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Ethanol Industry: Protect Corn to Save Second-Gen Biofuels

The latest line from two ethanol industry groups suing California over its low-carbon fuel standard goes something like this: Second-generation biofuels will die unless corn-based ethanol is protected.

The Renewable Fuels Association and Growth Energy filed a lawsuit in federal court last week challenging the constitutionality of California's low-carbon fuel standard. These new rules will require producers, refiners and importers of gasoline and diesel to reduce the carbon footprint of their fuel by 10 percent in the next decade. As I wrote in my post last week, corn-based ethanol receives a worse emissions score than petroleum due to so-called "indirect land use effects."

A quick recap: The low-carbon fuel standard calculates the impact of fuels throughout their lifecycle and takes into account emissions generated from production, transportation and ultimately, its combustion. Corn-based ethanol is penalized because of the indirect effect of growing corn energy on land that would normally be used to grow crops for food. The regulation assumes that by growing corn in the U.S. for fuel, a farmer elsewhere will burn grasslands and jungles to provide land to grow more food.

Under the indirect land use measurement, corn-based ethanol does not meet California's low-carbon fuel standard. Which can only mean one thing: It would be banned from use in the state. Hence, the lawsuit.

RFA and Growth Energy issued additional commentsTuesday in response to questions from the press about the lawsuit. It's here, the two pro-ethanol groups make their second-gen-biofuels-will-die-without-corn-ethanol pitch.

"The litigation filed in U.S. District Court should help us fix a serious mistake with California's low carbon fuel standard. The LCFS regulation would not only undermine the intent of Congress to ensure that Californians be able to obtain ethanol from domestic sources, but also cripple the nation's effort to move to more diversified sources of U.S.-produced ethanol, including ethanol from feedstocks other than corn. "
The statement goes on say the LCFS would encourage other states to make their own rules.
"Were California to succeed in discriminating against corn-based ethanol as the LCFS is currently structured to do, it would empower other states to defy the intent of Congress and establish a patchwork of fuel regulations that would greatly complicate the nation's fuel infrastructure and potentially limit the trade of fuel and fuel components between states."
Different regulations in every state would certainly complicate things for the ethanol industry. But Growth Energy's concerns don't really match up with at least one of their other initiatives: to establish a national standard of country of origin labeling for fuel. Growth Energy's "Label My Fuel" initiative would at the very least add another unnecessary layer of government oversight. And it would likely add to the confusion, since crude produced from a field is typically combined with with oil from other fields to form a stream of crude within a pipeline. As one reader wrote in response to my post: "My guess is that it will look like fruit juice labels, with the only way for some processors/bottlers to obey the law being to simply name every country with which he does business."

The statement also reminded me of comments made earlier this year by Jeff Broin, co-chair of Growth Energy and head of POET, one of the largest U.S. ethanol producers. The future of second-generation biofuels rests on the Environmental Protection Agency's upcoming -- and since delayed -- decision on whether to raise the ethanol blend wall to 15 percent, Broin said in an interview with Bloomberg. His argument? The blend wall is holding up potential investment. To ensure financing for new projects, the industry needs to expand its sources of supply.