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Conservatives attack Republican effort to expand ethanol mandate

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Michael Bastasch Energy Editor

Conservatives are criticizing efforts by some House Republicans to expand the federal government’s ethanol mandate to include ethanol produced from natural gas.

While Republicans have been pushing for full repeal of the Renewable Fuel Standard, some have argued that until the mandate is actually repealed ethanol made from natural gas should be used to “crack” the monopoly corn ethanol has in meeting government targets.

“Unfortunately, the inescapable fact is that we do not have the votes right now for full repeal in the House or the Senate,” Melissa Kelly, spokeswoman for Texas Republican Rep. Pete Olson, told The Daily Caller News Foundation.  Olson has introduced a bill to expand the RFS to include ethanol made from natural gas.

“It cracks the monopoly that corn ethanol has been granted by the government by allowing cheap, abundant and domestic natural gas to be used in the mandate as well,” said Kelly.

Olson’s efforts have been backed by 10 Republicans who are cosponsoring his RFS expansion bill, but some skeptics of the renewables mandate say it makes the problem worse.

“There’s no redeeming quality to this piece of legislation,” said Thomas Pyle, president of the Institute for Energy Research, arguing that this move was another attempt to confer special government benefits on an industry. “That’s like throwing gasoline on a fire to try and put it out.”

“Rep. Olson deserves credit for supporting full repeal; however, he is unfortunately dividing his efforts by introducing legislation that actually expands the mandate,” wrote Phil Kerpen, president of the conservative group American Commitment. “The bottom line is that government should not be imposing mandates on the fuel supply, and as long as it does, we’ll face negative economic consequences. The RFS can’t be fixed by being expanded; it must be repealed.”

The RFS is administered by the Environmental Protection Agency, and came under heavy criticism after the agency refused to grant waivers to states that were suffering from severe drought last year.

Arkansas Democratic Gov. Mike Beebe was one of seven governors to ask the EPA for a waiver. Beebe told the agency in a letter that ethanol production was taking a “terrible toll” on animal agriculture in his state and would force consumers to pay more for food.

“We recognize that this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers,” said Gina McCarthy, assistant administrator for the EPA’s Office of Air and Radiation and President Obama’s nominee to head the entire agency. “But our extensive analysis makes clear that Congressional requirements for a waiver have not been met and that waiving the RFS will have little, if any, impact.”

Last year, 40 percent of the U.S. corn crop went into making ethanol, which critics argue pushed food prices higher, especially during the severe drought.

Industry has also attacked the RFS as unworkable. The American Petroleum Institute recently called on the Obama administration to issue waivers to help protect consumers and their vehicles.

“The ever-increasing ethanol mandate has become unsustainable, causing a looming crisis for gasoline consumers,” said Bob Greco, downstream group director at API. “We’re at the point where refiners are being pressured to put unsafe levels of ethanol in gasoline, which could damage vehicles, harm consumers, and wreak havoc on our economy.”

Earlier this year, it was reported that renewable fuel credits were skyrocketing, indicating that the refining industry was hitting the “blend wall” — the maximum amount of ethanol that can be safely blended into the fuel supply. Bloomberg reported in March that refiners will fall 400 million gallons short the 13.8 billion gallon ethanol blending mandate.

“So until a full repeal is possible, Olson is trying to lessen the damage from the RFS by increasing the sources of ethanol eligible under the RFS,” Kelly told The Daily Caller News Foundation. “Rep. Olson’s bill is not the solution to the RFS. It’s merely a short-term attempt to bring some relief to industry and consumers who are saddled by the constraints of the RFS mandate.”

However, the blend wall problem isn’t created by an ethanol shortage. There is not enough gasoline to safely blend ethanol into to meet government blending targets. Consequently, some argue that more ethanol should be allowed to be blended into the fuel supply in order to avert the blend wall.

According to a report by NERA Economic Consulting, the RFS could drive up the price of diesel fuel by 300 percent and raise the price of gasoline by 30 percent.

“Congress must repeal the mandate,” Greco added. “But there isn’t much time to get this done. To protect consumers in the near term, EPA has the authority to reduce the mandate now. This would immediately lessen the blend wall problem until Congress can act.”

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