Corn Ethanol Mandate Elimination Actby Senator Dianne Feinstein
Posted on 2015-01-16
FEINSTEIN. Mr. President, I wish to submit an amendment with my
colleagues, Senators Toomey and Flake to correct a major problem with
the current Renewable Fuel Standard: the mandate for corn ethanol. We
see two major problems with continuing to mandate the consumption of so
much corn ethanol each year. The statute currently mandates more corn
ethanol than can be used by the current vehicle fleet and gas stations.
Roughly 40 percent of the U.S. corn crop is now used to produce
ethanol, artificially pushing up food and feed prices while damaging
the environment. This amendment offers a simple fix that addresses both
problems: elimination of the corn ethanol mandate.
Also, the amendment leaves in place the requirement that oil companies purchase and use low-carbon advanced biofuels, including cellulosic ethanol and biodiesel. This allows the program to focus on the fuels that best address climate change and do not compete with the food supply.
Let me highlight a few of the unintended consequences of the corn ethanol mandate. The policy has led us to use roughly 40 percent of the U.S. corn crop not for food but for fuel, nearly twice the rate in 2006. Using more and more corn for ethanol--in drought years as well as years with bumper crops--places unnecessary pressure on the price of corn.
The Congressional Budget Office estimated in June 2014 that escalating the volume of corn ethanol as currently required by statute would raise the average price of corn about 6 percent by 2017. That would increase food expenditures by $3.5 billion per year by 2017, the equivalent of about $10 per person, which most directly affects families living on the margin.
Internationally, according to Tufts University researchers, the corn ethanol mandate has cost net corn importing countries $11.6 billion in higher corn prices, with more than half that cost, $6.6 billion, borne by developing countries. Higher corn prices also raise prices throughout the food supply chain by raising the cost of animal feed. For the turkey industry alone, the Renewable Fuel Standard raised feed expenses by $1.9 billion in 2013, according to the President of the National Turkey Federation. For the restaurant industry, a recent Price-Waterhouse-Coopers study projects that the corn ethanol mandate would increase costs by up to $3.2 billion a year. For the milk industry, the Western United Dairyman reported in 2013 that a combination of high feed costs and low milk prices put 105 dairies out of business in one year alone.
The corn ethanol mandate also has unintended environmental consequences. In 2013, an investigative report from the Associated Press found using government satellite data that 1.2 million acres of virgin land in Nebraska and the Dakotas alone were [[Page S236]] converted to fields of corn and soybeans since 2006. Putting virgin land under cultivation has environmental consequences, including greater runoff, greater use of fertilizer, and less land available for conservation.
Another consequence of the corn ethanol mandate is that it places a regulatory requirement on oil refiners that cannot actually be satisfied--it requires more ethanol than the auto fleet and existing gas stations can accommodate, a concept called the blend wall. Under the RFS, oil refineries are required to blend 15 billion gallons of corn ethanol into the fuel supply in 2015. This far exceeds the roughly 13.5 billion gallons that our current infrastructure can accommodate. According to the Environmental Protection Agency's final 2013 rule, the ``EPA does not currently foresee a scenario in which the market could consume enough ethanol to meet the volumes stated in the statute.'' The Congressional Budget Office confirmed this judgment in its June 2014 report, saying that the statutory goal of escalating corn ethanol volumes would be ``very hard to meet in future years.'' Chevron, which operates oil refineries in my home State, is also concerned that the statutory mandate requires too much ethanol. It is Chevron's judgment that ``the required volume of renewable fuel exceeds the amount that can be safely blended into transportation fuels used by consumers.'' Facing this difficulty, the EPA has been unable to finalize the volume requirements for 2014 or 2015. This leaves the businesses seeking to develop advanced biofuel ventures without any certain prospects to guide their investments and undermines the primary purpose of the Renewable Fuel Standard.
The Corn Ethanol Mandate Elimination Act would address the blend wall directly, thereby allowing EPA to continue increasing volumes of low carbon advanced biofuel.
The corn industry, by contrast, does not depend on the RFS for its livelihood. In fact, the Congressional Budget Office predicts that refiners will continue to blend corn ethanol into the fuel supply in the absence of a mandate, because ethanol is the oil refiner's preferred octane booster and oxygenate.
Ultimately, I believe that this bill would better serve the advanced biofuel industry by removing the blend wall as an obstacle to the industry's expansion, and providing the regulatory certainty that they need to guide their investments. These advanced biofuels have none of the same problems as corn ethanol. They do not compete directly with food, and they reduce greenhouse gas emissions by at least 50 percent compared to petroleum.
I am also fundamentally committed to the vitally important public health and climate protections provided by the Clean Air Act. That is why I would like to make it crystal clear that this legislation is a narrow bill repealing the corn ethanol mandate. The bill's language explicitly clarifies that the legislation has no effect on the low- carbon advanced biofuel provisions in the Renewable Fuel Standard, and I would oppose any bill that would amend, revise or weaken the advanced biofuel provisions or other public health protections provided by the Clean Air Act.
The elimination of the corn ethanol mandate is a smart, simple reform with support from the prepared food industry, the dairy, beef, and poultry industries, the oil and gas industries, hunger relief organizations, and environmental groups.
The bill solves the problems of the Renewable Fuel Standard while maintaining the provisions that encourage the development, growth, and deployment of cellulosic ethanol, algae-based fuel, biodiesel, and other low-carbon advanced biofuels.
I urge my colleagues to support this legislation.