Indiana's ethanol producers warned on Thursday that their industry could face a long-lasting "chilling effect" if the federal government lowers the amount of ethanol blended into the U.S. fuel supply.
The U.S. Environmental Protection Agency must announce by Monday draft oil industry rules spelling out specific renewable fuel volumes that must be blended into the nation's gasoline supply during 2016. Those fuel volumes are called for under the Renewable Fuel Standard, which Congress created in 2005 to expand ethanol and biodiesel markets in the U.S.
Indiana Ethanol Producers Association secretary-treasurer Dave Hudak said during a Thursday conference call on the upcoming announcement that if the EPA cuts the amount of ethanol in the nation's gas supply, it would affect thousands of Indiana farmers whose corn has found a place in the ethanol industry.
Indiana ranks fourth in the nation in ethanol production, behind Iowa, Nebraska and Illinois. The state's 14 ethanol plants produced 998 million gallons of ethanol last year, according to the Indiana Corn Marketing Council.
Hudak said that industry has created and supported more than 25,000 Indiana jobs and a multibillion dollar state industry that could be harmed depending on the EPA's actions.
He said the nation's ethanol industry is worried that oil companies have lobbied the EPA to lower the amounts of ethanol required in the nation's fuel supply.
"The EPA now faces a crucial decision — set usage goals based on biofuels' availability as the Renewable Fuel Standard language demands or cut back on biofuel use based on the arguments of the oil industry," Hudak said.
A bipartisan group of dozens of U.S. senators, including Indiana Sens. Dan Coats and Joe Donnelly, recently sent the EPA a letter supporting the federal requirement that resulted in about 10 percent of fuel in the U.S. containing ethanol last year.
"Biofuels like ethanol are renewable domestic energy sources, create more economic opportunities, and give consumers more options at the gas pump," Donnelly said in a statement.
Patrick Pfingsten, a spokesman for the Indiana Corn Marketing Council, said the group represents thousands of Indiana grain farmers who sell their corn to the state's 14 ethanol plants, which turn that grain into the fuel. Those plants purchase more than 366 million bushels of corn annually, he said.
"That adds to the bottom lines of thousands of Indiana farm families. That's real money that comes back into the local economies," Pfingsten said.
If the EPA lowers the ethanol requirement, he said that "will mean not only hardship for corn farmers but it will also have a chilling effect on the future of biofuels in the state."
Ted McKinney, the director of the Indiana State Department of Agriculture, said the ethanol industry is "a bona fide way" to boost Indiana's rural communities because the overall renewable fuels industry is likely to grow in the decades ahead.
"Right now it's kernels of corn, but as we look to the future who knows where science and technology can take us?" he said.