NEW YORK: After decades of fighting to get more ethanol into U.S. cars, Big Oil is joining Big Agricultural in pushing for expanded use of corn-based biofuels.
Longtime adversaries are increasingly finding common ground as the growth of electric vehicles (EVs) threatens to reduce demand for gasoline.
Fossil fuel giants are also increasing investment in renewable fuels to win government incentives aimed at cutting emissions and curbing climate change.
“It's a different world today,” said Bruce Rastetter, founder of Summit Agricultural Group. “This is a game-changer where oil companies are working with the biofuels industry to decarbonize gas tanks.”
Most gasoline sold in the United States contains 10% ethanol, known as E10. However, it is generally prohibited to sell blends higher than 15% or E15 during the summer unless there is an exemption from the Environmental Protection Agency (EPA).
The American Petroleum Institute (API), the powerful oil lobby, has joined with the National Corn Growers Association and other groups to support Republican Sen. Deb Fischer of Nebraska's superpower to allow year-round sales of E15 across the United States. Supports partisan measures. The legislation would also maintain access to lower grade blends.
The collaboration is the largest ever between the two countries and is changing the face of energy lobbying on Capitol Hill as they fight for liquid renewable fuels.
“We have been working shoulder to shoulder on this,” said Will Hupman, API Vice President of Downstream Policy. “Historically, it's never been easy.”
U.S. oil producers have been at odds with farmers since the days of the Model T, when Henry Ford declared ethanol (the alcohol found in wine, beer and liquor) the fuel of the future. But oil magnate John D. Rockefeller and the Prohibition era set a different direction for the auto industry.
The U.S. government began encouraging the use of ethanol in the late 1970s after the oil crisis. At this time, President Jimmy Carter ordered agribusiness leaders to produce ethanol as a way to reduce dependence on oil.
Archer Daniels Midland began production in 1978. After the 2001 terrorist attacks heightened concerns about energy security, Congress enacted a mandate mandating the blending of ethanol and other biofuels into the nation's fuel supply each year.
This has sparked ongoing debate, with oil producers arguing that blending would increase refining costs, put union jobs at risk and increase gasoline prices.
It's also fueling conflicts over the pollution caused by summer driving. The federal Clean Air Act bans the sale of E15 in most parts of the United States from June through mid-September, when summer heat accelerates evaporation and increases the likelihood of smog from all gasoline. .
However, the rise of electric vehicles will curtail both liquid fuels and bring oil and agricultural groups closer together.
The Biden administration has set a goal of making half of U.S. car sales electric by the end of 2010. So far, electric vehicles have not had a significant impact on global fuel demand, but BloombergNEF estimates that oil consumption from EVs will increase to more than 20 million barrels per day by 2040.
Proponents of ethanol, such as U.S. Secretary of Agriculture Tom Vilsack, have promoted biofuels as a key weapon to help reduce carbon emissions, noting that it will take decades for U.S. passenger cars to become fully electric.
Corn growers say the administration's approach to climate change is “short-sighted” by prioritizing electric vehicles over biofuels, according to a statement released yesterday.
“If we are to tackle climate change and meet our climate goals, we will take a multipronged approach, including the use of higher levels of biofuels,” according to a letter sent to the president seen by Bloomberg News. “We're going to need to,” Joe Biden said yesterday. — Bloomberg
