Does EPA Biofuels Proposal Really Threaten Corn-based Ethanol?

Politicians, ethanol producers and environmentalists have worked themselves into a frenzy since the Environmental Protection Agency, acting under 2007 legislation, proposed new standards for the biofuels industry aimed at cutting greenhouse gas emissions.

Much of the verbal sparring centers on how emissions of biofuels will be measured and whether the proposed rule unfairly targets corn-based ethanol plants, which would be required to reduce emissions 20 percent compared to the production of the gasoline it replaces. The proposed standard measures the impact of fuels throughout their lifecycle -- from the time the feedstock is planted to its eventual use in vehicles.

Corn-based ethanol would fair poorly under these new standards because it includes indirect effects of using food crops for energy, causing farmers in other countries to convert forests, peat and grasslands rich in carbon into land suitable for growing crops and inadvertently releasing more greenhouse gases.

The EPA is considering two different timetables -- a 30- and 100-year study period -- for measuring emissions reductions from the use of biofuels. Under the 30-year period, corn-based ethanol produced at natural gas-fired mills would result in an emissions increase of 5 percent compared to petroleum-based gasoline.

On the surface, it looks like the proposed standards will make life for corn-based ethanol producers much harder. But before we start ringing the industry's death knell consider a few points.

Existing corn-ethanol facilities are exempt from the proposed rules if they came online before the U.S. Energy Independence and Security Act became law. This means as much as 15 billion gallons of first-generation biofuels would be grandfathered in. In Grist, few believe the nation's corn ethanol industry can produce more than 15 billion gallons, regardless of the circumstances.
The proposed rules have already elicited all sorts of hand-wringing and naysaying from House Republicans and Democrats from farm states and will probably mean more protection for the industry.
In a sign of continued support for corn, the Obama administration is forming a Biofuels Interagency Working Group to achieve a number of goals including helping existing ethanol and biodiesel producers get access to credit.The group also will work to encourage the development of advanced biofuels.

The demise of corn-based ethanol will be due to shifting views on the future of biofuels and the government's investment in advanced biofuels, not the EPA's proposed regulations. EPA administrator Lisa Jackson's comment that "corn-based ethanol is a bridge to the next generation of biofuels" is far more indicative of these views than the proposals themselves. A

As Kevin Parker, global head of asset management for Deutsche Bank says in an interview with the Washington Post, "the world has moved on" from corn-based ethanol to second-generation biofuels.

See BNET's additional coverage of the biofuels industry:

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