Gulf Oil Spill Spawns Biofuels Industry Opportunism

With cries of "Till, Baby, Till!" the biofuels industry is seizing on the Gulf oil disaster to highlight the differences between traditional fossil fuels and a safer ethanol alternative. But to some environmentalists, the effort smacks of opportunism that masks many thorny issues swirling around the nation's commitment to corn-based biofuels.

The anti-oil chant that filled the hall of a biofuels conference this week ignored corn ethanol's own contribution to Gulf pollution and the fact that ethanol subsidies end up in the pockets of some of those same big oil companies whose rigs sit precariously out at sea.

The president of the Renewable Fuels Assocation, or RFA, Bob Dinneen wrote a letter to President Obama on Wednesday calling for approval of increased ethanol blends.

"The juxtaposition of a green American farm field and the copper-toned oil slick spreading across the Gulf is striking," he wrote.

The only problem, according to Craig Cox of the Environmental Working Group, is that the corn ethanol industry has contributed substantially to its own version of Gulf pollution.

"The RFA statement used the tragedy essentially as a marketing tool, which we thought was offensive," Cox said. A large ‘dead zone’ exists in the Gulf that has been attributed to runoff of nitrogen-based fertilizers and sediment, largely coming from the Corn Belt region.

"It seems more than a little disingenuous to point to the tragedy and environmental destruction as a reason to support a fuel ‘alternative’ that has been implicated in contributing to the dead zone."

Extend ethanol subsidy?

The RFA wants the EPA to grant a full waiver for the use of 15 percent ethanol blends—up from 10 percent—a decision the agency has delayed until the summer. And although it is not mentioned in the letter, the RFA also is lobbying to extend the Volumetric Ethanol Excise Tax Credit, or VEETC. The credit, which pays ethanol blenders—which are often large oil companies—45 cents for every gallon produced, is set to expire at the end of 2010 unless Congress extends it.

"Even before the disaster in the Gulf, there was some reluctance to pay the oil companies $5 billion to follow the law, and I think there is even less appetite for it now," said Brendan Bell, a federal policy analyst with the Union of Concerned Scientists. "[The VEETC] is a tax credit that doesn’t make sense. We have the renewable fuel standard that mandates the purchase of biofuels in this country, so we don’t have to pay the oil industry $5 billion, which is what it would cost to extend it for a single year."

Although the corn ethanol lobby is well positioned to convince Congress to extend the credit, there is a growing list of groups who oppose its extension.

"We’re certainly working hard to make sure that it doesn’t get extended," Bell said. "Everyone from UCS to Oxfam to the Grocery Manufacturers Association, there is a whole range of groups that really are urging Congress to not extend the tax credit and to let it expire at the end of the year. It’s just a recognition that it is really expensive and it doesn’t make sense."

Bell said that some of the billions of dollars spent on ethanol credits would be better served going to advanced biofuel sources. Unlike the corn ethanol industry, the newer fuels cannot yet stand on their own without government help.

"For better or for worse, we have succeeded in launching the corn ethanol industry in this country," he said. "It is a mature industry, and it needs to survive on its own. Let’s start moving our money toward investment in advanced biofuels that have low greenhouse gas emissions, that are sustainable, and that can really be a solution to our dependence on oil."

Fuel efficiency

To Cox, though, even turning from corn ethanol to advanced fuels isn’t a good enough answer.

"The promise of advanced biofuels still remains only that," he said. "We’ve got our transportation fuel strategy turned on its head. Instead of so much hope and hype associated with biofuels, we seem to be overlooking the fact that we could make much faster and deeper and real progress if we focused on efficiency."

According to a UCS analysis, the institution of several policies including fuel economy standards for cars and trucks could cut oil consumption by 7.3 million barrels a day by 2030. In 2008, the U.S. consumed 19.5 million barrels per day.

The Obama Administration has already made a start on fuel efficiency improvements, when the EPA and Department of Transportation established federal rules that will require vehicles to average 35.5 miles per gallon by 2016. UCS has called for that number to increase to 42 mpg by 2020 and to 55 mpg by 2030.

Meanwhile, Obama also has made an early effort to roll back some existing subsidies for fossil fuels. His 2011 budget proposal would remove credits for some of the revenue from oil wells and coal deposits, but that most likely faces a fight in Congress. The Gulf oil spill, clearly becoming a talking point for almost every angle in the energy conversation, might play a role there as well.

"Our culture responds to crises, and this is a crisis,” Bell said “It reminds people of the consequences of our dependence on oil, and what we’re saying is we have the technology and the resources to do something about that."

See also:

Will the Oil Reach Washington? The Spill's Political Effects

Gulf Oil Spill Just Latest Black Mark on BP's Reputation in America

Will Extending the Ethanol Tax Credit Slow Progress Toward Advanced Biofuels?

(Photos via Wikimedia Commons and USDA)

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