Both houses have passed a national energy measure that includes a renewable fuels standard (RFS), but RFS proponents say the battle is far from won. Although the Bush administration is singing from the same page as the champions of “biofuels” — Secretary of Energy Spencer Abraham earlier this summer reaffirmed the administration’s support — fears remain that RFS provisions will be short-changed, under-funded or even eliminated in the appropriations process.

The energy package, in any case, will have to be considered amid other debates over other issues.

“Trade, energy and appropriations are three issue that will have big play in September,” administration spokeswoman Candida Woolf told a group of corn growers attending the National Corn Growers Association Corn Congress on Capitol Hill in July.

In the meantime, with the fates of RFS and ethanol/biodiesel fuels so interlocked, grain production groups are still trying to fight back “bad press.” The closer legally mandated fuel standards come to reality, they say, the more determined opponents are. For the most part, they are mostly lawmakers and others from congested urban areas that would be most affected by fuel standards.

In the face of studies and reports to the contrary, the opposition continues to insist ethanol production is counter-productive — or that it requires more energy to produce biofuels than the renewable energy it provides

USDA says it’s not so. USDA recently announced the results of its new study that confirms the energy efficiency of ethanol. The study also says ethanol has a positive role in reducing U.S. dependence on imported oil.

“This new research shows that ethanol is a valuable energy source,” said Agriculture Secretary Ann M. Veneman. “This report supports President Bush’s energy policy, which calls for additional renewable sources of energy.”

The report, “The Energy Balance of Corn Ethanol: An Update,” published by USDA’s Office of the Chief Economist, concludes that ethanol production is energy efficient because it yields 34 percent more energy than is used in growing and harvesting the corn and distilling it into ethanol.

Ethanol is also produced from grain sorghum and other grains. It may even be processed from sawdust. Biodiesel fuel is processed from soybeans,

The USDA report, which is available at http://www.usda.gov/oce, concludes that the net energy value of corn ethanol has become positive in recent years due to technological advances in ethanol conversion and increased efficiency in farm production. Ethanol produces much more energy than it consumes when compared to other products such as petroleum, the report says.

Moreover, ethanol production uses currently over-stocked domestic supplies of energy to convert corn into a premium liquid fuel that can displace petroleum imports.

Ethanol production has grown in the United States from a few million gallons in the late 1970s to about 1.8 billion gallons in 2001, spurred by national energy security concerns, new federal gasoline standards, and government incentives.

The increase in ethanol production has stimulated the U.S. agricultural economy because most ethanol is made from farm-grown commodities.

The boost in ethanol demand has created a significant new market for corn, according to the report. USDA says today’s higher corn yields, lower energy use per unit of output in the fertilizer industry. Advances in fuel conversion technologies have also greatly enhanced the economic and technical feasibility of producing ethanol.

Studies using older data, ethanol boosters say, tend to overestimate energy use because the efficiency of growing corn and converting it to ethanol has improved significantly over the past 20 years.

“A renewable fuels standard would reduce our dependence on foreign oil, improve our trade deficit, boost farm income, create new opportunities for rural businesses and reduce farm program costs,” said NCGA CEO Rick Tolman.

A recent analysis by John Urbanchuk of AUS Consultants shows implementing the RFS would lead to the annual use of 7.6 billion gallons of ethanol by 2016.

“That level of ethanol use could reduce crude oil imports by 2.9 billion barrels by 2016, an average of 302 million barrels annually,” said Tolman. “That equates to approximately one oil supertanker a day for the next 15 years.”

The reductions in imports, he says, would lower America's dependence on imported oil to 65 percent compared to the 70 percent currently projected by the U.S. Department of Energy in 2016.”

Other benefits of an RFS include:

  • A decrease in oil imports can reduce the U.S. trade deficit by $63.4 billion.
  • Would create 300,000 new American jobs.
  • Increase U.S. household income by $71 billion.
  • Use 2.5 billion bushels of corn for ethanol production by 2016. Current U.S. corn production is 9.4 billion bushels, of which 650 million bushels are used in ethanol production.
  • Corn prices will increase an average of 28 cents per bushel. Net farm income will increase an average of $6.6 billion annually. That could reduce direct government payments to farmers $7.8 billion through 2016.
  • $10.5 billion in new rural economic investments by 2016 to build or expand the renewable fuel production facilities. Much of the new investment would be through farmer-owned, value-added businesses.

bpryor@primediabusiness.com