Obama and His Green Dream Team

The new administration faces the historic challenge of guiding the nation through one of the most severe economic downturns in its history. During the campaign, hope and change were the pillars of President Barack Obama's message. Industry leaders share their expectations of the new administration with EPM.
By Erin Voegele | March 05, 2009
The Bush administration marked a number of milestones for the ethanol industry. During his eight years in office, President George W. Bush was a strong supporter of ethanol. "The Bush administration was far and away the most pro-ethanol administration that we had ever seen," says Bob Dinneen, president and chief executive officer of the Renewable Fuels Association. "He understood that the U.S. mobile transportation fuel market could absolutely utilize greater volumes of renewables. Were it not for the leadership of President Bush, we would not have had a renewable fuels standard."

While those in the ethanol industry say that support seems unlikely to diminish under the Obama administration, they agree that the underlying reason for that support is likely to change. The Obama administration is expected to place less emphasis on the goal of energy security, and will concentrate on the issue of climate change. In addition, industry insiders anticipate the new administration will place a renewed focus on science and the development of second-generation technologyw.

The need for energy security has been the message that has driven political support for biofuels and has resonated with policymakers for the past decade, says Graham Noyes, an attorney with Stoel Rives LLP who focuses his practice on biofuels issues. "I think that with this new administration—while energy security will still be a factor—global warming has probably surpassed it in terms of importance," he says.

Dinneen says he believes the Obama administration is committed to building on the success of the ethanol industry, accelerating the development of cellulosic fuels and building market opportunities. "This administration—more than any other in history—understands the threat to our planet's health of uncontrolled petroleum use and will do everything that it can to reduce carbon, and to stimulate more sustainable technologies," he says. "I am very confident that the administration recognizes that biofuels have got to play an important role in our nation's energy infrastructure."

The American Coalition for Ethanol is also confident in the Obama administration's commitment to a clean energy economy, says Brian Jennings, executive vice president of ACE. "I think the Obama administration is going to place a lot of emphasis on climate change and low-carbon policies—more so than any president in the history of the United States," he says. "I think there will be a concerted effort to reduce greenhouse gas emissions like never before. That could be very good for biofuel."

Overall, Noyes says his impression is that the administration really wants to challenge the scientific, education and business communities to come up with solutions for our nation's energy problems, and come up with them quickly. "I think this administration wants to really push the envelope and really push the industry," he says.

Carbon Considerations and Indirect Land Use
Noyes believes that carbon will be a critical issue for the ethanol industry in the coming years. "I think there has really been a sea change in administration here," he says. "I think the low-carbon fuel standard, greenhouse gas emissions and global warming issues are going to be keys to the industry."

During his first week in office, Obama issued a memorandum to the U.S. EPA, requesting that the agency revisit a March 2008 decision to deny California's application for a waiver that would permit the state to adopt stricter limitations on greenhouse gas emissions. This request clearly demonstrates the president's commitment to low-carbon fuel standards. "[This also] looks like an early indicator that the Obama administration wants to see innovation from the states," Noyes says.

As part of California's low-carbon plan and the EPA's implementation of the renewable fuels standard, indirect land use is expected to have a significant impact on the ethanol industry. As part of the implementation of the RFS, EPA must devise a tool to measure indirect land-use considerations. "It's the first time the government is being asked to establish a metric determining the carbon footprint of an industry," Dinneen says. "They need to get it right or the opportunity for continued growth and evolution in our industry will be unnecessarily and carelessly curtailed."

"When a fuel is assigned a particular value in those systems, that becomes the truth for that policy or regulation, and there is oftentimes no changing it," Noyes says. "If corn ethanol is not graded well, and there are a lot of policy issues that impact the science on how that grading is done, then [the industry] is going to suffer from it and be in a much less favorable position than if it gets a more favorable assessment in those findings." This means it will be necessary for the ethanol industry to focus a great deal of energy on how those metrics are developed, and be as involved as possible in the process.

The Dream Team
Those in the ethanol industry agree that sound science needs to be the foundation of the indirect land-use metrics. This emphasis on science seems to be reflected in Obama's cabinet member and administration selections. The most notable example was the appointment of Energy Secretary Steven Chu. "There usually aren't Nobel Prize winners in the cabinet," Noyes says. "But, it's a great thing to have one."

"I think [Secretary Chu] was a great choice," says Bruce Jamerson, Mascoma Corp.'s chief executive officer. "He is clearly focused on climate change and the role of transportation fuels in that." In addition, he brings a strong scientific background into the discussion of indirect land-use issues and carbon policies. "I think Steven Chu has clearly distinguished himself as a scientist and I think he has many talents he brings to the job," Jennings says. "Secretary Chu has been an outspoken advocate for moving to cellulosic feedstocks to make biofuels, and that's something we all embrace." Growth Energy agrees. "We are confident that under [Secretary Chu's] leadership, the department will make great progress in harnessing the full potential of renewable energy sources such as renewable, reliable ethanol today, and advanced biofuels such as cellulosic ethanol tomorrow," says Growth Energy Spokesman Jin Chon.

The appointment of Agriculture Secretary Tom Vilsack, the former governor of Iowa, has also been strongly supported by the ethanol industry. "[Secretary Vilsack] brings a lot of experience and understanding from the farm states, the biofuels industries and agribusiness," Noyes says. As an Iowan, Vilsack clearly has an appreciation for what the ethanol industry can do, Dinneen says. "[He] also has a real appreciation for the impacts of agriculture and the progress that farmers have made in reducing their energy inputs and their carbon footprint," he says. Chon adds that Vilsack's leadership will help ensure that American agriculture will continue to be the most innovative and advanced in the world. "He also understands the importance of creating green-collar jobs, the critical role our rural communities play in achieving energy security, and the power of clean, green, homegrown energy to power our nation today," he says.

Other administrative appointments further demonstrate the president's commitment to his energy policies. Noyes says the selection of Carol Browner as the White House Energy Coordinator, or energy czar, and the appointment of Lisa Jackson as EPA administrator will bring a lot of regulatory experience to the administration. The administration's commitment to clean energy and climate change is also apparent through Secretary of State Hillary Clinton's appointment of Special Envoy for Climate Change Todd Stern. Dinneen says he thinks this move reflects the deep commitment of the Obama administration to take serious, meaningful action in regard to climate change around the world. "It won't do much good for the U.S. to unilaterally disarm in terms of our greenhouse gas emissions if the rest of the world doesn't," Dinneen says. "Assuring that the developing world is thinking about these issues and enacting policies that will really heal the planet is an important component."

The Wish List
Although members of the industry are confident that the Obama administration will prove positive to the ethanol industry, they have also identified a number of issues that must be addressed to help the industry move forward. Most importantly, Dinneen says the administration must work to stimulate the economy. "The ethanol industry is the original green job," he says. "We think we can play a role in the revitalization of the entire economy, but only if access to capital issues are resolved and the market is allowed to continue to grow."

This potential for growth in the industry is largely tied to the ability to increase demand by approving the use of midlevel blends in legacy vehicles, Jennings says. "The most important thing is moving past the blend wall to midlevel blends," he says. Overcoming the blend wall is also a necessary component in the commercialization of cellulosic biofuels. "We will be unable to commercialize cellulosic ethanol unless the E10 blend wall is dealt with," Jennings adds. "It's widely recognized that corn ethanol will handle the E10 blend market. If we don't move beyond E10 and there is no market for cellulosic biofuel, the lenders won't step up to the plate and help commercialize these plants."

Jamerson cites the refining, expansion and streamlining of the U.S. DOE loan guarantee program as an issue that is important to the industry. Dinneen says implementation of the RFS will continue to be vital to the industry as well. "We'll be looking to make sure the existing federal program for renewable fuels, the tax incentive, the secondary tariff and the RFS remain in place," he says. "We believe that the federal program has been extraordinarily successful in creating an industry that is providing significant and critical benefits to the United States in terms of world economic development, energy security and environmental progress; and we want to make sure that program is not undermined and that our industry is allowed to continue to grow."

Erin Voegele is an Ethanol Producer Magazine staff writer. Reach her at evoegele@bbiinternational.com or (701) 373-8040.