GoodFuels

RFA testifies before CA Senate

Geoff Cooper, RFA’s director of research, testified yesterday before the California Senate Committee on Transportation and Housing.

Invited by the committee, Cooper talked about the California Air Resources Board’s (ARB) recent proposal for carbon reduction. In essence, ARB’s proposal saddles biofuels with the carbon footprint attributed to what is called “land-use change.” Land-use change is when land that has been used for a specific purpose are used for another purpose.

Pointing out that gasoline production was left out of the land-use consideration, Cooper said in his testimony that ARB has “failed to apply its rules across all fuel technologies.”

The science on land-use is uncertain, and blaming biofuels for the full brunt of these carbon emissions is irresponsible. It isn’t supported by fact and might lead to harm the development of the biofuels industry.

Click here to read Cooper’s testimonial in full.

Chasing Wild Geese

According to Dennis Avery of the Hudson Institute, ethanol could be the culprit behind the U.S. Airways flight that landed in the Hudson River last week.

If this is not a bird-brained theory, I don’t know what is.

Avery’s premise extends from a Time Magazine article that blames global warming for the incident, but he says, “Time reached the wrong conclusion. Research indicates we should blame the prosaic corn harvester-and perhaps our attempt to expand corn production for biofuels.”

He says that there has been a five-fold increase in the number of Canadian geese since 1970 because of the type of harvesting equipment used by corn farmers and because of the increase in corn acreage in the Northeast.

While he blames ethanol for the increase in geese, Avery’s solution to the problem of geese getting sucked into airplane engines is not reducing corn plantings or eliminating subsidies - it’s better bird-strike prevention and “more real goose research.”

This is irresponsible commentary and Good Fuels readers are urged to take Avery to task on it.

Comment on Avery’s article here.

Anti-Ethanol Group Loses Credibility

Secretary of Agriculture Ed Schafer says “almost nobody” is talking about the biofuels industry “going backward” - just a few notable exceptions like the Grocery Manufacturers Association and the governor of Texas.

Speaking to the media after a speech at the Cellulosic Ethanol Summit Wednesday, Schafer said the group that held a press conference yesterday calling for an end to ethanol subsidies “stood up there with no credibility whatsoever,” when they claimed that it will take 18-24 months for the lower commodity prices to bring food prices back down.

“I just think that they are totally off base,” Schafer said. “They’re trying to justify their corporate policy in increasing costs to the consumer by blaming it on somebody else - that’s just simply wrong.”

Schafer is especially concerned that the group is working against important public policy for energy independence. “Why would be they be against energy independence?” he asked. “They’re working against economic activity. Why would they be against economic activity?”

Why indeed. He thinks in the end they will get what they deserve, “which will likely be lower purchases of their products because of their increased prices.

I asked the secretary several other questions relating to the biofuels industry, including what he sees as the Bush administration legacy regarding biofuels, his trip this week to Brazil for an International Conference on Biofuels and whether an auto industry bailout might mean more flex fuel vehicles.

Listen to my Q&A with Schafer here:

Food Versus Fuel is Fallacy

An analyst with a major agricultural financial institution says “food versus fuel” is basically a misleading sound bite.

According to Karol Aure-Flynn, executive director of the Rabobank Food and Agribusiness Research and Advisory department, “The fallacy of the headline is that there is a direct competition between the two; that it’s either/or. The reality is that strong global economic growth has changed the demand equation for U.S. commodities.”

Aure-Flynn also noted in a recent Rabobank podcast that while prices at the farm level have increased this year, they have been outpaced by production costs for farmers.

“Farmers’ profitability doesn’t change retail prices. And farmers’ profitability isn’t guaranteed by high grain prices. The same factors that are lifting grain prices are lifting production costs,” said Aure-Flynn. “So, yes, the farm price index is at 162 percent of what it was 1990-1992, but at the same time the price index measuring what farmers pay — for services, farm wages — is 189 percent of base.”

Rabobank is a global financial services leader providing institutional and retail banking and agricultural finance solutions in key markets around the world.

Waiting for Word on Waiver

The ethanol industry is holding its collective breath today as the highly-anticipated decision by the Environmental Protection Agency on whether to grant a partial waiver of the Renewable Fuels Standard will be announced Thursday afternoon.

EPA Administrator Stephen Johnson and Principal Deputy Assistant Administrator Robert Meyers will hold a press conference at 1 pm eastern time to officially answer the request from Texas Governor Rick Perry to cut the RFS ethanol blending requirements by 50 percent.

According to the Houston Chronicle, Gov. Perry sent a letter to Johnson this week responding “to challenges to his request filed with the environmental agency after the public comment period ended July 23. Fifty-five pages accompanied the letter.”

In his letter, Perry acknowledged that corn, diesel and crude oil prices have “retreated” in the past month. But, he wrote, “the fundamental problems adversely affecting our well-being remain and could worsen when those prices begin to escalate again, as they probably will.”

“This view is contrary to what would seem to be conventional wisdom and as espoused by the proponents of the ethanol mandates who claim that ethanol is suppressing the price of gasoline at the pump. But it is true nonetheless.”

Gotta love that - contrary to conventional wisdom but true nonetheless - because two “experts” say so. But, as Mark Twain once said, truth is more of a stranger than fiction.

We await the decision of the judges.