This may be a tumultuous time for corn farmers and ethanol producers.
But then again, the ethanol industry's entire history has been a roller coaster ride.
In this episode, NCGA CEO Jon Doggett revisits the battles that got us to this point with "the Godfather of Ethanol" himself, Bob Dinneen from the Renewable Fuels Association. Plus, they're joined by NCGA's Director of Renewable Fuels, Mark Palmer, to discuss what the future might hold as the ethanol industry navigates a new set of uncertain times.
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Transcript
Bob Dinneen:
When times are tough, farmers, the ethanol industry don't look around trying to blame others, they look for ways that they can help.
Jon Doggett:
What this industry has been about, it's been about the land, it's been about community, it's been about family, it's been about our country. And you're right, Bob. We have so much to be proud of and we're just starting today to build the future that we could be even more proud of years to come.
Dusty Weis:
Hello and welcome to Wherever Jon May Roam, the National Corn Growers Association Podcast. This is where leaders, growers, and stakeholders in the corn industry can turn for big picture conversations about the state of the industry and its future. I'm Dusty Weis and I'll be introducing your host association CEO Jon Doggett. You can join Jon every month as he travels the country on a mission to advocate for America's corn farmers. From the fields of Corn Belt to the DC beltway, we'll make sure that the growers who feed America have a say in the issues that are important to them with key leaders who are shaping the future of agriculture.
Dusty Weis:
In this week's episode, we're checking in with another familiar figure in the corn business. Some call him the godfather of the ethanol industry. Bob Dinneen joins us to talk about the past, present, and future of ethanol. If you haven't yet, make sure you're subscribed to this podcast in your favorite app, that way you can take us with you in your truck, your tractor, or on your next trip and never miss an update from Jon. Also, make sure to follow the NCGA on Twitter @nationalcorn and signup for the National Corn Growers Association newsletter in your email at ncga.com.
Dusty Weis:
And with that, it's time to once again introduce Jon. Jon Doggett, the CEO of the National Corn Growers Association. Jon, today's episode touches on a subject that I know is near and dear to your heart, but also hopefully serves as sort of a return to normalcy amid everything that we've had to endure this past couple of months.
Jon Doggett:
Well, Dusty, the ethanol industry has never been one that has been very static. It's like a roller coaster. We're up and down. We take wild turns one way and then we take wild turns another way and then we're up and down again. We've had some great success over the years in ethanol policy. It's important to corn farmers. 40% of our corn goes to ethanol. And that's a really, really important component to our demand structure in this country. So it's important and we're working really hard on that today. And as we are airing this in the middle of the pandemic we also are suffering from a huge glut of oil on the international market brought to us by the Saudis and the Russians.
Jon Doggett:
And the ethanol industry is really hurting right now. Probably more than any time in decades. So what we wanted to do today was talk a little bit about how we got here. A little bit of the history. We have two guests today. They were part of that history and I'm thrilled to have with me one of my very best friends, somebody I've known for a long time. He shares my love of cufflinks. Some would say he's boisterous and outspoken. He is known for his annual in and out lists and some might even call him the godfather of the ethanol industry. He spent more than 30 years fighting for ethanol and for corn farmers. He's currently serving as the Senior Strategic Advisor for the Renewable Fuels Association. He was previously the president and CEO and he really needs no introduction. Bob Dinneen. Bob, welcome.
Bob Dinneen:
Oh, it's so wonderful to be here senior as I may be.
Jon Doggett:
So Bob, tell us a little bit about your background. And I know that you probably will mention the Boston Red Sox at some point, but how did you get here?
Bob Dinneen:
A lot of people have asked that question because how would a kid from Boston end up working for farmers? But the fact of the matter is, in the early '70s, I remember a conversation I had with my father as we would drive around Boston. He was so excited because he was a television news photographer, and he had just done a story on this thing called gasohol and he thought it was really cool that being in Boston, he was able to use a fuel that was in part derived from corn grown in the Midwest. And of course, at that time there was precious little ethanol being sold across the country, but somehow some of it had found its way to Boston. And the new station he had worked for had done a story on it.
Bob Dinneen:
Well, I just sort of filed that away. And years later, after I had moved to Washington in DC where I went to school and was working on Capitol Hill my wife got pregnant. What does that get to do with ethanol you say? Well, as much as I enjoyed working on Capitol Hill, it is awfully hard to raise a family on what a congressional staffer is paid. And so I started to do the various networking that you do. And one of the friends I played softball with at the time was Al Tank. Al was with the National Corn Growers and he and I were playing ball one day and I was telling him how I was looking for more gainful employment off of the Hill. And he said, "Well, you know what, there's a guy that's sharing space in our office right now, he works for the ethanol industry and he's looking for somebody that could work the Hill."
Bob Dinneen:
Now, Al said to me, "I don't know if this industry will be around five years from now or not, but in the meanwhile, Bob, we'll have a lot of fun." And so I interviewed and I got the job. And about a year later Al Tank was off doing other things and I was still at the RFA and I stayed around for 30 years. I saw the industry grow from when I was just that young kid. We were producing about 600 million gallons. And this year, despite everything, we're still going to produce more than 15 billion. So it has been, as Jon said earlier, a wild ride and we've seen some ups and downs. Never anything quite as bad as it is right now, but through it all the ethanol industry has endured. It has grown and it has provided tremendous economic opportunity for farmers in the Midwest and a great deal of economic and energy and environmental security for the rest of America.
Jon Doggett:
I thought you were going to mention working in the house post office, but that's another story. So also with us today is NCGA Director of Renewable Fuels, Mark Palmer. Mark is on his second stint with NCGA. He worked with me years ago and we decided to give him another chance to see if he could make it this time. He also worked for the biodiesel industry when the initial RFS became law. And his job today is to keep Bob and I on point, something that he's had to do over the years. But Mark, introduce yourself and you're from Quincy, Illinois?
Mark Palmer:
Yeah. Thanks Jon. Yeah, I grew up in Western Central Illinois. Quincy, Illinois, Adams County. Always had a very strong interest in politics, public policy. Always had a strong interest in agriculture just growing up in that area. Corn or beans were such a really important part of my background and a big part of the economy. And I think when I came to Washington, DC getting started on the Hill and weaving into the public policy arena, the first thing I really wanted to dig into were the agricultural issues and the renewable fuels issues and ultimately after, I believe seven years on Capitol Hill, that that brought me to you, Jon, in 2003.
Mark Palmer:
So it's very exciting to have lived that life in DC but certainly, it's also very exciting to be back at corn, to be in this world now. And if anything more out of curiosity, just sort of see kind of today where we can go in the future, and I think it's bright and exciting no matter how many of those roller coasters we get on it. It seems to be a wonderful industry that does a lot of great things for our growers and our ethanol producers suffering today. I think to see the prospects of the future I think are very bright.
Jon Doggett:
Well, Mark, I'm going to mention one other thing about your background because you share something with my son-in-law, Frank Walker. And that both of you had very interesting first jobs on Capitol Hill. What was your first job on Capitol Hill?
Mark Palmer:
Well, surprisingly enough when I graduated from college in 1995, I wanted to come back to Capitol Hill after having done an internship that previous summer and was desperate to find any type of work. And usually, you start either in the mailroom or on the phones. And I started on the phones for Senator Feinstein from California. Thankfully that was only three months because the phones, the size and the number of calls that you get every day can be pretty tough. And I ended up after three months as her body man. So basically taking her wherever she needed to go, making sure that she had anything that she ever needed. There's a lot of storylines there, but it was very rewarding because to be 23, 24 years old, to have that much exposure with somebody of that stature was just short of anything fascinating. And I think at a certain point you wanted to get into the public policy arena, which you went for. But that was certainly a great setup for me.
Jon Doggett:
Any of us who've been in Washington, we all have those stories that happened along the way. And some of them are good stories and some of them not so much, but it's always, there's never a straight line in Washington, DC when it comes to a career. And certainly, there is never a straight line when it comes to ethanol policy. And I want to get back to kind of where ethanol started. Henry Ford when he started building cars he said that the fuel of the future is going to come from fruit like that sumach out on the road or from apples, weeds, sawdust, almost anything. Bob, do you ever wonder if Henry Ford would have thought corn would be the primary use for ethanol?
Bob Dinneen:
Well, I'm sure that he did. You knew Henry Ford, I suppose as old as you are, so you could probably tell us better. But from what I understand, he clearly understood that ethanol was going to be produced from agricultural feedstocks, the same agricultural feedstocks from which we get other potent potables. So corn would certainly have been a feedstock that he would have envisioned because he was a bourbon drinker.
Jon Doggett:
I didn't know that. Bob, let's talk a little bit about the era of leaded gasoline and MTBE and oxygen standards. As we have gone through so many different times in the ethanol industry and oftentimes there's a great deal of dissension or controversy around moving from one thing to another thing. And back at the end of the 1990s, we were still involved in the oxygen standard. What was that all about and how did that come to turn into the Renewable Fuel Standard?
Bob Dinneen:
Well, the oxygen requirement for reformulated gasoline was one of the victories that the ethanol industry had in 1990, the Clean Air Act Amendment. There were two programs designed to add ethanol to gasoline. One was the oxygenated fuels program for carbon monoxide nonattainment areas. In 1990 there were 52 areas across the country that were nonattainment for carbon monoxide. And we understood that adding ethanol to gasoline was the most effective way of reducing CO emissions. And so that became part of the Clean Air Act in 1990. It was implemented in '92 and actually by '96 the number of CO nonattainment areas had fallen from 52 down to nine and a few years later was really just one and today there are none. But in addition to that important program for CO nonattainment was a program designed to reduce ozone pollution. The reformulated gasoline program was designed to do just that.
Bob Dinneen:
A component of that program was a requirement for refiners to add a 2.7% oxygen. That equates to about 15% MTBE or 10% ethanol. Refiners though, because the reformulated gasoline market was about a third of the nation's gasoline supply did not want to utilize a product that they didn't produce or control to oxygenate that market. And so they gravitated toward something called methyl tertiary-butyl ether or MTBE. MTBE was fine oxygenated, did the job as well as ethanol, but it had this one distinctive and unfortunate quality. When it was added to gasoline, it would one way or another find its way into water supplies. And one teaspoon of MTBE would contaminate an Olympic size swimming pool. And soon after, the RFG program was implemented in 1995. You started seeing drinking water supplies contaminated all across the country.
Bob Dinneen:
And by the year 2000, approximately 25 states across the country had actually banned the sale of MTBE. As that was occurring, ethanol was seeing increased market opportunities for sure, but nothing was guaranteed. Oil refiners wanted the government mandate to reformulated gasoline to be eliminated. And for years we would battle on Capitol Hill as the oil companies would move an amendment to eliminate the oxy requirement for RFG and we would fight to maintain it, not because we cared about MTBE, but because we didn't think you needed to throw the baby out with the bathwater. And in fact, we wanted to make sure that if the oxygen requirement was going to go away, there was some program to assure that ethanol would still be used. Shockingly, we didn't believe that the oil companies would utilize ethanol just for its octane component. And we knew that there would need to be another driver to assure that our market still had an opportunity to grow.
Bob Dinneen:
So we would fight at least seven or eight votes in the House Energy and Commerce Committee to try to assure that the oxygen requirement was maintained. At some point, however, the oil companies themselves realized they were not going to beat us on Capitol Hill on this. And a series of meetings began to occur in which we would negotiate with the oil companies, really with the American Petroleum Institute and Red Cavaney, the President of API at the time to try to see, okay, if we're going to let you out of the oxygen requirement, what can we do to make sure that the ethanol market opportunity was preserved? And out of that grew the Renewable Fuel Standard. But as you noted, Jon, there was a great deal of controversy and a number of folks in the ethanol industry were not at all comfortable with sacrificing the oxygen requirement in the reformulated gasoline market for something new called a Renewable Fuel Standard.
Bob Dinneen:
Ultimately, we were able to convince the industry that that was the right direction to go. And the RFA working with the American Petroleum Institute was then able to go to Capitol Hill with a solid plan that ultimately was adopted into the 2005 energy bill creating the very first seven and a half billion-gallon Renewable Fuel Standard. It was a monumental moment for the industry and really set up the industry that you see today.
Jon Doggett:
Bob, I remember the time that a group of us in the ethanol industry and in the corn industry, I was working for the Farm Bureau at the time, and we had representatives from Tom Daschle's office and from Dick Lugar's office. Daschel a Democrat from South Dakota, Lugar a Republican from Indiana. And they came in and started talking about this Renewable Fuel Standard and how we probably could get to maybe 2 billion gallons worth of demand. The phrase that you and I heard the most was, why would we let go of the burden hand to get the two in the bush? When did that first rollout begin? I remember it was in ... we were having breakfast at [LaColeen 00:17:30] up on Capitol Hill. We started the discussion but what year was that? That had to been, what? 2000, 2001.
Bob Dinneen:
I did not schedule it because that's a fancy restaurant and I'm more of a Dubliner kind of guy. I would have gotten to the Irish pub, particularly for anything as serious as a discussion about public policy.
Jon Doggett:
I do remember the meeting well. It was one of those ones where your former boss, Eric Vaughn, I thought there was going to be a fistfight break out in the meeting. And it was a very interesting discussion and it took us a long time to get the industry together to agree that we needed to go for a Renewable Fuel Standard. But by the time we got to that and we were talking that two and a half, three billion gallons of demand, it took a while to get the legislation done. We've all gone to civics class. You introduced the bill, it goes through the Committees of Jurisdiction for hearings and then they do a markup and then they take it to the floor and each chamber passes a bill and then they go to a conference committee and then they come back with a conference report. That doesn't happen anymore and it certainly didn't happen here. I think I remember a couple key votes that were tough ones. Mark, maybe you might remember one because I remember standing next to you outside the Senate Chamber when that happened.
Mark Palmer:
Yeah, it is. Jon always likes to joke. He says, "Palmer, I hired you to do one thing." "What's that, Jon? "To deliver that last vote for cloture." And it didn't happen. And I remember after Jon hired me off of the Hill, I think that we were fairly well into the process and had got to the Senate and as Bob said, the MTBE issue was an extremely challenging, sticky wicket. And I know having served on the Hill for a member from Illinois at the time that there were 27 ground wells contaminated in Illinois. And the news kind of continued to build and it made it very difficult to pass that bill in the Senate and coming up one vote short on that day. I remember kind of really feeling disappointed and defeated and having felt, looking back, that I had led a lot of people down; Bob and Jon including our growers, our ethanol producers.
Mark Palmer:
But I look back and I've reflected on that quite a bit because I remember after we went to the Senate Chamber, we were all standing in Russell Park at the fountain and I just was sort of shaking my head like, I can't believe this. This is so disappointing. And Bob kind of grabs my shoulders and just has one of those moments of look, this isn't your fault. This was a tough vote. But I do think looking back that having lived through that moment of disappointment, I think we ended up with a much better bill in 2005 having worked with Jon and Bob for a very long time, absorbing their wisdom and getting their perspective. Looking back, I think that we came out better than we would have if we would have gotten the bill in 2003, and I don't know if we would have gotten the subsequent bill in 2007 frankly.
Jon Doggett:
There's that old country song about thank God for unanswered prayers and that might've been one of those moments in my career where I remember that long walk back to the office and having to call our board and Rick Tolman, our CEO and saying, "Well, we got close but not close enough." And you're right. Ultimately, it was a favor for us. We regrouped, we gathered more allies. I remember going up and talking to the Staff Director for the Senate Energy Committee, Alex Flint, who worked for Pete Domenici at the time. And right after that vote, and Alex said, "I still don't understand ethanol, but I certainly have a much better understanding of ethanol politics and the power you guys bring when you are all together and you're unified and we're going to make this thing happen." And we ended up getting it done.
Jon Doggett:
But we're fairly determined and fairly straight forward in what we were looking for and how we intended to get there, and we brought a whole lot of folks in the Midwest who made phone calls. And I remember getting those calls and Bob, I think you got some as well from Capitol Hill chiefs of staff who said, "Would you please have your farmers quit calling. We're with you. We're going to vote with you. Just have them stop calling because you're tying up our phones." Certainly a big difference between where we were and where the oil industry was at that time, and I think it shows you kind of the pathway to success. In 2005 when we worked with the oil industry, we worked with the coal industry, the nuclear industry, the wind energy industry. We worked with everybody in that energy space to pass a really big energy bill and we were a key part of that because we brought the grass roots. So a few years goes by and then we're going to do another energy bill. Bob who did we work with then?
Bob Dinneen:
Let's put it this way, the oil industry who we had worked with to get the 2005 bill had said when that bill passed, "Don't worry about it. There's no way a bunch of farmers are going to be able to produce seven and a half billion gallons of ethanol by 2012 when they're barely producing more than a billion gallons today. Won't happen." Well, the incentive that the Renewable Fuel Standard had created in that 2005 bill was so powerful that we had reached seven and a half billion gallons, not by 2012 but by the end of 2006. And Capitol Hill recognized just how critical that was. More importantly, the environmental community took a look at that and said, "Wow, we can take advantage of this incentive also and create an incentive to reduce carbon in this kind of a program." And so the environmental community came to us and said, "Let's work together to expand the RFS, but let's make it so that we are encouraging the production of even cleaner biofuels. Fuels that will reduce CO2 even more than corn ethanol is doing today." And we were quite up for that.
Bob Dinneen:
There was one bill that was introduced by a junior senator from Illinois. You may remember Barrack Obama who had required, in their legislation, 60 billion gallons of renewable fuels to be produced with a good portion of that coming from advanced biofuels or fuels that would reduce carbon dioxide emissions even further. We thought that that was a bridge too far. And I remember one Senate Energy Committee meeting where I had to essentially not support Senator Obama from Illinois bill because I thought it was too aggressive and we supported a 36 billion gallon bill that had been introduced by a bipartisan group of senators. Jon, you asked earlier who are some of our champions? I mean, we had the likes of Jim Talent from Missouri and Byron Dorgan from North Dakota that were on the energy committee and were strongly supportive. And we had a core group of senators that were just committed to making sure that they would build upon the RFS.
Bob Dinneen:
It was a very remarkable thing. John Thune had just been elected in South Dakota, and he was a strong proponent on the energy committee. But at the end of the day, what we had was the environmental community working with the ethanol industry and farmers across the country to get a bill done that the oil industry absolutely abhorred and they could not support a further erosion of their market share. So while we worked with the oil guys in '05, they fought us tooth and nail in '07, but because of the new coalition that we had built with the environmental community, with national security hawks, with consumers and certainly with farmers, we were able to dramatically expand the RFS from a seven and a half billion gallon requirement to a 36 billion gallon requirement. And it did indeed ultimately include the first legislation in the world that created a carbon metric for motor transportation fuels.
Bob Dinneen:
That was a remarkable achievement signed by a Republican president from Texas, George Bush, who was without a doubt a driving force behind both the '05 and the '07 bill and was enthusiastic about the opportunities that were being created for farmers and for clean octane and as he saw it, for refiners to have lower cost fuels for the future.
Jon Doggett:
It was a remarkable time. And I remember when George Bush was elected and we thought, here's an oil guy from Texas. This is not going to be good for the ethanol industry. And he ended up being probably as good a president as we've ever had when it comes to being a friend of this industry. And it was just remarkable. He told us he was with us and he stayed with us throughout the whole time while he was in office. And it was just a great, great opportunity to work with somebody who was on our side and told his former colleagues in the oil industry that they better get on board and get with the program.
Jon Doggett:
So, Bob, I remember two other times in our time together with these two bills. And I remember after the final vote on the conference report passed in the Senate and you and I were walking out of the Capitol building. And you looked at me and said, "I don't know if our industry can produce seven and a half billion gallons of ethanol, but we're sure going to give it a try." Well, you certainly did. And it happened very, very quickly. Faster than anybody thought. And I remember after you and I attended the bill signing at the Department of Energy for the 2008 bill and we walked out and I turned to you and said, "I don't know that we can produce that much corn." Well, we did. And it's amazing what a little incentive does and a little bit of certainty does to get people to produce, whether it's ethanol or corn.
Jon Doggett:
And speaking of renewable fuels and we have a lot of acronyms in this industry, we talk a lot about the RFS, the Renewable Fuel Standard, but Bob and Mark, I'm going to throw a few acronyms at you and tell our listeners what these things mean. AKI, what does AKI stand for?
Mark Palmer:
Oh, AKI, usually when you go to the pump, that's the number. Sometimes an 87 or an 89, maybe a 91 or a 93 which is generally your octane number at the pump. Usually, it's based on different pricing. Now we have clean 88, unleaded 88, which is generally E15. I mean, it's different. They designate different products.
Jon Doggett:
And now I'm going to ask Bob this next one to set his teeth on edge. SREs, what are they?
Bob Dinneen:
The exemptions for small refiners. So Small Refiner Exemptions, SRE. And that was a provision that was included in the Renewable Fuel Standard to give some flexibility to refiners that may have some difficulty meeting the standard. Now, ethanol is less expensive than gasoline today. Even in this crazy market, it's less expensive on an octane basis than petroleum-derived octane enhancers and still is a value to refiners. But given this historically banned, less expensive than gasoline, it's hard to imagine that any refiner small, large, or medium-sized would have difficulty blending a less expensive, higher octane fuel or that it would because any difficulty. And indeed in the first several years of the program, there were maybe two or three small refiners defined in the act as those producing 75,000 barrels per day or less that were given some waivers. Didn't mean a whole heck of a lot and so that was indeed one of the things that was allowed under the act and we never opposed it.
Bob Dinneen:
However, in this administration, the Small Refiner Exemptions, the SREs that were granted went from two or three a year to 25, 30 or 40 a year, and the refiners began to use those SREs as a way just to get out of the program in a fashion that was not intended when that provision was added to the act. And so we actually had gone to court recently, the corn growers joined in now of course, as did the American Coalition for Ethanol and the National Farmers Union. And we sued in the Tenth Circuit EPA's granting of three of the Small Refiner Exemptions that they'd given and the court found for us. It was a huge victory because the court determined that the way EPA had begun to utilize its Small Refiner Exemption authority was illegal. And it, I think dramatically changes how SREs will be granted in the future for sure.
Bob Dinneen:
We believe that the Tenth Circuit decision needs to be applied nationwide. EPA, however, right now is resisting applying it nationwide and is awaiting further appeals that the oil companies do have before determining what to do with it. That doesn't make a great deal of sense to me because it's pretty clear where this is going. The first appeal that the refiners made was to the Tenth Circuit trying to get what's called an en banc hearing instead of three-judge panel that had unanimously determined that EPA's authority had been exceeded in this case, trying to get the entire panel of the Tenth Circuit judges to look at it. They didn't get a single one to say, "Yes, we need to review this." It was again, unanimously rejected. So now they will likely go to the Supreme Court where I doubt that they will get a cert, but the refiners are doing everything they can to delay the implementation of the Tenth Circuit decision nationwide.
Bob Dinneen:
And EPA is abetting this. They are going along with it when what they should be doing is implementing the Tenth Circuit decision today. But it's somewhat infuriating that the agency that has created so much demand destruction, over the past three years, more than 5 billion gallons of renewable fuel demand have been erased by EPA's now illegal distribution of Small Refiner Exemptions, and they still are unwilling to address that in a responsible fashion.
Jon Doggett:
Well, thanks Bob and I'm glad you opened up about your true feelings about EPA and the job that you think they're doing.
Bob Dinneen:
Whoa, Whoa, Whoa, Whoa, I have a number of friends down at EPA. And for the most part the bureaucrats that are in the trenches doing the work are phenomenal people and they are just trying to do their jobs and they are proud of the mission that they have to protect the nation's air quality and consumers across the country. The leadership of late at the agency has been at war with the rank and file employees beginning with Scott Pruitt from Oklahoma who would wake up every single day trying to think of a way that he could undermine the growth in the ethanol industry that began this. When he left EPA under a cloud and was replaced by Andy Wheeler I was initially pretty enthusiastic because Andy Wheeler is somebody that Jon, you and I and Mark had worked with when he was on the Senate Energy Committee. And when he worked for Senator George Voinovich from Ohio, he was a strong supporter of renewable fuels and ethanol on the RFS.
Bob Dinneen:
He then went to work for a senator from Oklahoma, Senator Inhofe and took a decidedly different view of all of this. And so it was somewhat of a wild card when he got to EPA, whether we would see the George Voinovich, Andy Wheeler or the Inhofe, Andy Wheeler. But I knew that he was always going to be open and honest and straightforward. I've been disappointed that we've seen far more of the Inhofe Wheeler than the Voinovich Wheeler. And he has continued a number of the Scott Pruitt programs to undermine the growth of the ethanol industry.
Jon Doggett:
So let's talk briefly about the environmental benefits of ethanol. Ethanol as we can prove, reduces greenhouse gas emissions by 40 to 45% at a 10% blend. So if we get to E15 or E30 we can only imagine how much more we could help the environment by decreasing greenhouse gas emissions even more. So when talking about ethanol, people forget that. And Bob, you made the point that the Renewable Fuel Standard was the first statute that reduced greenhouse gas emissions for motor fuels. And so it was a huge change in where we were. But now we're hearing a lot about electric vehicles and how good they are for the environment, but I think there's a lot of things that aren't taken into consideration. So Mark Palmer, Director of Renewable Fuels at NCGA, what are some of those things that folks ought to think about when they talk about the many benefits of electric vehicles and how maybe the picture isn't as rosy as we might think.
Mark Palmer:
Yeah, Jon, thank you. And I've always tried to be objective about this and I really find it hard to be, because I think there's this notion that electric vehicles are going to be this great savior. And I think when I debate my good friends on the left in the environmental community, they've never really been able to give me a straight answer of but where's your power coming from? And I feel like sometimes they just point to the plug in the wall. And I go back and we get scrutinized for so much in our life cycle. And some of it is just not fair, some of it's academically dishonest and yet when it comes to electric vehicles, I don't feel there's that same level playing field of their honesty. I also think there's a huge issue with infrastructure, which is not a new issue that people have brought up before.
Mark Palmer:
I also think that there's a huge issue of not just where's your power coming from, but where are you disposing your batteries? How is that being handled? Some of the materials that it takes, components of these batteries are being mined in very unstable places. And I don't mean that just in a governmental or a democratic sense, but just with some of the child labor issues that go along with this. And I think if we're going to have that conversation, I think that we need to put all of that on the table.
Mark Palmer:
I think the fact that we're really hitting that issue home on what it is that has been done in the 2007 energy bill, really the first bill signed to really mitigate climate looking at some of those issues and really trying to just really, I can't say more plainly, be honest about it. I don't think that they are when they point to the plug in the wall. I just shake my head because they're smarter than that and they're better than that, but yet that's their conclusion. I've had a really hard time with that.
Jon Doggett:
So Mark talking about the future of fuels and we're working very closely with our ethanol partners on a Low Carbon High-Octane fuel standard. What's that all about and why is that good for corn farmers?
Mark Palmer:
I think with respect to this component, a lot of this had come out of a coalition that we have been a part of with some of our domestic auto partners. And frankly for full disclosure, one of the reasons that I came back to corn was to explore what's next? What is that new frontier? And I think through some of the work that our states have done through the work that we are engaged with our ethanol industry partners, specifically RFA, looking at finding what that next path forward is, trying to have a carbon metric but also really continuing to focus on corn grind and ethanol consumption. Trying to not just broaden our coalition, but also trying to bring the coalition that we had back together.
Mark Palmer:
We have a very different Congress today. We have a very different administration today than we had 10, 15 years ago. And I think when we look at this, it's a more say, polarized Congress at each end of the spectrum. And finding some of the middle ground to pursue an opportunity that's going to really be that next frontier and another ethanol boom and increase blends. And you've got people at GM telling us that, "Hey, when we bring out these higher compression engines and I guess model year 2025, the sweet spot is going to really be E25." And I think right now, again, at 10% in the marketplace and ushering up to E15. Looking at that possibility is that something that we can shoot for, that we can aim for, that's going to increase corn grind, help our farmers especially in light of the situation with COVID-19 today that we're seeing. And that I think is only going to continue to be more difficult for our producers.
Mark Palmer:
Is this that method? Is this the opportunity that we've been seeking? Is this the next RFS? And I think if we do this right, if we spend the time to do our research and continue to build our partnerships and our coalitions, I think it's very possible. We talk about 2002, we saw what happened in 2003. We didn't have ultimate success until 2005 and then even in 2007, that's the last time that we really had success in an energy bill. But in those two years it's amazing what can happen, but I think we have to lay that groundwork. We have to have those conversations. We have to engage our growers. And I think that this is certainly something like this that they can get excited about.
Bob Dinneen:
Mark is absolutely correct that what we ought to be looking at when we talk about electric vehicles is a level playing field. And let's make sure that they're not just ending the analysis at the plug as Mark suggested, because he's right. In the mining of lithium used in these batteries today, there are real environmental consequences that EPA's regulations right now ignores. But there may be opportunity for renewable fuels, and ethanol specifically with electric vehicles as well. There are ethanol-powered fuel cells that are now being used in some electric vehicles. And electric vehicles done right not only could be better for the environment, but also provide further opportunities for farmers and ethanol than one might think. And I believe that there are potential partnerships here because we all want what's best for the environment, and ignoring the environmental consequences of lithium mining makes no sense for anybody.
Bob Dinneen:
But ultimately, if the market is going to go toward electric vehicles, there's a potential role for ethanol there as well. We're a long way off from electric vehicles being ubiquitous in the way that the internal combustion engine is today, and ethanol is quite a huge role in this market. But let's also plan smartly for the future automobile fleet as well.
Jon Doggett:
Well, certainly much different times now than what we saw in the early part of the 2000s. At that time, energy security was a huge component of our argument about why we needed to have a domestically produced renewable fuel that was grown by Americans farmers. And now we have this a huge fracking boom in the United States. America is energy independent. We are actually exporting some energy. And now on top of that, we have the Russians and the Saudis just flooding this market with oil. And then you add into that, the COVID-19 dilemma and the situation we're in today. I look at where we are today and I look back and I think about the history of this industry and the partnerships we've had, the relationships we've had, we have persevered through some really, really tough times, and we still have some exciting stories yet to tell about this industry.
Jon Doggett:
And I'm hoping that 15 years from now somebody doing a podcast will look back and say, "Times looked really pretty tough in 2020, but we built the relationships and we built the political infrastructure we needed to be successful." So Bob, any last-minute reflections you might have on where we've been, where we are and more importantly where we're going?
Bob Dinneen:
Well, Jon, you're absolutely right that the marking conditions that we are facing today are more difficult and challenging than any that I have seen in my 30 plus year history working with this industry. More than 40% of the industry's capacity is shut down right now, either temporarily or some cases permanently as a consequence of $20 oil and the COVID-19 and the precipitous fall in gasoline demand that has occurred. But it is in these trying times that the true character of a person or in this case, an industry, I believe is revealed. Because while things are extraordinarily tough right now, I will tell you, Jon, I have never been more proud of this industry than I am today because ethanol producers are doing everything that they can A, to protect their workforce, to make sure that people are able to get through this with them, but they're also stepping up to be foot soldiers in the war against this pandemic.
Bob Dinneen:
Many, many, many companies today are producing more of the pharmaceutical-grade ethanol that can be used for hand sanitizer than fuel ethyl today. So we've stepped up, we've realized that we've got something to contribute to help fight this pandemic and we're doing it. And I think that speaks volumes because in many cases they're just donating those supplies to the local communities and they're working with partners across agriculture to make all of this happen. And that is something that I find just remarkable. When times are tough, farmers, the ethanol industry don't look around trying to blame others, they look for ways that they can contribute, ways that they can help. I see the oil industry saying, "Hey, we got to remove the Renewable Fuel Standard because of this pandemic." And I say, "What are you talking about? That's got nothing to do with the pandemic." So others are trying to use this to promote their own self-interest. Farmers and this industry are stepping up to be helpful. And like I said, I've never been more proud.
Jon Doggett:
I remember years ago one of our leaders in our organization said, "You know why ethanol is important to me?" He said, "I contributed and invested in the local farmer-owned ethanol plant in our community and I'm getting some extra money for every bushel of corn that I sell because I have this additional market there and the ethanol plant has done well and I got a little dividend and I'm going to pay down the loan that I took out to make that investment." He said, "It's brought a boom to the little community that I'm part of. And they're taking the plywood off storefronts and we're going to be able to keep our movie theater. We're going to be able to keep our school." And he said, "We're providing jobs," and he said, "Jobs for people like my daughter who just came back from Afghanistan after serving there two tours in the army."
Jon Doggett:
So what this industry's been about, it's been about the land. It's been about community, it's been about family, it's been about our country. And you're right Bob, we have so much to be proud of and we're just starting today to build a future that we can be even more proud of years to come. So thanks again to Bob Dinneen, Senior Strategic Advisor to the Renewable Fuels Association and Mark Palmer, Director of Renewable Fuels for the National Corn Growers Association. Thank you so much for being on today. This has been a lot of fun. My name is Jon Doggett, I'm the CEO of the National Corn Growers Association and thank you for listening to Wherever Jon May Roam, the podcast for the National Corn Growers Association.
Dusty Weis:
That is going to wrap up this edition of Wherever Jon May Roam, the National Corn Growers Association podcast. New episodes arrive monthly, so make sure you subscribe in your favorite app and join us again soon. Visit ncga.com to learn more or sign up for the association's newsletter in your email. Wherever Jon May Roam is brought to you by the National Corn Growers Association and produced by Podcamp Media, branded podcast production for businesses, podcampmedia.com. From the National Corn Growers Association, thanks for listening. I'm Dusty Weis.