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Senators Weigh In on EPA Rules

November 21, 2008
On Monday Nov. 17, six U.S. Senators sent a new letter to EPA Administrator Stephen Johnson echoing a proposal that BIO previously made. BIO earlier called on EPA to release its proposed methodology for measuring greenhouse gas emissions during the rule’s comment period, but withholding conclusions on specific levels of reductions achieved by particular biofuels until the methodology was complete. The Senators’ letter states:
The methodology ultimately used by EPA in crafting this program will have a significant impact on the overall success of the program, and the science and methodology employed by EPA should be subject to thorough public and academic review. Likewise, the premature publication of specific greenhouse gas (ghg) emissions calculations based on incomplete ILU [indirect land use] assumptions could undermine the ultimate success of RFS-2 and be detrimental to U.S. biofuels producers and farmers, as it will undermine investor confidence and further deprive the industry of the investment capital it will need to meet the renewable targets established in RFS-2.”

The Senators go on to say,
EPA’s inclusion of international ILU changes as a factor in determining significant indirect emissions has the potential to effectively disqualify significant volumes of U.S. renewable fuels production from being used to meet the Advanced Biofuels Schedule in RFS-2, thus placing in jeopardy the entire fuels program.”

BIO has consistently said that models for measuring indirect land use change are immature, and recent revisions of crop price forecasts by the USDA and the Food and Agricultural Policy Research Institute provide a case in point. FAPRI’s model is usually used to predict crop prices and yields around the world to guide U.S. farmers in decisions about planting, storing and marketing their grains. Their model is now a key to the theory developed by Tim Searchinger and the EPA’s proposed methodology for the RFS.
In a recent edition of its “Decisive Marketing,” FAPRI revised the advice it gave farmers at the beginning of this year, saying:
Since peaking in early July, the corn and soybean markets have been in a downtrend. Those downtrends have become very steep since late September, pushing prices much lower than nearly everyone expected. The USDA’s 2008-09 price forecasts were lowered eighty cents per bushel for corn and soybean prices cut two dollars in the October supply/demand reports. These are huge cuts to be made in just one month, but current prices are now much lower than the lowest end of the USDA’s forecast price ranges.”

Later in the newsletter, FAPRI buries a very significant inference from the price drop, “Current prices discourage increased plantings in South America.” [emphasis mine]

Note that while the USDA’s Feed Outlook projected prices for corn in 2008/09 were lowered by $0.80 just between October and November, to $4.00-$4.80 per bushel, this is significantly down from July, when the USDA’s Feed Outlook projected prices of $5.50-$6.50.

Environmental groups, such as the NRDC, would like to claim that they have science on their side. See for instance the New York Times editorial this week. The drastic revision of projections from these models within a six-month period demonstrates how far the science has to go. At this point, it would be dangerous to include the models in a regulatory system.