Obama-era economic policy so far has not prominently featured the nation’s farm country. But that’s changing.
Policy being weighed now in Washington concerning ethanol will have a major impact in states like Colorado, home to Yuma County, one of the most efficient corn-growing regions in the country and a major producer of the biofuel.
As debate over ethanol heats up, the path the Obama Administration is steering looks to be exactly the kind of middle-way, practical political tack that chagrins progressives, in this case energy analysts and environmentalists who want to see the country take bold steps and begin to lead the world in green technology and climate change mitigation.
Supporting ethanol is not at all how they would propose to do that. They say ethanol production and delivery takes so much energy it’s a zero gain or net loss in the battle against CO2 emissions, that it also shifts food farming overseas and leads to loss of carbon-capturing rainforest.
Ethanol production expansion as “farm-country stimulus”
The science behind those forward-thinking arguments is debated, of course. More significant, however, is that the arguments, no matter the validity, are almost impossible to reconcile on the ground.
For farm-country politicians like U.S. Rep. Betsy Markey, whose 4th Congressional District takes in much of northern and eastern Colorado, ethanol is an immediate economic issue, and supporting the industry in a recession doesn’t compromise her alternative-energy credibility anything like supporting traditional fossil fuels might.
“Ethanol is a renewable homegrown fuel available today. Every gallon of ethanol you use is a gallon of gasoline you haven’t burned,” said Dave Cunningham, a longtime ethanol backer in the state who has worked closely with the industry for years. “Look around. There’s no more brown cloud in Denver. Ethanol people can see the mountains sooner coming west from Sterling and they’re proud of that.”
Markey, a Democrat, is co-sponsor of two key ethanol bills. Along with U.S. Rep. John Salazar, a Colorado Democrat from the San Luis Valley, Markey is backing a hot-button amendment to the Clean Air Act being pushed by Minnesota Democrat Colin Peterson, who chairs the House Agriculture Committee. That amendment would limit the way ethanol’s CO2 emissions are measured, a measure Peterson has said he wants passed or he’ll block the larger climate bill being pushed by top Democrats on the Energy and Commerce Committee, Henry Waxman of California and Ed Markey of Massachusetts.
Congresswoman Markey is also one of two co-sponsors of legislation being pushed by South Dakota Democrat Stephanie Herseth Sandlin to provide incentives through tax breaks to increase ethanol fueling-station infrastructure.
And in April, she signed on to a bipartisan letter to the director of the Environmental Protection Agency, Lisa Jackson, urging the agency to raise the ethanol blend cap per gallon of gasoline from 10 percent to 15 percent. The EPA recently extended the Open Comments period on the proposal to the last weeks in June.
Markey spokesman Ben Marter is quick to cite a figure familiar to anyone in the ethanol business and the reason why many are referring to it off-hand as farm-country stimulus: “The 15 percent blend translates to 135,000 jobs.”
Markey acknowledges the precarious position of ethanol in the next-generation energy industry and the difficulty in assessing the promises and risks of future fuel and transportation technologies. But the congresswoman believes that the benefits of ethanol right now are rich, Marter said.
“She sees ethanol as a bridge technology. She believes corn-based ethanol is crucial in moving the country toward energy independence.”
Ethanol isn’t as recession-proof as proponents claim
In Colorado as elsewhere, Markey’s “bridge technology” is heaving.
Denver’s BioFuel Energy, founded in 2005 during what many call the ethanol boom, plunged this year from a one-time share-price of $7.75 down to 35 cents. The company’s now trading at 65 cents per share but is hanging in the balance. BioFuel Energy, which owns and operates two 115 million gallon-per-year plants in Minnesota and Nebraska, announced Thursday that it received a Notice of Default from its lenders and posted a press release like a dispatch from the ethanol front.
Should the lenders delay or prevent the company from gaining access to funds… The Company may have to curtail or cease its operations, which would likely result in its inability to continue as a going concern and force it to seek relief from creditors through a filing under the U.S. Bankruptcy Code.
Broomfield-based Range Fuels, the company behind a pilot cellulosic plant in Denver that converts biomass from Colorado beetle-killed pine trees into fuel, confirms that it has secured funding and is moving forward with its cellulosic ethanol plant in Georgia.
But in February, Canadian ethanol company Lignol suspended a similar beetle-kill ethanol project slated for Grand Junction. The reasoning, according to the company, included “the instability of energy prices, the uncertainty in the capital markets and the general market malaise.”
Bill Pentack, a spokesman for Texas-based Panda Ethanol, told the Colorado Independent that once-celebrated plans for a major 115 million gallon-per-year ethanol refinery in Yuma County were on hold indefinitely.
“There’s no timeline for that project now. The window for financing new green-field ethanol facilities in the United States has been closed for quite some time.”
Supplanting corn-based ethanol for cleaner renewable energy
With the industry dipping, now would be the time to shut it down, say ethanol’s critics, and move the country more toward cleaner wind and solar energy.
But no farm-country politician, including Obama from Illinois, would do that.
There are five ethanol plants in Colorado employing hundreds of workers. What’s more, the present ethanol infrastructure will serve much cleaner next-generation cellulosic ethanol. An inarguably clean fuel, cellulosic ethanol can be made from low-water consuming prairie switch grass and bio waste. It displaces no land for food farming.
There is also the fact that Denver is a substantial market for ethanol, something that surely plays in the minds of Colorado’s delegation in D.C.
Yet, the rules under consideration in the nation’s capital might effectively take those decisions out of the hands of lawmakers.
The controversial draft rule on ethanol emissions the EPA is considering would take into account estimates of indirect carbon emissions — not just what comes out of your tailpipe but the emissions from production and distribution and from land conversion here and overseas, including rainforest.
It’s a move that would amount to a radical shift, signaling a whole new level of seriousness on the part of the U.S. to mitigate climate change. The rule would essentially move corn-ethanol out of the alternative fuel category, drying up federal money and hobbling the industry.
Failing to raise the ethanol blend in gasoline to 15 percent would also send a clear message that national leaders have lost faith in contemporary ethanol, in effect cutting losses after investing tax money heavily for a decade.
“Ethanol is not busting,” says Steve McNinch, CEO for Kansas-based Western Plains Energy, which ships 50 million gallons of ethanol to Colorado annually and 10 percent of its production to the Denver market alone.
“There have been growing pains but ethanol as we know it today is a whole new industry. Critics are looking at baseline data from 2004, before the boom.”
Efficiency has gone way up. Yields have climbed and the approach to energy use and waste has shifted.
“They’re producing more from local corn, transporting less. And they’re making both ethanol and feed for livestock in the process now, basically getting two bites at the cob,” Cunningham said.
And most observers agree that raising the blend cap to 15 percent is the only way to reach the levels for clean fuel established by the Renewable Fuel Standard passed in 2007, the standard which has dictated industry expectations ever since.
“We’re not in a bust and we’re not looking for a stimulus,” McNinch said. He maintains that if the debate in Washington is centered on the facts, ethanol will win.
The facts, though, are probably more fungible than the political realities of the current recession.