Battle for the Barrel: Ethanol strikes back as industry is “under siege but fighting back.”

| February 7, 2013

coppola-dinneenIn a fiery address at the National Ethanol Conference, RFA chief Bob Dinneen rallies his troops.

Patton would have been proud.

It might have been Patton, or it might have been The Godfather — but Renewable Fuels Association CEO Bob Dinneen appears to have definitely been channeling Francis Ford Coppola in a fiery keynote address yesterday at the National Ethanol Conference.

Or, it might have been Apocalypse Now — because he seemed to be relishing the smell of napalm in the morning (presumably biobased) as he readied the industry for a year of battle over the RFS, E15 and what he termed “protectionist policies” in the EU and Brazil.

Go to the mattresses

For sure, it’s time to “go to the mattresses” and bring out “the wartime consigliere” — that’s the Digest’s Godfather-esque takeaway on Dinneen’s annual state of the industry address.

He derided industry opponents as “the angry birds at the National Chicken Council, the mad cows at the American Meat Institute, and the big spending oil companies,” as he reminded delegates that the industry’s adversaries were not targeting RFS because it had failed, but rather because it had succeeded as designed.

pattonBut, perhaps, he was more Pattonesque.

He called it the upcoming war over the RFS and ethanol as “the Battle of the Barrel,” and it was as sharply put and stark as an address to the troops from Patton — all that was missing was the three-starred helmet, a giant American flag in the background and the pearl-handled sidearm.

Addressing 1,100 participants in the National Ethanol Conference in Las Vegas, Dinneen said, “The state of the ethanol industry can be summed up in five words: under siege and fighting back.”

“The stakes are high; our adversaries are well-funded; and our challenges are legion,” Dinneen added as he stirred up the delegates for a three-front war that he described as:

· Defending the major federal program for ethanol production, the Renewable Fuel Standard (RFS);
· Promoting motor fuels consisting of 15 percent blends of ethanol with gasoline (E15); and
· Opening new markets for American ethanol overseas, while opposing protectionist policies in Brazil and the European Union (EU).

Ethanol in 2012 by the numbers

Reviewing a year of falling gasoline demand, a killing US drought, and regulatory and commercial opposition to E15 — Dinneen reported that the U.S. ethanol industry “produced 13.3 billion gallons of high-quality, high-octane biofuels, representing 9.7 percent of the nation’s motor fuel and marketed in every state, from coast to coast and border to border.”

In spite of all the challenges during 2012, the RFA leader reported that the U.S. ethanol industry supported 87,000 direct jobs and 295,000 indirect and induced jobs, while adding $43 billion to the GDP, providing $30 billion in household income to families, saving consumers between 78¢ and $1.09 per gallon, or about $1,200 per family, and reducing greenhouse gas emissions by 48 to 60 percent compared directly to gasoline.

In the process, ethanol displaced 485 million barrels of imported oil, helping to reduce US dependence on imports from more than 60 percent in 2005 to only 41 percent in 2012.

RFS giveth, RFS taketh away

In a fiery attack on Brazilian imports, Dinneen charged that “Brazil promotes its own production with favorable tax treatment and subsidies for ethanol transportation, storage and export” while the EPA is weakening American ethanol’s position in U.S. markets by “assigning specious land use change penalties to U.S. production.”

Dinneen was highlighting the problems with staving off Brazilian imports – where Brazilian sugarcane qualifies for higher-value Advanced Biofuels RIN credits, but US corn ethanol does not.

The result, Dinneen said, is that “Without Uncle Sam’s federal finger on the scales, U.S. produced ethanol is the lowest cost ethanol in the world. Without that RIN credit Brazilian ethanol could not compete. With it, Brazilian ethanol is cannibalizing our market and displacing U.S. product. The inevitable consequences are catastrophic: Our plants are shuttering. Our workers are losing their jobs. And the continued evolution of our industry is stymied. This must end. ”

Promoting E15

Turning to efforts to promote E15, Dinneen will reported that the first E15 stations opened during 2012. Meanwhile, RFA has developed a Model Mitigation Plan approved by the EPA, as well as a retail advisory handbook, to guide gasoline marketers across the country in the proper labeling, documentation, distribution, dispensing and sale of E15.

New markets

While criticizing the RFA’s actions against “Europe’s foolish effort to limit ethanol produced from what they call ‘food feedstocks,” Dinneen warned that “Ultimately, we’ll need to open new markets in the Pacific Rim, India, China and anywhere in the world consumers are looking for clean-burning, high-performance, renewable motor fuels.”

Next step: cellulosic biofuels

Expressing optimism for the future of American biofuels, Dinneen declared: “The nay-sayers keep writing obituaries for cellulosic ethanol. But the real news is that, in 2012, the first commercial cellulose plant was completed and several others began construction. Ineos in Florida is producing cellulosic ethanol today. From Abengoa in Kansas to ZeaChem in Oregon, the future of the ethanol industry can now be seen.”

The full text of the speech as prepared can be read here.

 

 



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