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Biofuels; Ag Economy (Food Security); EPA Issues; and Trade

Biofuels- EPA on E15

A news release from EPA yesterday indicated that, “The U.S. Environmental Protection Agency (EPA) today waived a limitation on selling fuel that is more than 10 percent ethanol for model year 2007 and newer cars and light trucks. The waiver applies to fuel that contains up to 15 percent ethanol – known as E15 – and only to model year 2007 and newer cars and light trucks. This represents the first of a number of actions that are needed from federal, state and industry towards commercialization of E15 gasoline blends. EPA Administrator Lisa P. Jackson made the decision after a review of the Department of Energy’s (DOE’s) extensive testing and other available data on E15’s impact on engine durability and emissions.”

The release noted that, “A decision on the use of E15 in model year 2001 to 2006 vehicles will be made after EPA receives the results of additional DOE testing, which is expected to be completed in November. However, no waiver is being granted this year for E15 use in model year 2000 and older cars and light trucks – or in any motorcycles, heavy-duty vehicles, or non-road engines – because currently there is not testing data to support such a waiver.”

With respect to labeling issues, the EPA release explained that, “Additionally, several steps are being taken to help consumers easily identify the correct fuel for their vehicles and equipment. First, EPA is proposing E15 pump labeling requirements, including a requirement that the fuel industry specify the ethanol content of gasoline sold to retailers. There would also be a quarterly survey of retail stations to help ensure their gas pumps are properly labeled.”

“The E15 petition was submitted to EPA by Growth Energy and 54 ethanol manufacturers in March 2009. In April 2009, EPA sought public comment on the petition and received about 78,000 comments,” yesterday’s EPA release said.

An audio replay of yesterday’s EPA announcement and related press conference, is available here (MP3- 27:22).

Matthew L. Wald reported in today’s New York Times that, “The Obama administration made a gesture of support for the ethanol industry on Wednesday, with a declaration by the Environmental Protection Agency that gasoline retailers can sell fuel blends containing up to 15 percent ethanol for use in late-model cars.

But it was unclear when drivers might find the new fuel mix. Numerous other changes would have to occur before gas stations will begin selling the blend, known as E15, including many approvals by states and significant changes to the infrastructure at most gas stations.”

The Times article added that, “Gina McCarthy, the E.P.A. assistant administrator for air and radiation, said that the decision advanced an important national goal of reducing oil consumption. The federal government would like to see Americans use 36 billion gallons of alternative fuels by 2022, including 21 billion from advanced biofuels beyond the corn-based ethanol that is prevalent now. Currently, the industry says it can produce about six billion gallons of corn ethanol a year.

It was not clear why the agency made an announcement on one group of cars when a decision on another group is coming in a month or two, but analysts suggested that election-year politics played a role.

“Kevin Book, an analyst at ClearView Energy Partners, a research firm, said that in the midterm Congressional elections in three weeks, ‘there are nine at-risk Democrats from the top 10 ethanol producer states. If you’re fighting for every seat in a midterm election, you can’t afford to wait until the rule is finished.’”

Dow Jones writers Tom Polansek and Naureen S. Malik reported yesterday that, “Industry executives said it could take several months, if not longer, to start offering E15 at gasoline stations because of considerable investments needed to offer the new blend. Auto makers and oil marketers have expressed concern that use of gasoline with higher ethanol content may harm engines, particularly in older models, leaving a big bill to honor vehicle warranties. Some leisure boat owners–who already use a higher ethanol/gasoline blend–are already suing fuel suppliers. Refiners can choose to buy credits to meet the government’s existing renewable fuels mandate instead of blending more ethanol into their mix.

Gasoline stations will have to ensure that fuel dispensers, pipes and tanks are certified for use with the higher ethanol usage or replace them to avoid potential lawsuits for any vehicle damage. Pumps will have to be clearly labeled as E10 (for a 10% ethanol blend) or E15 (for 15% blend) but that may not be enough to prevent misfueling, industry associations said.”

Darren Goode reported yesterday at The Hill’s Energy Blog that, “Supporters and critics of expanded ethanol use both found fault with the Environmental Protection Agency’s decision Wednesday to allow for a higher ethanol blend in gasoline for vehicles as old as model year 2007, while punting for now on allowing it for older vehicles.”

E15 Reaction- Policymakers

Sec. of Agriculture Tom Vilsack– “Today’s action by Administrator Jackson and the EPA provides assurance to farmers, ranchers and the renewable fuels industry that the government backs the use of home grown energy in our cars and trucks.”

Sen. John Thune (R-SD)- “For far too long, the Obama Administration has sent mixed signals regarding domestic ethanol production which has stifled job creation and economic growth in the clean renewable energy sector.”

Sen. Charles Grassley (R-Iowa)- “The announcement unnecessarily complicates the fuel-supply chain and undermines real progress that a waiver for all vehicles would have provided to America’s domestic renewable fuel producers.”

Sen. Byron Dorgan (D-ND)- “The EPA should immediately act to extend the partial waiver to more vehicles to boost the ethanol market.”

Sen. Tom Harkin (D-Iowa)- “Applauded” the announcement, but “expressed disappointment that a decision has not yet been made on 2001-2006 vehicles…”

Sen. Mike Johanns (R-Neb.)- “This Administration’s continued failure to stand up for domestic, renewable fuels and American farmers is exasperating.”

Sen. Ben Nelson (D-Neb.)- “I commend Administrator Jackson for taking what is a bold step—moving that agency forward.”

Sen. James Inhofe (R-Oklahoma)- “EPA’s decision today on E-15 is confirmation of what we’ve known for some time: the fuels mandate in the 2007 energy law contained serious flaws, which Congress should now address with new legislation.”

Rep. Stephanie Herseth Sandlin (D-SD)- “This long overdue but welcome decision will cover an estimated 43 million motor vehicles and benefit South Dakota producers…”

E15 Reaction- Stakeholders

Nat’l. Corn Growers Association Pres. Bart Schott– “We’re disappointed in the very limited scope of this approval, but pleased the EPA has finally taken action to partially approve the waiver request to allow higher blends of ethanol in some motor vehicles.”

Renewable Fuels Assoc. Pres. Bob Dinneen– “EPA’s scientifically unjustified bifurcation of the U.S. car market will do little to move the needle and expand ethanol use today.”

Growth Energy CEO Tom Buis– “Today’s approval of E15 for newer vehicles is the first crack in the blend wall in more than 30 years, and proves what was laid out in Growth Energy’s Green Jobs Waiver – that E15 is a good fuel for American motorists.”

Executive VP of American Coalition for Ethanol Brian Jennings– “While some will portray this partial E15 waiver as a major victory and others will suggest it is completely unworkable, the truth lies some where in between.”

American Farm Bureau Federation Pres. Bob Stallman– “EPA must now follow up on this first effort to reaffirm America’s commitment to biofuels.”

Nat’l. Farmers Union Pres. Roger Johnson– “This announcement is a step in the right direction; however, we remain concerned about further delays on a decision for pre-2007 model year vehicles and encourage the agency to provide producers and consumers an expeditious decision.”

Nat’l. Pork Producers Council Ethanol Task Force Chairman Randy Spronk– “NPPC is withholding comment on raising the blend rate to E15 from its current E10 until we can consult with our economists. But any upward pressure on corn prices will have a negative effect on producers.”

Nat’l. Cattlemen’s Beef Assoc. Pres. Steve Foglesong– “NCBA’s members strongly oppose mandated production and increasing government intervention that artificially inflates the cost of feed ingredients.”

An update posted yesterday at the Greenspace Blog (Los Angeles Times) stated that, “Among the first to blast EPA was a coalition of agricultural interests, including the American Meat Institute; the Grocery Manufacturers Assn.; the National Council of Chain Restaurants; the National Chicken Council; the American Frozen Food Institute; the American Bakers Assn.; the National Meat Assn. and the National Turkey Federation:

“‘E15 – which would be a 50 percent increase from the currently permitted level of 10 percent ethanol in gasoline – will result in dramatic increases in the portion of the U.S. corn crop used to make fuel rather than food and, when fully implemented, could result in more than 40 percent of the nation’s corn crop being diverted to ethanol production. The corn ethanol industry has received over $30 billion in federal subsidies over the last three decades.’”

Agricultural Economy (Food Security)

DTN Ag Policy Editor Chris Clayton reported yesterday (link requires subscription) that, “The urgent need for increased global ag production was highlighted Wednesday in a study released by the Global Harvest Initiative at the World Food Prize Symposium.

“‘The current rate of agricultural productivity growth is lagging the world’s expanding demands,’ the Global Harvest Initiative stated in the Global Agricultural Productivity, or GAP report, developed with the Farm Foundation and USDA’s Economic Research Service.

The report quantifies for the first time the difference between the current rate of agricultural productivity growth globally and the acceleration needed to meet future population demands. Simply put, the report concludes ag production isn’t growing fast enough to meet the doubling of production that it will take to feed the world by 2050. That gap in production growth needs to be closed, especially over the next two decades when population is expected to grow the quickest.”

The DTN article noted that, “Bill Lesher, executive director of the Global Harvest Initiative, said at a luncheon releasing the report that the research points to the urgency needed in the policy arena to address how agriculture can accelerate production and do so in a sustainable way.

“‘Most people cannot comprehend what it might take to meet the needs of an additional 3 billion people with increased incomes,’ Lesher said. ‘For world leaders in a position to impact policy and resource allocation to sustainably increase the rate of productivity, the GAP report provides very real data globally and regionally upon which to make informed decisions on policies and research investments.’”

O. Kay Henderson reported earlier this week at RadioIowa Online that, “U.S. Agriculture Secretary Tom Vilsack says his agency is building coalitions worldwide to increase acceptance of biotech crops.

“The former Iowa governor addressed a ‘Global Farmer Town Hall’ meeting at Iowa State University today. Vilsack said genetically-modified crops can help meet the increasing demand for food worldwide.

“‘Now there are some that would suggest there is an inherent conflict on farmers increasing reliance on agriculture technology and the health of our environment,’ Vilsack said. ‘But when managed appropriately, farm and ranchlands that embrace science and new technology can produce more, while preserving much of the native biodiversity.’”

And Bloomberg writer Alan Bjerga reported yesterday that, “U.S. farm exports may surpass the 2008 record of $115.3 billion on surging corn, soybean and wheat prices, according to Joe Glauber, the U.S. Department of Agriculture’s chief economist.

“Shipments may exceed the August forecast of $113 billion for the year that began Oct. 1, Glauber said today in a telephone interview.”

EPA Issues

Greenwire writer Gabriel Nelson reported earlier this week at The New York Times Online that, “With climate legislation stalled in Congress and U.S. EPA just months away from regulating greenhouse gases for the first time, 37 states have taken sides in a court battle that could end up steering U.S. climate policy for years.

“Just like the cap-and-trade bills that narrowly cleared the House and floundered in the Senate, challenges to the Obama administration’s climate program have highlighted a bitter divide between industry-heavy states and their environment-minded counterparts. All of them are now lined up for a high-stakes legal showdown that will allow a few federal judges to decide what 535 members of Congress have not.

“The states involved in the litigation are closely divided. Seventeen are asking to review EPA regulations, while 20 are supporting one or more EPA rules, according to a Greenwire analysis of federal court records. Thirteen states have not taken a side.”

Meanwhile, Robin Bravender reported yesterday at Politico that, “With energy legislation left in tatters this year, experts from both sides of the climate debate have some advice for lawmakers: ditch cap and trade.

“Extreme political polarization on energy and climate has stalled long-term action on the issues for decades, according to a new report from major liberal and conservative think tanks. The study calls for a ‘post-partisan’ plan that nixes controversial cap-and-trade programs and backs away from dirty fossil fuels in favor of clean energy technology incentives.”

And Sen. Amy Klobuchar (D-Minn.) was a guest on yesterday’s AgriTalk Radio Program with Mike Adams where she discussed a recent bill she introduced with Sen. Richard Lugar (R-Indiana) that would “ensure that American farmers are represented in the decision-making process for environmental policies and regulations that could affect U.S. agriculture.”

A news release on this issue from Sen. Klobuchar last month explained that, “The Representation for Farmers Act would give the Secretary of Agriculture the authority to appoint up to three members to the Environmental Protection Agency’s (EPA) Science Advisory Board, which is charged with providing analysis and recommendations for EPA regulations and other technical matters that often impact the U.S. agriculture industry. Currently, the board consists of 50 members, none of which have an agricultural background.”

To listen to a portion of yesterday’s AgriTalk Radio program, where host Mike Adams and Sen. Klobuchar discuss this issue in more detail, just click here (MP3- 3:12).

Trade

A news release yesterday from Rep. Jerry Moran (R-Kansas) stated that, “Rep. Jerry Moran and Rep. Collin Peterson, Chairman of the U.S. House Agriculture Committee, requested this week that President Obama repeal U.S. Department of Treasury regulations that restrict access of U.S. farmers and ranchers to Cuban markets. In recent weeks, reports have indicated the Obama Administration is preparing to make changes to U.S. travel policy with Cuba. Moran and Peterson requested the Administration include a repeal of the agricultural trade restrictions along with any regulatory change in U.S. travel policy toward Cuba.”

Jay Heflin reported earlier this week at The Hill’s Finance Blog that, “Sens. Chuck Grassley (R-Iowa) and Orrin Hatch (R-Utah), the two highest-ranking Republicans on the Senate Finance Committee, on Tuesday sent a letter to Agriculture Secretary Tom Vilsack and U.S. Trade Representative Ron Kirk urging them to take action to stop China’s discriminatory duties on U.S. poultry products.

“The senators said the act is the latest example of China’s discriminatory treatment of U.S. products that are in violation of China’s international trade obligations.”

Agri-Pulse Senior Editor Stewart Doan recently interviewed (audio) U.S. Trade Rep. Ron Kirk and discussed a wide variety of trade issues impacting agriculture, including the ongoing trucking dispute with Mexico.

An Agri-Pulse summary of the interview noted in part that, “The trade ambassador insists the administration is working hard to resolve a trucking dispute with Mexico that’s resulted in sanctions against several U.S. farm products in a manner that’s acceptable to both the Mexican government and the teamsters.”

To listen to a portion of the Agri-Pulse interview with Stewart Doan and Amb. Kirk on th trucking issue, just click here (MP3- 2:02).

Keith Good