The blending obligation for biofuels has long been a thorn in the side of the oil industry. For the agricultural sector, biofuels provide a floor in the raw materials market. Two parties with quite conflicting interests on points. With the rise of the electric car, something has changed. Both industries have found each other as critical minds in the discussion about electrification, which is presented in both Brussels and Washington as the panacea against CO2 emissions.
The US National Corn Growers Association (NCGA) sent a letter to Biden last week expressing concerns that biofuels are being overlooked as a way to reduce CO2 emissions from light to medium vehicles. In the letter, which was signed by more than 3.400 farmers, the NCGA warns that the Biden administration is rushing to electrify the vehicle fleet while ignoring other (obvious) options.
American consumers are not eager to switch to EVs. Research that the NCGA commissioned from Morning Consult shows that Americans have concerns about, among other things, the range of electric cars and the possibilities for charging. Furthermore, in the letter, the NCGA cites a study by American car dealers which shows that sales of EVs are stalling and the cars are staying at the dealers longer. EVs are too expensive and the challenges surrounding range and charging options are putting the brakes on sales. The NCGA refers to the state of California that has made electrification a priority. Despite all efforts and billions of dollars to get consumers to use electric cars, only 2022% of passenger and small commercial vehicles were electric at the end of 2,6.
Support from oil lobby
The NCGA is endorsed by the American Petroleum Institute (API). The interest group for the oil industry, together with the growers' association, is committed to increasing the blending percentage for bio-ethanol in gasoline. As in Europe, most gasoline in the US is E10 with 10% ethanol. The sale of gasoline with a higher blending percentage of E15 is prohibited in the summer months by the American environmental agency EPA. API and NCGA have backed Republican Senator Deb Fischer of Nebraska who wants E15 to be sold year-round. “We stand shoulder to shoulder at this point,” said Will Hupman vice president of API at Bloomberg. “Historically, that has not been the easiest step.”
Oil producers and farmers have not gotten along very well in the past. In the heyday of the T-Ford, Henry Ford called ethanol the fuel of the future and Rudolf Diesel designed his engine for vegetable oil. Oil baron John D. Rockefeller, among others, ensured that oil became dominant. In the 70s, biofuel came back into the picture due to the oil crisis. President Carter wanted to reduce dependence on oil imports. After the attacks of September 11 in 2001, it was again the security of supply that ensured that a mandatory blending percentage for biofuel was introduced.
Forgot infrastructure
In Europe, the German Union for the Promotion of Oil and Protein Plants (Ufop) warns of a similar problem as in America. The vehicle industry had almost given up the fight to make the traditional combustion engine greener until the German liberal governing party FDP 'slammed on the brakes late, but just in time', as the Ufop writes. “Both in Berlin and Brussels, the mantra of e-mobility was spoken without taking into account the enormous system costs associated with creating the necessary associated infrastructure.” Electricity prices have risen in recent years, the European electricity grid is squeaking and creaking and the expansion of green energy is faltering, according to Ufop. Biofuels must be given a more prominent place in the energy mix, not only as an alternative but also as a complementary energy carrier.
"The UFOP demands that, at best, a European-coordinated propulsion and fuel strategy should be the prerequisite for the framework for action and for a reliable long-term financing policy, so that more jobs are not at risk of being moved to third countries. This applies also for engine development."