Wisconsin biofuel producers say they're disappointed Gov. Scott Walker hasn't joined a group of Midwestern governors urging the federal government to support ethanol use and not cut the fuel additive requirement in gasoline.
Long considered a boon to the Midwest economy, ethanol made from corn is blended in most of the gasoline sold in the U.S. today.
But for the first time since 2007, the U.S. Environmental Protection Agency has proposed cutting by 3 billion gallons, or almost 18 percent, the amount of ethanol in the U.S. fuel supply this year.
The reduction could have a huge adverse effect on corn growers and ethanol plants, said Robert Sather, co-founder of Ace Ethanol in Stanley and president of the Wisconsin Bio Industry Alliance.
"We have nine ethanol plants in the state. They will all be in jeopardy if the EPA change comes to fruition," Sather said.
The proposal has raised the ire of Iowa Gov. Terry Branstad, a Republican, and governors from Illinois, Kansas, Michigan, Minnesota, Nebraska, North Dakota and South Dakota, who want the EPA to leave the biofuel requirements intact.
If the EPA's proposed rule takes effect, the negative impact would be felt most in rural America, the governors said in a letter to EPA Administrator Gina McCarthy and Agriculture Secretary Tom Vilsack.
The governors said more than 400,000 Americans depend on renewable fuels for jobs in their states, directly or indirectly. They cited an Iowa State University study that estimated a reduction in the Renewable Fuels Standard could cause corn prices to drop below the point where farmers would make a profit on the commodity.
Corn is Wisconsin's biggest crop, and farmers make planting decisions based in part on the demand for ethanol. So Wisconsin ethanol producers say they're frustrated by Walker's decision not join the other governors in urging the EPA to reject any reduction in the Renewable Fuels Standard.
Walker says he's keeping a campaign pledge to not take a position in the debate that has pitted ethanol producers against Wisconsin's small-engine industry, which opposes increased use of the fuel additive.
Livestock farmers also aren't pleased with ethanol because it drives up the price of corn and makes their feed more expensive.
"From our standpoint, it's a careful balance. We've got corn producers, but we also have (corn) users, particularly in the dairy industry," Walker said in an interview.
The EPA was supposed to make its decision on the 2014 ethanol requirements last November but missed the deadline and has kept its public comment period open until Jan. 28.
"If there ever was a time the industry wanted the governor to get involved and weigh in, now is that time," said Josh Morby, executive director of the Wisconsin Bio Industry Alliance.
In a speech to EPA officials in November, Iowa's Branstad said by lowering the nation's ethanol blending mandate, President Barack Obama's administration would be turning its back on Iowa voters.
Iowa is the nation's largest ethanol producer with 42 refineries.
"This is going to drive us into what could be another farm crisis. It makes no sense," Branstad said.
Ethanol critics say the recent boom in domestic oil production has made the biofuel additive less important as an alternative to foreign oil.
Also, as vehicles become more fuel efficient, Americans are using less gasoline than they did seven years ago when the government set the Renewable Fuels Standard.
Almost all gasoline sold in the U.S. contains 10 percent ethanol.
"We are now at the E-10 blend wall," the agency said, adding that if gasoline use continues to decline with more fuel-efficient vehicles, then growth in ethanol use would have to come from higher blends ranging from 15- 85 percent.
That would be unpopular with the automotive industry and small-engine makers, who contend the higher blends could result in problems such as premature engine wear, fuel line issues and lower fuel mileage.
It's time to scale back the Renewable Fuels Standard to better reflect the current situation, the American Petroleum Institute says.
"The Renewable Fuels Standard was a well-intentioned law that was written in 2007, when the assumptions of what 2014 would look like were vastly different," said Patrick Kelly, API's senior fuels policy adviser.
"Now the EPA has taken steps in the right direction to address this," Kelly said.