State of Play

By Bob Dinneen | November 15, 2011

The vast majority of progressive, forward-looking policies that have helped to build America’s ethanol industry into the largest alternative fuel industry in the world have emanated from Washington. Smart, productive policies such as the Volumetric Ethanol Excise Tax Credit and the renewable fuel standard (RFS) have in no small measure made the construction and operation of more than 200 ethanol biorefineries in 26 states possible.

To be sure, debate over America’s ethanol industry will continue to be en vogue on Capitol Hill as we have seen by the numerous committee and subcommittee hearings on ethanol-related topics in the past year. Increasingly, the debate about the role of policy and America’s ethanol industry has moved into state capitals all across the country. In some cases, these debates are forward looking. For example, the state of Iowa has worked very hard to clear the way for the legal sale and use of E15 ethanol blends. So, too, has the state of Illinois.

But far too often, the debate in state legislatures and governments around the country is focused on rolling back the progress we have made in reducing their dependence on oil and creating job opportunities. Rather than looking to build upon or continuing to incent the evolution of American ethanol production, some state legislators are seeking to pull the rug out from under critical investments that businesses have made to produce, distribute, and use a growing supply of ethanol derived from a diverse basket of feedstocks.

Perhaps the most visible is the effort underway in Florida to repeal the state’s mandate for 9 to 10 percent ethanol. One state representative and one state senator have introduced legislation that would seek to unravel the web of investments made in renewable fuel production and infrastructure in Florida since the mandate was put into place in 2008. Given Florida’s importance to the gasoline market and the presence of the federal RFS, repealing the ethanol mandate may not materially impact ethanol demand in Florida. But such an outcome cannot be guaranteed. Nor can it be stated with absolute confidence that the progress of new ethanol production technologies just now taking hold in Florida would continue. In fact, were Tallahassee to reverse its position on renewable fuels, many of the projects underway in Florida may be dealt a death blow as would the jobs and economic activity that go along with them. The result would be a dramatic increase in both Florida’s demand for imported oil from nearby dictators like Hugo Chavez and higher gas prices for all Florida consumers.

Florida is not alone. Earlier this year, the state of New Hampshire sought to ban the use of corn-based ethanol entirely. And the state of Hawaii, perhaps providing the model for Florida, has sought repeal of its mandate. Similar anti-ethanol efforts are being seen in other state capitals. 

As America’s ethanol industry has grown, so too have the concentric circles on its back. And, as more of the gasoline market is constituted by a renewable fuel alternative, efforts to prevent the further loss of market share will be intense.

As an industry, we have a strong track record of successful advocacy. Now is not the time to rest on those laurels. We must continue to be vigilant—both in the halls of Congress and in statehouses across the country—of coordinated efforts to undermine the progress our industry has made and to inaccurately portray the facts about domestic ethanol production. Challenges to our industry will only continue to increase as the industry grows and evolve. So, too, must our resolve to press forward.

Now, for a much more cheerful subject: On behalf of the entire staff the Renewable Fuels Association, I wish you and yours a very happy, safe, and enjoyable holiday season!

Author: Bob Dinneen
President and CEO of the
Renewable Fuels Association
(202) 289-3835