial board noted in today’s paper that, “Senate Majority Leader Harry M. Reid (D-Nev.) intends to bring an energy bill to the Senate floor the week of July 26. It will feature four key elements — a response to the Gulf of Mexico oil spill, promotion of energy efficiency, a boost for clean-energy production and a cap on carbon emissions from power plants. This is not ideal, but it would be a useful start.”

After additional analysis, the Post indicated that, “The Reid proposal is less ambitious than the stillborn bipartisan attempt of Sens. John F. Kerry (D-Mass.), Joseph I. Lieberman (I-Conn.) and Lindsey O. Graham (R-S.C.), and far less ambitious than the Waxman-Markey bill passed by the House. But in the current economic and political climate, it offers a reasonable compromise that could lay the groundwork for a sensible carbon policy.”

Nutrition

An update posted yesterday at CQPolitics.com reported that, “A child nutrition bill that would increase spending on food programs for infants and youth by $8 billion over a decade advanced out of a House committee Thursday, although members did not make any headway on paying for the bill.

The House Education and Labor panel approved the bill by 32-13. It would boost funding levels for school breakfast and lunch, and other nutrition programs over 10 years.”

The CQ update noted that, “Republicans continue to insist that the $8 billion in additional spending must be offset. Chairman George Miller, D-Calif., vowed to address that issue down the road.

“‘It is a requirement that before we get to the floor, we will have in line the offsets for this legislation,’ Miller said. ‘That is the goal of the chair and the members of this committee, and I think it’s going to be key to get access to the floor.’

“The Senate Agriculture, Nutrition and Forestry Committee approved a draft measure in March that would authorize an additional $4.5 billion over the coming decade, partially offsetting the increase by using over $2 billion from the Environmental Quality Incentives Program.”

Washington Post writer Jane Black noted yesterday that, “Both bills now await a floor vote. Child nutrition advocates hope that will happen before the August recess. The current act expires on September 30.”

Both First Lady Michelle Obama and Sec. of Ag. Tom Vilsack applauded the House panel’s passage of the nutrition measure yesterday.

Trade

The Washington Insider section of DTN reported yesterday (link requires subscription) that, “There still is a possibility that Congress this year will consider a bill that would provide far more flexibility in trading agricultural products with Cuba. But with both chambers already loaded down with high-profile, controversial issues and looking toward the Nov. 2 elections, this issue is not the sure thing that some have suggested.

Capitol Hill watchers say that a House bill sponsored by Agriculture Committee Chairman Collin Peterson, D-Minn., stands a reasonable chance of being voted on before this session of Congress ends later this year. But in the Senate, Robert Menendez, D-N.J., is saying he will block any Senate bill relaxing sanctions against Cuba. Whether he can fulfill that threat/promise remains to be seen: both Sens. Mike Enzi, R-Wyo., and Byron Dorgan, D-N.D., claim to have the votes to overcome a filibuster.

Animal Ag

A news release from yesterday by the National Pork Producers Council stated that, “‘All uses of antibiotics improve animal health, and these improvements in animal health can substantially improve human health,’ concluded one expert who testified yesterday at a congressional hearing on antibiotic use in livestock production and antibiotic resistance in humans.

Randall Singer, associate professor of epidemiology at the University of Minnesota, who for 12 years has studied antibiotic uses and antibiotic resistance, reiterated to the House Energy and Commerce Subcommittee on Health what the National Pork Producers Council and other livestock groups repeatedly have stated about antibiotic use in food-animal production: ‘The best way to manage antibiotic uses in animal agriculture is through sound, rational, science-based policy.’”

Financial Reform

Brady Dennis reported in today’s Washington Post that, “Congress gave final approval Thursday to the most ambitious overhaul of financial regulation in generations, ending more than a year of wrangling over the shape of the new rules and shifting the government’s focus to the monumental task of implementing them.

“The final Senate vote, which came almost two years after the nation’s financial system nearly collapsed, was a significant legislative victory for President Obama, who had pledged to rein in the reckless Wall Street behavior behind the crisis and to right the government regulation that failed to prevent it.”

For more background and analysis on this development, see this FarmPolicy.com interview with House Ag Committee Chairman Collin Peterson from July 1.

Keith Good

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