Comments on EPA Proposed Rule for 2019 Biomass Volumes

by Jerry Jung

My name is Jerry Jung.  I reside in Birmingham, Michigan.  Three years ago I started a webpage entitled “RethinkEthanol.com.”  The webpage has a link to my resume’ outlining both my credentials and my motivation to comment on the proposed rule. 

I support the EPA’s decision to grant D6 RIN waivers to small refiners and also support applying D6 RIN credits for exported corn ethanol.  In light of the EPA’s acknowledgment of the environmental harm caused by the corn ethanol mandate, I also support lowering the 2019 Renewable Volume Obligation (RVO) for conventional biofuel.  In addition, the EPA should minimize the adverse impact of incremental corn production on biodiversity by banning the use of Bt corn for ethanol production.

In the last two years I have made twenty trips to Washington D.C. on the topic of ethanol mandates.  I have met with several dozen legislators, a score of trade and environmental associations, as well key administrative officials including former Administrator Pruitt.  Here in Michigan, I have met with farmers and conservation groups with a focus on the harm caused to the Great Lakes due to the additional nutrient loading associated with increased corn production.

The rationale to pass the Renewable Fuel Standard included a smorgasbord of admirable objectives, none of which have materialized.  These goals included an inexpensive way to increase the octane ratings of gasoline; a way to reduce reliance on foreign oil imports; a way to invigorate the farm economy; an environmentally friendly manner in which to reduce harmful emissions; and a renewable approach to energy production that would conserve existing resources.  Some supporters of the RFS also pointed to food security issues.   Many ethanol advocates still utilize these arguments, but the ten year history of ramped up corn ethanol production leaves little room to doubt that the initiative has failed and hurts many more than it helps.  The following comments address each of these lofty goals and why they have not only failed, but have indeed worsened the very situations they were intended to ameliorate.

Background: When ethanol is added to gasoline, its octane rating increases.  An increase in octane is not to be confused with an increase in power, as ethanol has less energy density than pure gasoline.  What ethanol does, like lead and MBTE before it, is to delay ignition with the result that engines operate at higher compression ratios.  This allows car manufacturers to utilize smaller engines.  Currently some car companies are lobbying for higher base octane ratings as a way to reduce costs, improve fuel efficiency and reduce emissions.

The results: Prior to the passage of RFS and the subsequent rapid ramp up in RVOs, the price differential between grades of gasoline was 10-20 cents.  Typically, if 87 octane gasoline sold for $2.00, 89 octane gasoline would sell for $2.10 and premium grade 91 octane gasoline would sell for $2.20.  Today the spread between regular gasoline and premium gasoline has increased (here in Michigan) from 20 cents pre-RFS, to 90 cents today ¹. The potential cost savings associated with smaller high compression engines has been more than offset by the increased cost of high octane fuel.

Another unintended consequence facing car manufacturers is the public outcry that cars are not achieving EPA mileage ratings.  Exacerbating this situation is the fact that the U.S. is exporting higher octane pure gasolines with greater energy density to Europe.  In Europe where pure gasoline is readily available ², ethanol blends have not been well received by motorists.  This has resulted in shortages of pure gasoline as well as a glut of ethanol blends ³.  The export of higher quality gasoline further lowers the average energy density of U.S. blends.  EPA fuel economy measurements are based on pure gasoline yet most motorists utilize an E10 blend.  This is a questionable practice that misleads the public because ethanol blends cannot deliver the fuel economy that pure gasoline does.

The promise:  The mandated production of corn ethanol will reduce dependence on foreign oil.   

The reality: Numerous studies indicate that it takes more fossil fuel to produce corn ethanol than it yields.  One Cornell study estimates that corn ethanol takes 40% more energy to produce than it yields, but most studies center on an input/output ratio of about one to one ⁴.   Even the U.S.D.A., an unabashed and misguided supporter of ethanol mandates, estimates energy output at only 10% more than the energy inputs ⁵.  The output increases if credit is given for the left over distillates fed to livestock, but studies indicate that this practice can sicken cattle and alter the taste and appearance of beef while shortening its shelf life ⁶.

Ethanol producers will tell you that it takes 28% as much energy to produce ethanol as it yields.  This is just the amount of fossil fuel consumed in the fermentation and distillation process.  It does not take into account the fuel consumed by agricultural tractors and trucks, as well as production of fertilizer and other agricultural inputs.

The net effect of corn ethanol mandates is that it dramatically increases domestic energy consumption.  If pure gasoline was consumed instead of the ethanol blends prevalent today, the total energy consumed by motorists would decrease significantly because of all the fossil fuel required to produce ethanol. 

The goal: Corn ethanol production will strengthen the domestic farm economy by expanding the market for corn and increasing its price.

The reality: When RVOs were dramatically increased just over a decade ago, corn prices spiked near $7 per bushel ⁷.   Therefore, in the short term, the promise of a better farm economy held true.  However, the beneficial economic effect for farmers was short lived.  A basic tenet of economics states that supply will increase as prices increase.  The production of 15 billion gallons of ethanol requires 40% of the total corn crop and 35 million acres of prime U.S. farmland—an area larger than most states ⁸.   About 8 million acres of this total has been identified by the National Wildlife Federation (NWF) as conversion from Conservation Reserve Program (CRP) acreage and from native prairie or forest.  The remaining 27 million acres has been diverted from growing food crops such as corn, soybeans or pasture.  Other countries have taken up this slack.  Whereas the U.S. has historically been the world leader in agricultural exports, Brazil now surpasses the U.S. in soybean exports and Russia surpasses us in terms of wheat exports ⁹.   Our ethanol policies have bolstered foreign competition for foodstuffs while weakening trade ties and expanding the national trade deficit.  Predictably, prices for corn have dropped to the same levels seen before the RFS ¹⁰  .

A March 2017 study by the Conservative Political Action Committee confirms that the farm economy has weakened during the past decade.  It is no wonder.  Ethanol is a low-value commodity.  A bushel of corn will produce 2.8 gallons of ethanol worth about $4.50 ¹¹.   The same corn, fed to poultry produces about $20 of value, and to cattle or pork, about $50 worth of value ¹² .   It is this value added chain that creates rural employment and economic diversity.  A couple of years ago, I sold some acreage near Coldwater Michigan to a pork processing facility owned by Clemens Food Group.  They currently employ about one thousand workers processing 10,000 hogs per day.  Compare this to a 70 million gallon annual capacity ethanol plant that employs about 30 people while utilizing twice as many bushels of corn as was fed to the processed hogs.

A recent motorcycle tour through Iowa confirmed the downsides to rural communities of what is essentially the industrialization of agriculture.  Very little long grass prairie is left in that state—about 3% of the original total ¹³.   While riding through the state, I noticed a large hand painted sign that read, “Family farms, not factory farms.”  One wonders whether this sentiment is related to the diminished sense of community and increasing levels of outside control exerted over the lives of rural families.   Farm profits have not increased in 15 years ¹⁴.   The backlash over industrial scale farming in Iowa is so intense that the state government passed a law banning corporate ownership of farms ¹⁵.  Outdoor recreational opportunities for farm families such as camping, hunting and fishing have been sharply curtailed as natural areas have been converted to farming.  Drinking water supplies have been contaminated by neo-nics and high nitrate concentrations ¹⁶.   The City of Des Moines, actually sued upstream agricultural districts in an effort to recoup increased treatment costs ¹⁷.

A typical acre of farmland might produce $50 of profits for the farmer.  That same acre typically requires about $300 of inputs such as seeds, fertilizer and pesticides ¹⁸.  Whereas crop prices are subject to worldwide competitive pressures, agricultural inputs are controlled by cartels and oligopolies who are the only winners under the RFS ¹⁹.   This situation has only been exacerbated by the recent acquisition of Monsanto by Bayer as well as the merger of DOW and DuPont.  Farmers are being squeezed between worldwide commodity markets and locally controlled input prices.  Agricultural input prices can be higher domestically than they are in competing countries where agricultural acreages have expanded dramatically since the ramp-up of ethanol mandates.

A popular political misconception is that the majority of Iowans support ethanol mandates.  Many times I have heard the comment, “We wouldn’t have this stupid policy if Iowa was not the first state to hold primaries.”  That may not be the case.  Two separate polls, one sponsored by a conservation organization and one by a political candidate found the majority of Iowans are opposed to ethanol mandates.  Recall that Senator Cruz, the one candidate that consistently opposed ethanol mandates, won the Republican Presidential primary in Iowa.   It is likely that the uncompromising support for ethanol mandates espoused by many politicians from Iowa is driven by some factor other than popular sentiment.

The sales pitch:  Ethanol is good for the environment. 

The outcome: As mentioned previously, mandated ethanol production requires 35 million acres of prime U.S. farmland, the majority of which has come from displacing food crops.  Because of the world-wide nature of agricultural commodity markets, foreign countries have taken up the slack, especially Brazil.  Few would argue that cutting down rainforests is good for the environment.  These forests have been called “the lungs of the earth” and contain astounding biodiversity ²⁰.   Conservatively, 20 million acres of rainforest, most of it in Brazil, has been converted to cropland due in part to U.S. ethanol mandates ²¹.   If each of these acres contained 500 tons of carbon sequestered in the form of biomass, then 10 billion tons of carbon (20,000,000 acres times 500 tons per acre) have been logged, cleared or burned and later the acreage planted into food crops once grown in the U.S.  To put this in perspective, the U.S. consumes less than 1 billion tons of coal per year ²².

The reduction of habitat has had a profound effect on biodiversity.  Of special concern are agricultural practices such as round-up ready corn that reduce weeds that many insects and birds depend upon.  Of even greater concern is the prevalence of Bt corn that produces bio-toxins that kill pests such as corn earworm but also indiscriminately kill all moth and butterfly caterpillars ²³.   Corn is a wind pollinated plant ²⁴.   An internal document that the Bio Innovation Organization shared with me states that Bt also effectively kills aquatic larvae such as mosquitos.    (I am sponsoring independent research to determine the extent to which the wind carries corn pollen and to study the concentrations of viable bio-toxic pollen that land on insect food sources as well as aquatic environments at various distances from corn fields.)  Monarch butterflies migrate from Mexico over the Corn Belt.  Their populations have plummeted 90% to 95% in recent years ²⁵. Dramatically increased corn production and widespread use of Bt corn (estimated at 80% of the total) ²⁶ have delivered a “one-two punch” to insect bio-diversity.  A German study recently yanked from the internet, pointed to an 80% reduction in insect biomass. The majority of birds eat insects as at least part of their diet ²⁷ not to mention amphibians, bats and reptiles ²⁸.

In the 1950’s and 1960’s, as DDT moved up the food chain, it threatened the survival of apex predators such as the bald eagle.  Today huge swaths of toxic corn threaten insects at the base of the food chain. Rachel Carson’s book, “Silent Spring” contributed to the ban of DDT in the United States, but DDT is still manufactured and used in developing countries ²⁹.  Whereas Bt corn has been banned in most European countries, Bayer still profits from its use in the United States ³⁰.  Who is the third world country now?   The transfer of genetic material between species is more common than previously thought ³¹. The exponential increases in the toxic Bt gene sequence as a result of its introduction into food crops increases the likelihood that it will enter the genome of wild plants.  This currently unfolding “Insect Armageddon” has the potential to impact the environment in a manner detrimental to humanity.  How it will ripple through the ecosystem is anybody’s guess.

Air quality is also an environmental concern with ethanol in gasoline.  As the ethanol blend wall increases, so do automotive exhaust emissions of NOx that synthesizes the creation of ozone—a serious health concern ³². Recognizing this years ago, Senator Feinstein introduced legislation aimed at limiting ethanol use in the nation’s fuel supply ³³.  Added to tailpipe emissions, are the extensive air emissions involved in the farming of incremental corn and the conversion of corn kernels to automotive ethanol.

Polling suggests that the biggest concern related to excessive agricultural production is water quality ³⁴.  The Des Moines lawsuit points to the potential impact on drinking water.  A recent University of Michigan study finds that 85% of nutrient overload in the western basin of Lake Erie is due to agricultural run-off ³⁵.   A few years ago, the City of Toledo was forced to shut down its water supply due to toxic algae in Lake Erie ³⁶.   Both Michigan and Ohio have strong agricultural components to their economies, yet the Governors from both states have declared the western basin of Lake Erie as impaired ³⁷.   During the peak months of August and September, green sludge covers many square miles of the Lake’s surface.   With warm temperatures and abundant rainfall washing fertilizers from farms this year, surface algae have returned earlier than normal ³⁸.   I have experienced this toxic sludge first hand while trying to fish.   Scientists have called for a 40% reduction in phosphorus in Lake Erie ³⁹.   Ironically, this is the same percentage of the corn crop dedicated to ethanol.  Millions of people rely on the Great Lakes for drinking water and recreation. ⁴⁰

Agricultural pollution is not limited to inland rivers and lakes.  Near the mouth of the Mississippi River an area the size of New Jersey will not support marine life due to depleted oxygen levels ⁴¹.

The extra production of fertilizer, herbicides and pesticides associated with increased corn production creates pollution not only when it is applied, but also when it is manufactured.  Here in Michigan the DNR advises against eating game shot in the Tittabawasse rivershed,⁴² home of a large DOW chemical plant that produces agricultural products.

The recent EPA report that ties environmental degradation to ethanol mandates is welcome news and is beyond reasonable dispute.

RFS selling point: Corn ethanol is sustainable and is a renewable source of energy that strengthens domestic energy independence.

Facts: Corn production as it is currently practiced is not sustainable in terms of water resources, soil health and phosphorus supplies.  And how can a practice that does not reduce the use of fossil fuels and effectively doubles energy consumption provide energy independence?

Let’s start with the consequences of irrigating non-food crops.  Of particular concern is the Ogallala Aquifer that underlays much of what used to be prime rangeland, but now is increasing given over to corn production.  This reservoir of clean water is being depleted at an alarming rate and according to a National Geographic article will take thousands of years to replenish⁴³.  With increasingly polluted rivers in the western part of the Corn Belt, it is unwise to subsidize the extraction of water upon which future generations will rely.

Years of intensive agriculture have reduced many farm soils to little more than mineral substrates that are infertile without fertilizers ⁴⁴.  The production of these fertilizers requires extensive amounts of fossil fuels that are by definition not renewable.

Phosphorous, one of the three principal components of fertilizer, is in short supply.  The U.S. Geological Survey estimates that only 25 years’ worth of reserves of phosphate rock is left in this country ⁴⁵.

Pitch:  The RFS will increase food security.

Results: A bushel of corn can produce 2.8 gallons of ethanol ⁴⁶.  The proposed EPA mandate for conventional biofuel is 15 billion gallons in 2019.  If history is any indication, about 98% of this total is will be from corn.  Therefore, well over 5 billion bushels of corn will be reserved for fuel before the remainder is made available to feed livestock and for other uses ⁴⁷.   The FIRST 40% of production is reserved for fuel and the SURPLUS for food.  This is outrageous logic that serves to exacerbate supply and price swings for food.  For instance, a 20% decline in total corn production, translates into a 30% decline in corn available for food.  The food industry is many times the size of the ethanol industry.  Drought impacted the corn crop in 2012 and prices rocketed up to over $7 per bushel ⁴⁸.  Although the EPA had the authority to reduce the RVO predicated on short supplies, they did not.  Does it make sense to affect millions of workers in the food industry; to slaughter poultry, hogs and cattle prematurely; and to drive up the price of food–a most basic human necessity, to protect the relatively tiny ethanol industry?  This policy has resulted in food riots in poor countries as they exported corn to the United States instead of feeding it to their people ⁴⁹.

Conclusion: The EPA should be applauded for taking steps to reduce Renewable Identification Number trading prices but more needs to be done.

RINs are in essence subsidies to ethanol producers funded by a covert tax on refiners, much of which is passed along to motorists.  The RIN market is very susceptible to market manipulation both from a regulatory perspective as well as by speculators.  If ethanol production falls short of the RVO, RIN pricing becomes very price inelastic.  Trading of RINs is veiled in secrecy.  As a result, Senator Carper among others have called for transparency ⁵⁰. 

In addition to utilizing refinery waivers, the EPA should apply RIN credits to exported ethanol.  This year ethanol exports have increased dramatically.  If RINs are not allowed to be separated from exported ethanol, then the likelihood of an RVO shortfall increases and RIN pricing has the potential to skyrocket.  This further threatens good paying productive jobs at refineries and in the food sector.

The most important step that the EPA should take is to lower the D6 RVO.  It has lowered RVO’s for other categories of bio-fuels so the precedence has been set.  The primary justification for doing so is the environmental damage caused by the RFS that has recently acknowledged by the EPA.  Under no circumstances should the RVO be higher than the previous year’s domestic supply of ethanol.

An additional step in line with the EPA’s mission to protect the environment would be to phase out the use of Bt corn.  It borders on insanity to allow wind pollinated plants to be genetically modified to spread bio-toxic pollen.

The EPA should also provide non-politically motivated scientific advice to legislators currently attempting to draft legislation addressing the RFS as well as the related issues of octane ratings and CAFE standards.  This scientific advice should be grounded in common sense and take into account the total environmental picture, not just tail pipe emissions or fuel economy.  The sentiment among many in Washington D.C. is that any change to the RFS must be acceptable to all parties.  Subsidized and mandated production of corn has too many economic and environmental downsides to be held hostage to special interest politics.