Policy, industry divisions tackled at ACE conference

By Holly Jessen | July 15, 2010
Posted Aug. 5, 2010

The U.S. EPA isn't slow walking on the E15 decision, said Ron Lamberty, vice president and director of market development for the American Coalition for Ethanol. The EPA is moon walkinggoing backwardson the E15 decision.

Lamberty was one of the speakers Aug. 4 at ACE's 23rd annual Ethanol Conference & Trade Show. The event, held in Kansas City, will conclude Aug. 5. Another hot topic at the conference was ethanol tax incentives, including whether legislators will extend the Volumetric Ethanol Excise Tax Credit and what to do about an industry seemingly split by differing opinions.

Brian Jennings, ACE's executive vice president, singled out VEETC and the blend wall as the two most important policy challenges facing the industry. Although the renewable fuels standard signals the industry to produce more ethanol, there's a 30-year-old limit in the Clean Air Act that restricts ethanol blending to E10.

The EPA has been considering the E15 waiver for a year and a half now and, in June, delayed the decision for the second time. Now there are rumors that E15 will be approved only for model years 2007 and newer, although the ethanol industry has maintained that the blend is safe for all vehicles, no matter what year. ACE has calculated if the EPA goes through with the model year limit it would open up E15 to only two out of every 10 cars on the road. "It sounds like a solution that only a government bureaucrat could come up with," he said.

In late July, ACE joined with the National Corn Growers Association and the Renewable Fuels Association in sending a letter to the EPA's Administrator Lisa Jackson. The groups encouraged the EPA to formally approve the use of E12 for all vehicles immediately, while the final decision on E15 is waited for. This was based on the EPA's delay on E15 and concern about restricting the use of E15 to newer cars. The groups have repeatedly pointed out that fuels with oxygen content equivalent to E12 were previously approved.

VEETC, the second big topic at the ACE conference, is certainly a topic of debate, Jennings told the crowd. The industry can debate about how many jobs would be lost and how many plants would close if it is allowed to expire at the end of the year. "The fact of the matter is that both those things would happen," he said, adding that the price at the gas pumps would go up for the consumer.

Although there are 150 days left in 2010, there are only 20 days left for voting on the Congressional calendar, Jennings said. Legislators will take a break during August, returning home to stop by state fairs and campaign. This is a great opportunity for those in the ethanol industry to make their voices known. He encouraged those in the audience to invite legislators to tour ethanol plants and meet with the board of directors. "The very best ethanol lobbyists are sitting here," he said.

During a frank discussion about the perceived industry split, Jennings and Darrin Ihnen, president of NCGA, reaffirmed the two groups' support of extending the ethanol tax incentive, including the tariff. Although Growth Energy and it's Fueling Freedom Plan was not specifically mentioned by name, Jennings and Ihnen both said that after talking to legislators, it was determined it was too late in the legislative session to change course radically. "Timing is everything in Washington, it genuinely is, and the time for us to introduce a bold new approach should have been a long time ago," Jennings said, acknowledging that perhaps, in hindsight, it would have been a good idea to approach Congressional leaders with a new strategy some time ago.

Growth Energy's plan calls for transitioning VEETC payments from a blender's credit to building up ethanol infrastructure with blender pumps and ethanol pipelines, plus requiring 100 percent of new vehicles to be flex-fuel vehicles (FFV), which, the organization said, would help the ethanol industry compete in an open market.

There are portions of that plan that are "incredibly appealing, incredibly attractive," Jennings said. The industry needs to encourage long-term discussion on ethanol's access to the marketplace, and do so in an intelligent and careful wayavoiding mixed signals. "Our job is to put our representatives in Congress in a position to win for us," he said.

A question was asked from the audience, if pursuing an extension of VEETC puts FFVs and blender pumps on the back burner. No, Jennings said, both are important. "We've got to walk and chew gum at the same time," he said.

Raymond Defenbaugh, president, CEO and chairman of Big River Resources LLC in West Burlington, Iowa, commented from the audience that what the industry needs is one voice of support for ethanol from all three groupsACE, Growth Energy and the RFA. The groups, of which Big River Resources is a member of all three, have different strategies but all are unified in their support of ethanol. Ron Fagen, president and CEO of Fagan Inc., added that while a unified message is important, he didn't see it as a negative to have three different groups, as each one has different connections in Washington.