Iowa Ethanol Supporters Applaud EPA Decision On RFS

Iowa Farm Scene

Iowa governor and others say Obama administration made right decision -- denying a request for waiver of the RFS.

Published on: November 20, 2012

Gov. Terry Branstad of Iowa and Iowa Lt. Gov. Kim Reynolds applaud the federal government’s decision to uphold the Renewable Fuel Standard and deny pending waiver requests. Iowa leads the nation in ethanol production, accounting for 25% of total U.S. ethanol production, said Branstad on November 16, immediately after the U.S. Environmental Protection Agency made its announcement.

“In addition, Iowa’s biofuels industry has added $13.1 billion to our economy, generated $2.4 billion in household income and supported 49,000 jobs in Iowa,” said Branstad. He sent a letter earlier this year encouraging EPA to maintain the RFS and avoid the scenario of adding more uncertainty into the agriculture sector by granting the waiver requests. “The EPA decision on November 16 is not only good for Iowa but for the rest of America, too,” the governor added.

WAIVER REQUEST DENIED: EPA last week denied a request from some state governors, livestock and poultry groups, and consumer organizations who wanted EPA to waive the Renewable Fuels Standard following the 2012 drought. Ethanol industry leaders and corn growers say denial of request for waiver of RFS was the right decision. They say RFS is needed so the industry can continue to invest in improving the efficiency of making ethanol, and to make progress in achieving the next step -- developing and commercializing cellulosic biofuels.
WAIVER REQUEST DENIED: EPA last week denied a request from some state governors, livestock and poultry groups, and consumer organizations who wanted EPA to waive the Renewable Fuels Standard following the 2012 drought. Ethanol industry leaders and corn growers say denial of request for waiver of RFS was the right decision. They say RFS is needed so the industry can continue to invest in improving the efficiency of making ethanol, and to make progress in achieving the next step -- developing and commercializing cellulosic biofuels.

Iowa Gov. Branstad said the following upon regarding EPA’s decision:
“There is no question that this year’s drought has caused hardships in the agriculture sector, particularly for livestock producers. The EPA rightfully decided that waivers were not an effective remedy to those hardships and would have instead injected unnecessary additional uncertainty into another component of the agriculture sector.” Iowa Lt. Governor Kim Reynolds added, “Gov. Branstad and I continue to believe that biofuels can play a significant role in diversifying our nation’s energy portfolio and making our nation more energy independent.”

More information on the EPA decision can be found at  www.epa.gov/otaq/fuels/renewablefuels/notices.htm.

National Corn Growers president supports EPA decision to deny waiver request|
Pam Johnson, who farms with her family in northeast Iowa and is the current president of the National Corn Growers Association, released the following statement in response to the EPA’s announcement to deny the request to waive the RFS.

"The National Corn Growers Association supports the Environmental Protection Agency's decision to deny the Renewable Fuel Standard waiver request. We believe EPA Administrator Jackson appropriately recognized that the petitioners who sought the waiver did not properly prove severe nationwide economic harm had occurred, thereby creating no justification for a waiver of the RFS.”

Johnson added, "The U.S. ethanol industry plays a pivotal role in job creation throughout the country, supporting over 400,000 jobs nationwide. This includes many jobs in ethanol plants in rural America. The RFS advances the use of domestically produced renewable fuels, encourages new technologies and enhances U.S. energy independence."

IRFA applauds EPA for “sticking with the facts to uphold the RFS”
The Iowa Renewable Fuels Association also commended EPA for “sticking with the facts and upholding our nation’s commitment to cleaner, American-made energy by denying requests to waive the Renewable Fuel Standard.”

IRFA executive director Monte Shaw stated: “The decision by EPA to deny requests to waive the RFS was clearly based on the facts and proves the current policy is working. There was simply no legitimate reason to waive the RFS given the massive amount of excess RINs available coupled with a ‘top 10’ corn harvest for the U.S. this year. The inherent flexibilities built into the RFS allow the market to adjust to a short corn crop and prove the RFS is built to last even during difficult years. This EPA decision is proof that Congress should not waste time ‘fixing’ an RFS policy that isn’t broken.”

EPA’s decision last Friday means that it denies the requests to abandon the nation’s most successful energy policy, says Shaw. IRFA’s comments on the waiver request can be found by clicking here. Iowa is the leader in renewable fuels production. Iowa has 13 biodiesel facilities with the capacity to produce 320 million gallons annually. In addition, Iowa has 41 ethanol refineries capable of producing nearly 3.7 billion gallons annually and one new facility under construction.

Ethanol maker POET says denial of the request for RFS waiver was right decision
Jeff Lautt, CEO of POET, issued the following statement regarding EPA’s decision on the RFS waiver: “EPA last Friday made a sound decision in denying a waiver of the Renewable Fuel Standard. As studies have shown, a waiver would have likely had little to no impact on commodities prices in the aftermath of the recent drought. This effort was nothing more than the latest attempt by renewable fuel opponents to undermine policy that has helped make America stronger.

“EPA’s decision means the Renewable Fuel Standard remains a strong and stable policy, and our industry can move forward with greater confidence, continuing to invest in new technology to make biofuel production even more efficient. Continuing the RFS will also help make the commercializing of production of ethanol from cellulosic feedstocks (such as crop residue and other plant material) a reality.

Industry can continue to invest in improving efficiency, commercializing cellulosic biofuels
Lautt adds, “POET-DSM Advanced Biofuels is our joint venture company that is involved with construction of the first commercial cellulosic biofuels plant that will use corn cobs, leaves, husks and some stalks to produce renewable fuel. Long term, there are ambitious plans for expansion of this technology to more ethanol plants in the POET network and to other companies through licensing agreements. By maintaining the integrity of the Renewable Fuel Standard, those expansion plans are much more feasible.”

POET, one of the world’s largest ethanol producers, is a leader in biorefining through its efficient, vertically integrated approach to production. The 25-year-old company has a production capacity of over 1.6 billion gallons of ethanol and 9 billion pounds of high-protein animal feed annually from its network of 27 ethanol production facilities in the U.S. The company also operates a pilot-scale cellulosic bio-ethanol plant which uses corn cobs, leaves, husk and some stalk as feedstock and plans to commercialize the process at Emmetsburg, Iowa through its joint venture with DSM. For more information, visit www.poet.com.

EPA rejects calls for RFS waiver, keeps ethanol volume requirements intact
EPA officials say their agency studied the situation and found no evidence to support a severe 'economic harm" that some people say would warrant granting a waiver of the federal Renewable Fuels Standard. The EPA said the decision is based on economic analyses and modeling done in conjunction with USDA and DOE. "We recognize this year’s drought has created hardship in some sectors of the economy, particularly for livestock producers who have to cope with high feed costs driven up by high priced grain," said Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation. "But our extensive analysis makes it clear that Congressional requirements for a waiver have not been met and that waiving the RFS would have little, if any, impact." To support the waiver decision, EPA officials say they conducted several economic analyses and those studies of impacts in the agricultural sector, conducted with USDA, showed that on average, waiving the mandate would only reduce corn prices by approximately 1%. Economic analyses of impacts in the energy sector, conducted with DOE, showed waiving the mandate would not impact household energy costs.

This marks the second time EPA has considered an RFS waiver request
"EPA found that the evidence and information failed to support a determination that implementation of the RFS mandate during the 2012-2013 time period would severely harm the economy of a state, a region, or the United States. The RFS standard was established by Congress in the Energy Policy Act of 2005 (EP Act)," the agency said in a statement. EPA says the 2005 law requires the agency to implement a renewable fuels standard to ensure that transportation fuel sold in the United States contains a minimum volume of renewable fuel. A waiver of the mandate requires EPA, working with USDA and DOE, to make a finding of "severe economic harm" from the RFS mandate itself. This November 16 decision marks the second time EPA has considered an RFS waiver request -- the first such request came in 2008 from Texas Gov. Rick Perry. In both cases, an analysis by EPA concluded that the mandate did not impose severe harm and the requests for a waiver of the RFS were denied.

Decision comes after a heated battle between grain and livestock organizations
Livestock and poultry groups (national as well as some state livestock producer associations) say the 2012 drought caused lower grain yields which has driven up the cost of feed. They say demand for grain for the biofuels market is aggravating the situation of a short grain supply. Grain groups such as the national and state corn grower associations say the RFS provides an opportunity for energy independence, and built-in flexibilities in the RFS would allow the mandate to function properly, despite concerns about low corn yields.

National Cattlemen’s Beef Association president J.D. Alexander said EPA’s denial of the waiver is a “blatant example” of the flawed policy of the RFS. “Our message to EPA and its administrator Lisa Jackson is how bad does it have to get for livestock producers before relief is brought to rural America? Cattlemen and women are only asking for a level playing field,” says Alexander. “With EPA’s refusal to grant a waiver when faced with these conditions, it is clear the RFS is not working as Congress intended.”

National Pork Producers Council says the RFS needs to be repaired

The National Pork Producers Council released this statement in its weekly newsletter after EPA denied the request for a waiver last week:

“A coalition of food and agricultural organizations said it would work to fix federal biofuels policy after the EPA denied requests that it waive the Renewable Fuels Standard, which requires corn ethanol to be blended into gasoline. A severe drought in summer 2012 – the worst in more than 60 years – hit much of the corn-growing regions. It adversely affected yields and pushed up feed grain prices. Dozens of pork, poultry, beef and dairy operations have filed for bankruptcy, been sold or gone out of business over the past few months because of higher production costs.”

The NPPC statement continues, “The RFS will require 13.8 billion gallons of corn-based ethanol to be blended into gasoline in 2013, an amount that will use about 4.5 billion bushels of the nation’s corn crop, according to USDA. USDA’s November 9 Crop Report puts this year’s U.S. corn harvest at just 10.7 billion bushels, down 13% from last year and down 28% from USDA’s May 2012 projection. The ethanol industry will use more than 40% of the corn supply next year.”

Now that EPA has denied the waiver request, what’s next step for those groups who don’t like the RFS?
NPPC and others in the coalition that requested the waiver say “fix the renewable fuels standard now.”

NPPC sums up its position: “When Congress expanded the RFS in 2007, certain “safety valves” were added to the law. One provision allows the EPA administrator to reduce the required volume of renewable fuel in any year based on severe harm to the economy or environment of a state, a region or the United States. This year, in addition to the livestock, poultry and dairy organizations, a bipartisan group of 34 U.S. senators and 156 House members and nine governors also petitioned EPA to grant a waiver of the federal requirement for the production of corn ethanol. This group filed this petition with EPA because the RFS mandate, coupled with a drought that has reduced yields and pushed up prices of feed grains, has caused the severe economic harm for which Congress added the so-called “safety valves.”