Complex RFS2 rules threaten Caribbean ethanol industry

In recent comments to the US Environmental Protection Agency, a group representing Caribbean ethanol producers claim that requirements relating to feedstock sourcing could not only hurt but potentially shutter their industry.

George Fitch, executive director of the Caribbean Basin Ethanol Producers Group, noted in a recent paper to the EPA that specific RFS2 rules "could shut down our industry."

Fitch, whose group represents ethanol producers in Trinidad, El Salvador, Costa Rica and Jamaica, last month called for the rules to be modified "to allow us to continue to operate."

Their chief concerns revolve around provisions that require verification of where sugar cane for alcohol, the chief ethanol feedstock, originates. Because the countries his group represents produce little alcohol domestically, they rely on imports from Brazil.

The Caribbean producers and others call the sourcing requirement "impossible." One ethanol observer compared the difficulty of identifying the sugar cane where the alcohol originated -- and specifically whether it was on land currently under cultivation -- to the potential dilemma of Iowa corn producers who supply that commodity for US-produced ethanol. "There's no way they can figure out where every corn kernel comes from," the observer said.

The reason is that feedstock shipments from different alcohol mills in Brazil are pooled and co-mingled in large tanks at the Caribbean producers' plants, as is the finished ethanol stored for shipment to the US.

Caribbean ethanol accounts for about 5% of the US ethanol consumption market, or 339 million gallons last year exported from the region, Fitch said. The US stipulates that no more than 7% of its domestic market for ethanol, which is currently close to 7 billion gallons, can enter the country duty-free.

To counter the difficulties his producers say is inherent in the legislation, Fitch asked that the locale verification requirements be modified to reflect "the nature of how hydrous alcohol is collected, shipped, discharged, processed and stored." The suggestion appears to be a dose of realism for a destination whose labyrinthine routes frequently become tangled in their own complexities.