Vilsack: RFS2 vital to ethanol’s future

Federal incentives for next-generation ethanol development hinge on congressional budget priorities

Martin Ross

Published: Mar 4, 2012

Federal incentives for next-generation ethanol development hinge on congressional budget priorities. The success of new ethanol blends hinges in part on defeating opposition from biofuels critics.

But the ethanol industry’s future itself hinges on the nation’s biofuels commitment under the federal Renewable Fuel Standard (RFS2), according to Ag Secretary Tom Vilsack.

The standard mandates 36 billion gallons of annual biofuels use by 2020. The U.S. Environmental Protection Agency has set a 15.2-billion-gallon renewable fuels target for 2012, including 8.65 million gallons of cellulosic ethanol and 1 billion gallons of biodiesel and other renewable diesel fuels beyond existing corn-based ethanol.

The ethanol sector is counting on the RFS2 to provide demand stability amid uncertain energy prices and elimination of the federal ethanol tax credit. Biodiesel interests continue to push both retroactive extension of the expired biodiesel credit and higher RFS2 volumes in 2013.

Midwest interests have lobbied for inclusion of sorghum-based ethanol in RFS2 requirements. RFS2-driven demand is expected to fuel development of cellulosic ethanol.

Vilsack argues the RFS2 and its long-term goals are “important to the security of this country,” in terms of reducing oil imports from unstable or hostile regions.

“Make no mistake: Just because (the RFS2) is in the law doesn’t mean it will always be in the law,” he warned.

“Because of the extraordinary work that you’ve done over the last several decades to grow and expand this industry, you’ve gotten the attention of the oil industry, no question.

“Now, there are very interesting and subtle ways folks are beginning to talk about the Renewable Fuels Standard: Do we need it? Should it be changed? Should it be expanded?”

A cellulosic ethanol tax credit remains in force through Dec. 31, USDA has created five “virtual research centers” to help identify new feedstock opportunities and improve production, and 2008 farm bill programs have enabled USDA to grant hundreds of millions in loan guarantees for biorefineries.

In addition, Vilsack said USDA has identified 50,000 acres across nine project areas where non-food crops can be raised “to supplement corn-based ethanol.” But the 2012 farm bill faces major spending cuts possibly targeting energy programs.

Vilsack noted inclusion of biofuels in President Obama’s newly unveiled “all-of-the-above” energy strategy. In a speech detailing the plan, Obama noted use of “clean, renewable energy” has nearly doubled over the last 16 years, “and thousands of Americans have jobs because of it.”

However, Vilsack was uncertain whether the White House’s energy push will translate to congressional energy funding, given Washington’s current political environment. While he finds House and Senate ag committees “relatively bipartisan,” he sees deep divisions on the Hill.

“I don’t know what (House Ag Chairman) Frank Lucas and (Senate Ag Chairman) Debbie Stabenow can do -- whether they can sprinkle fairy dust across the Capitol to make whatever they did occur across Congress,” Vilsack told FarmWeek.

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