First it was that widely circulated Associated Press article last week that blamed ethanol for soil erosion and other environmental problems. Then the federal Environmental Protection Agency released its proposal to reduce the required use of corn-based ethanol in 2014 in the nation's gasoline supply. The attacks on corn ethanol keep coming.
Late last week the Environmental Protection Agency released its 2014 Renewable Volume Obligations or RVOs under the Renewable Fuel Standard. RVOs are set annually by the EPA and dictate the amount of renewable fuel that needs to be blended into the U.S. motor fuel supply. "Unfortunately, the White House bent to pressure from Big Oil and has proposed to lower the conventional ethanol requirements to 13 billion gallons," says Don Mason, membership services director for the Iowa Corn Growers Association. An estimated 13.8 billion gallons of "corn based" ethanol is being used in 2013.
The current RFS statute requires that 14.4 billion gallons of conventional ethanol be blended in 2014; however, the proposed rule is 1.4 billion gallons less than that requirement because EPA claims corn ethanol has met the E10 blend wall. "ICGA is extremely concerned about the potential corn industry impacts from this proposed cap. EPA needs to hear from corn growers," says Mason. There is a 60-day public comment period on the EPA proposals for the RFS. So they aren't set in stone yet.
Iowa governor has launched a website supporting the RFS
Iowa Gov. Terry Branstad and Lt. Gov. Kim Reynolds have launched a new website in an effort to counter EPA's proposed reduction of 2014 blending requirements. The site, ProtecttheRFS.com, collects comments from citizens about the proposed changes to the Renewable Fuel Standard and sends them to EPA. "The result of this proposed rule change would mean corn prices would plummet below the cost of production, loss of jobs and increased dependence on foreign oil. Concerned citizens cannot sit on the sidelines and wait for the comment period to open. Now is the time to defend and protect the RFS," Branstad says.~~~PAGE_BREAK_HERE~~~
"Why the Obama administration would side with the big oil companies over Iowa's homegrown renewable fuels is baffling," says Branstad. "The EPA has turned its back on rural America, and our economy and family farms will suffer as a result. Corn prices have already dropped to the cost of production, and this will likely further squeeze corn producers and negatively impact income growth in rural America. We have more than 50 ethanol and biodiesel plants in Iowa, and these EPA reductions would negatively impact thousands of Iowa jobs. This debate isn't over. I will lock arms with our agricultural groups, our family farmers, leaders from both parties, and Iowans in fighting for Iowa's homegrown, reliable and safe renewable fuels. I encourage Iowans to officially comment to the EPA."
Administration's proposal turns its back on competition and fuel choice, says Iowa Renewable Fuels Association
"That November 15 RFS announcement represents the biggest policy reversal of the entire Obama Administration," says IRFA executive director Monte Shaw. "The EPA proposal turns the RFS on its head, runs counter to the law and is a complete capitulation to Big Oil. The Administration needs to conduct a thorough soul-searching and decide whether they are serious about cleaner fuels, consumer choice and cutting petroleum dependence, or whether they truly want to adopt the Big Oil status quo. There is still time to restore Congressional intent and common sense before the rule is finalized."
In the proposed rule, the Obama administration adopts the position that a lack of retail distribution equipment this year equates to a renewable fuel "supply shortage" next year, says Shaw. This "infrastructure" waiver was specifically rejected by Congress during the adoption of the RFS and, if allowed to stand, would effectively repeal the RFS as a factor in U.S. energy policy, he adds. "The circular logic of this proposal creates a downward death spiral for the RFS as the RFS could not be increased unless Big Oil had already begun to offer higher ethanol blends. With no pressure to move forward, Big Oil would be expected to continue hiding behind its Century of Subsidies and Federal Petroleum Mandate to prevent consumer choice for higher blends."~~~PAGE_BREAK_HERE~~~
RFS is supposed to be a tool for market access, not market restriction, says Shaw
Shaw continues, "It's not just the absurdity of lowering the 2014 numbers below the 2013 level, with the new waiver framework, in essence, the Administration would be ceding power to the petroleum industry to dictate the level of each year's RVO based on the amount of infrastructure the petroleum industry was willing to install. That is the exact opposite of how the RFS was intended to work. The RFS is supposed to be a tool for market access, not market restriction."
In addition to creating an extra-legal waiver mechanism, the proposal lowers the "corn ethanol" level from 13.8 billion gallons called for by the RFS in 2013 to only 13 billion gallons in 2014. The proposal also freezes the biodiesel level at 1.28 billion gallons despite the fact the biodiesel industry is currently operating at an annualized rate of 2 billion gallons.
Shaw hopes we don't have to look back at Nov. 15, 2013 as the start of the next farm financial crisis
"The 2014 numbers represent the real crossroads," concludes Shaw. "We either move toward more competition and more consumer choice or we lock in the current petroleum monopoly. When faced with that choice, the Obama Administration has blinked. I think we've just seen how politically powerful Big Oil really is. They just got what they wanted from EPA when they had no chance of gutting the RFS through Congress. With no Farm Bill and the RFS in danger of being rendered useless, I hope we don't look back at November 15, 2013 as the beginning of the next farm crisis."
Iowa is the leader in renewable fuels production. Iowa has 42 ethanol refineries capable of producing over 3.8 billion gallons annually, with three cellulosic ethanol facilities currently under construction. In addition, Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually. The IRFA was formed in 2002 to represent the state's liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.