Why an ethanol advocacy group supports a clean fuels policy

The Midwestern Clean Fuels Policy Initiative, facilitated by the Great Plains Institute (GPI), recently released a report detailing how a successful clean fuels policy should be designed. The initiative brings together fuel producers and marketers, nonprofit and research organizations, scientists and engineers, and agriculture and industry stakeholders.

The American Coalition for Ethanol (ACE), a grassroots organization advocating for ethanol, headquartered in Sioux Falls, South Dakota, served as a co-convener and co-funder of this initiative. The following is a Q&A with ACE CEO Brian Jennings explaining the value of a clean fuels policy from the perspective of the ethanol industry.

The American Coalition for Ethanol has been a primary supporter of the Midwest Clean Fuels Initiative. How did that come about?

ACE- Brian JenningsThe discussion between GPI and our organization really started after ACE issued our white paper dissecting the Greenhouse gases, Regulated Emissions, and Energy use in Transportation (GREET) model back in 2018, comparing how California does lifecycle analysis to how the most recent GREET model does lifecycle analyses for corn ethanol. We said, look, these clean fuels policies make sense because they drive value in the marketplace and create demand for ethanol, but the modeling has to be right and maybe there are opportunities to do this differently than California has done.

Brendan Jordan, [GPI vice president, transportation and fuels] picks up the phone and says, “I’ve read the white paper, I think you guys are on to something. I’ve been thinking we need to see if there is interest for a Midwestern Clean Fuel Standard, do you want to take part in that?” We didn’t hesitate; we said yes.

GPI led a series of conversations, which we helped organize, with 30 to 40 stakeholders over the course of 20 months in 2018 and 2019. That led to a second white paper released in January [A Clean Fuels Policy for the Midwest, January 7, 2020] that provides the guidance and framework for governors and state legislators in the Midwest on what a clean fuels policy could look like and why it’s important for the various stakeholders interested in it.

The biofuels industry is definitely a stakeholder. Why does ACE support this proposal?

The reason ACE members support it is that carbon is a way to drive value for ethanol in marketplaces. Compare what is going on in California with the national Renewable Fuel Standard (RFS). With the RFS being mismanaged by the U.S. EPA and all these refiners escaping their blending obligation, there is no RIN value. [Renewable identification numbers are purchased by obligated parties to demonstrate compliance with the RFS blending requirements.] There is nothing to incentivize higher blending.

In California, the opposite has been happening. Before coronavirus, prices were setting new highs in terms of credit value almost on a weekly basis. Carbon credits fetch almost two cents a gallon per point of carbon intensity reduction for an ethanol plant. That can generate some nice revenue for plants, if they can reduce their carbon intensity and sell into the California market.

We’d like to replicate that in the Midwest, while improving upon some of the problems we see with the California program. A clean fuels program would drive value into the market so ethanol producers can make money by reducing their carbon intensity, and farmers can make money for their carbon sequestration efforts. And, obviously, increase demand for ethanol.

A clean fuels policy would incentivize other fuels and electric vehicles. Is ethanol supporting that?

If you look at the future through a clean fuels lens, the electric vehicle is our friend. The data from every number cruncher would indicate electric vehicles are not going to take over tomorrow, nor in 10 or 20 years from now. Widespread saturation of electric vehicles in the marketplaces is decades away. The natural transition to that point in time is lower-carbon liquid transportation fuels where ethanol and biodiesel can play such an important role.

To me, the approach we have to take is to work with the environmental groups who want to see greenhouse gas reductions and carbon sequestration on farms and work with those pushing for electric vehicles. We in the ethanol industry need to recognize we have so much more in common with those groups than differences.

That’s been one of the most encouraging aspects of working on the Midwestern Clean Fuels Policy Initiative with the Great Plains Institute—its credibility and ability to bring so many diverse stakeholders to the table and help us appreciate what we have in common. We don’t have any legislation moving yet in a Midwestern state, but I hope we can continue to build upon this work and see that happen within the next year or two.

 

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