Ex-Sen. Talent Revs Up Fight Over Whether Ethanol Must Be Added To Fuel

Springfield News - Leader 

Oct 10, 2015

By Deidre Shesgreen

WASHINGTON — Former Missouri Sen. Jim Talent has joined a pitched battle to protect the ethanol industry from a two-pronged political attack in Washington, a showdown that pits Show-Me State farmers against an array of powerful interest groups.

At issue are federal rules requiring ethanol and other alternative fuels to be added to America’s gasoline supply, which has been a boon to corn farmers in Missouri and other Midwestern states.

But the ethanol mandates, which are supposed to increase every year under a 2005 law that Talent helped craft, are a bane to the oil industry, which is committed to killing the requirements.

The fight has scrambled the usual party lines in Washington, where oil and gas lobbyists have aligned with environmental advocates, hunger activists and fiscal watchdog groups in an effort to repeal or gut the 2005 requirements. On the other side, the powerful farm lobby and the biofuel industry are working with Midwestern lawmakers to preserve the so-called Renewable Fuel Standard (RFS).

Sens. Roy Blunt, R-Mo., and Claire McCaskill, D-Mo., have repeatedly badgered the Environmental Protection Agency to ramp up its implementation of the RFS, saying the agency has been too slow and lax in setting targets.

Talent, a Missouri Republican who served in Congress for 11 years before losing re-election in 2006, entered the fray last week, when he helped launch a new advocacy group called Americans for Energy Security and Innovation. Talent said the group is funded by biofuel companies and investors, but he declined to provide any more detail.

“We’re not hiding the fact that these are biofuel (firms)” that have an economic stake in the issue, Talent said. But he said the new group, organized as a nonprofit under the IRS code, is not required to disclose its members or its funding.

The biofuel industry approached him, he said, because “they knew it was kind of my baby.” The new group will run TV ads and try to mobilize supporters, Talent said, with the goal of shaping public opinion and influencing the political debate.

Congress created the Renewable Fuel Standard in 2005 and then expanded it in 2007, as part of a broader effort to curb greenhouse gas emissions and reduce America’s reliance on imported oil. The law requires specific quantities of alternative fuels — such as ethanol — to be blended into fuel for cars, trucks and other vehicles. The EPA is charged with crafting the exact RFS, with the agency setting annual hikes in the amount of alternative fuels added to regular gasoline.

Supporters of the RFS say it has sparked innovation and job creation in the biofuel industry, reduced greenhouse gas pollution and scaled back U.S. dependence on foreign oil.

“We think consumers benefit, our farmers benefit, and our economy as a whole benefits by keeping (fuel-related jobs) in the United States instead of exporting them to countries that don’t like us very much,”said Gary Marshall, CEO for the Missouri Corn Growers Association.

Missouri is the 10th top corn producing state in the country, growing 500 million bushels a year. And the state ranks 12th in ethanol production capacity, with six facilities that turn corn and other grains into ethanol.

“It’s had the effect of strengthening family farms and without price supports,” Talent said.

But critics say the ethanol requirements are a sop to the agriculture industry that skew the free market and do not help the environment.

“This is the government using corporate welfare to shower money on a favored industry and then send the bill to the general public,” Sen. Pat Toomey, R-Pa., said in February, when he unveiled legislation to repeal the corn ethanol provision in the RFS.

He was joined by Sen. Dianne Feinstein, a California Democrat, who said the ethanol requirement drives up the cost of food and gas, damages car engines and hurts the environment.

“If the mandate continues to expand toward full implementation, the price of corn will increase,” Feinstein said. “Americans living on the margins simply can’t afford that.”

That bill has attracted the support of a strange-bedfellows list of interest groups — from the American Petroleum Institute, the oil and gas industry’s lobby arm, to Friends of the Earth, a liberal environmental group. The oil industry says the current fuel-supply infrastructure can’t handle increasing amounts of ethanol. Environmental groups say ethanol has turned out to be as harmful as, or more hamful than gasoline, in terms of greenhouse gas emissions, land use and farm runoff.

“There are few things worse for the environment than gasoline, but corn ethanol is one of them,” Emily Cassidy, a research analyst at the Environmental Working Group, an advocacy group, said earlier this year when the EPA unveiled its latest renewable fuel targets.

Those targets were a small victory for opponents of the standards, because the EPA lowered the amount of ethanol required to be added to gasoline, saying the targets set by Congress were no longer realistic given changes in production and consumption.

In a rule that will be finalized next month, the EPA called for requiring refiners to blend 17.4 billion gallons of renewable fuels in 2016, much of it from corn, but 3.4 billion gallons would come from advanced biofuels such as cellulosic ethanol made from grasses and wood chips. The figure was well below the 22.3 billion target set by Congress. EPA officials also proposed 16.3 billion gallons for the current year, less than the 20.5 billion set by Congress.

Blunt and others have objected to EPA’s move, accusing the agency of sidestepping Congress’ intent and creating uncertainty in the biofuels market. EPA officials say they have the legal authority to lower the numbers Congress intended, noting, among other things, that higher-ethanol blends such as E15 and E85 have not been widely accepted.

The oil industry hailed the EPA’s decision, saying the vast majority of cars and trucks on the road today can’t handle fuel with higher concentrations of ethanol than what is already available today — 10 percent ethanol and 90 percent gasoline.

“That’s what we call the blend wall,” said Bob Greco, a top official at the American Petroleum Institute.

But Moore, the Missouri Corn Growers Association’s CEO, said the blend wall is a fiction that “exists only in the minds of the oil industry.”

He said the real reason they have objected to more ethanol is because it will cut demand for gasoline.

“You’re trying to take 10 percent of the market, or more now, from the wealthiest, most influential business in the world,” he said. “So obviously that creates problems.”

He and others are fighting the EPA’s decision. Lower demand for ethanol will cause corn prices to drop, Moore said, dealing an economic blow to farmers in Missouri and other big corn-producing states.

Talent said the fuel standards are “under attack” by both the Obama administration and in Congress, prompting the need for the new group, Americans for Energy Security and Innovation. Talent, who is also a military expert with the American Enterprise Institute, said he will not register to lobby on the RFS. And he declined to outline the group’s specific plans, saying more details would be coming soon.

But Talent clearly plans to use his conservative credentials and his political savvy to sway the debate, and he said he would be specifically trying to counter the idea that the ethanol mandates amount to government favoritism for a special industry.

“The purpose of the RFS was not to create a market so much, but to protect the market that was already developing against manipulation by the oil cartel, so they couldn’t strangle it before it had a chance to grow,” Talent said. “That’s a message that will resonate I hope and believe with conservatives.”

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