CHAMPAIGN — Agriculture industry observers are closely waiting for new Environmental Protection Agency rules to be released for 2014 that could shape the future of the alternative fuels market.
The EPA is dealing with regulations that created a blend wall for biofuel production, or the mandated amount that needs to be produced and blended into gasoline, said Scott Irwin, an agricultural economist at the University of Illinois.
Irwin was among the speakers Wednesday at a Farmland Markets profitability and future perspectives conference in Champaign organized by Decatur-based AgEngage and the newly established TIAA-CREF Center for Farmland Research at the university.
“Everyone associated with biofuels and grain markets is a loser to some degree,” Irwin said. “They’ve taken imaginative and creative logic in order to justify the new rules.”
The possible changes would represent a U-turn in federal policy about biofuels, Irwin said.
Biodiesel production, which was once projected to surpass 2 billion gallons a year by 2015, could dip below 1 billion gallons if the new rules are implemented, Irwin said. Corn ethanol comes out the best, he said.
“The policy goal was clearly there, and now we’re changing them,” Irwin said. “Why? I don’t have a good answer for that.”
Cellulosic ethanol production has already failed to reach the volume levels forecasted when Renewable Fuels Standard requirements were implemented, Irwin said. Cellulosic, which comes from nonfood crop sources, was at first projected to reach 1 billion gallons of production but Irwin said in 2013 only 6 million gallons will be produced, representing a huge gap.
The blend wall and cellulosic issues are at the heart of all debates about the Renewable Fuels Standard, Irwin said. The outcome of the debate about renewable fuels could be more important than the Farm Bill for Midwest grain farmers as it affects the prices of corn and soybeans, he said.
The Farm Bill continues to face a tough run through Congress, said Jonathan Coppess, a University of Illinois agricultural specialist who until recently worked on the staff of U.S. Sen. Debbie Stabenow, D-Michigan, chairwoman of the Senate Agriculture Committee.
The Farm Bill debate has been dominated by budget cuts and spending, Coppess said.
The House and Senate are supposed to be meeting to see if a version of the Farm Bill can be agreed upon, Coppess said.
“We’re still waiting on whether that process can be completed and a Farm Bill done,” Coppess said. “They’re real close on the matter of spending except for SNAP.”
Members of the House want to change eligibility requirements for the SNAP program, which provides food stamps. Doing so, Coppess said, makes it difficult to compromise on the issue.