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Farm, Renewable Fuel Groups Angered by EPA Plan to Replace Lost Demand for Ethanol, Biodiesel

  • Wednesday, 16 October 2019 09:00

Des Moines Register

October 15, 2016

By Donnelle Eller

Iowa farm and renewable fuel groups say a proposal that the U.S. Environmental Protection Agency released Tuesday fails to keep President Donald Trump's promise to boost the sagging market for ethanol and biodiesel.

“We had a deal with the president … but what the EPA rolled out isn’t that deal,” said Monte Shaw, the Iowa Renewable Fuels Association's executive director. 

Jim Greif, president of the Iowa Corn Growers Association, said his group "is outraged" that the EPA's proposal Tuesday doesn't reflect what the administration outlined "only 11 days ago."

On Oct. 4, the EPA said it would begin accounting for the reduction in demand for corn-based ethanol and soybean-based biodiesel that resulted when the administration granted some refineries exemptions from a federal mandate called the Renewable Fuel Standard.

The law, known as RFS, outlines how many gallons of ethanol and biodiesel that oil refiners must blend into the nation's fuel supply each year.

The EPA said Tuesday it plans to use a three-year average to account for the reduction in demand for ethanol and biodiesel resulting from the waivers, using the number of gallons that the U.S. Department of Energy recommends waiving.

But the Trump administration earlier this month told farm groups it would use the average of the actual number of renewable fuel gallons that are waived, which is much larger. "Any proposal that does not account for actual waived gallons under the Renewable Fuel Standard fails to restore the integrity of the law," Greif said in a statement.

The difference between the two is significant, said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

The energy department, which provides an initial review of small refinery exemption requests, most recently recommended granting waivers for 770 million gallons of renewable fuels. The EPA, however, approved waivers for 1.4 billion gallons during its last round of exemptions.

Since taking office, the Trump administration has granted 85 waivers to oil refineries, freeing them from using 4 billion gallons of renewable fuel. The exemptions have killed demand for 1.4 billion bushels of corn used to make ethanol, industry officials say.

"It's not a shock that the EPA is trying to water down" the plan the Trump administration announced earlier this month, Shaw said.

The administration in the Oct. 4 announcement said Trump had made a deal with Iowa Republicans, including U.S. Sens. Chuck Grassley and Joni Ernst, and Gov. Kim Reynolds, to increase renewable fuel demand.

Grassley said in a statement Tuesday that Iowa farmers and renewable fuels plants will have to trust the EPA to adequately account for the waived gallons.

"The ethanol and biodiesel industries have a lot of cause to distrust EPA and that is understandable," Grassley said. "But President Trump brokered this deal and any attempt to undermine it from EPA would represent a betrayal of the president. I expect EPA would not do that after all the work that’s gone into this issue.”

Ernst and Reynolds said in separate statements they would do everything they could to hold the EPA accountable.

“I understand the biofuel industry’s frustration and distrust following the EPA’s announcement today,” Reynolds said. “The next 30-day comment period is crucial to making sure the EPA follows through on the president’s commitment.”

A public hearing is scheduled to be held Oct. 30 in Ypsilanti, Michigan.

Growth Energy, a Washington, D.C., ethanol association, called on the EPA to hold the public hearing in Iowa “so more Midwest families racing to complete this year’s harvest will have an opportunity to share their views.

“The farm families hit hardest by EPA exemptions deserve a seat at the table, and that can’t happen if the EPA refuses to hold a hearing in a central location, closer to millions of voices who cannot afford to leave the farm for days at a time,” said Emily Skor, Growth Energy's CEO.

The decline in demand for ethanol and biodiesel has been a double blow to farmers already dealing with depressed prices for corn and soybeans because of the administration's trade wars with China, Mexico, Canada and other countries.

The current corn ethanol requirement is 15 billion gallons.

Shaw said it will be tough for many farmers to trust EPA.

“We couldn’t trust the EPA to stick to the deal for 11 days,” Shaw said. “We haven’t been able to trust EPA for the last two years with the RFS.”

Few Iowa renewable fuels or farm groups would have supported the Oct. 4 plan if they had known how the EPA planned to implement it, Shaw said.

“We all said it has to be real numbers. It has to be accountable," Shaw said. "And it has to send a market signal.

Grant Kimberley, Iowa Biodiesel Board's executive director, said he believed the EPA's proposal would be "likely to inflict further damage on the already struggling biodiesel industry and farm economy."

Nearly 30 U.S. ethanol and biodiesel plants have closed either temporarily or permanently because of the exemptions. Four are in Iowa.

U.S. Rep. Dave Loebsack, an Iowa Democrat, said the EPA's proposed rule "is another in a long string of broken promises for our farmers and biofuel producers."

The proposal leaves “farmers and biofuel producers with no guarantee that the billions of gallons of biofuels exempted from the mandate would ever be restored, as has long been promised by the Trump Administration and EPA,” Loebsack said.

The Renewable Fuels Association called the EPA's proposal a "step backward."

"It falls short of delivering on President Trump’s pledge to restore integrity to the Renewable Fuel Standard and leaves farmers, ethanol producers, and consumers with more questions than answers," Geoff Cooper, the group's CEO, said in a statement.

"This proposal is not what was promised by the administration just over a week ago and fails to answer President Trump’s personal call for a stronger conventional biofuel requirement of more than 15 billion" gallons, Cooper said.

The Iowa Renewable Fuels Association said the EPA's proposal "reneges on the core principle" of Trump's plan earlier this month.

"It is unreasonable and counterproductive to expect Iowans to put their faith in EPA to fix the small refinery exemption problem when they were the ones who created the crisis in the first place," Shaw said.

The EPA released details of its plan as part of a supplemental document to the 2020 biofuels requirement. It was required to be filed by Nov. 30.

In a statement earlier this month, the EPA said that under its plan, it would seek comments on actions "to ensure that more than 15 billion gallons of conventional ethanol be blended into the nation's fuel supply." But it did not specify how many gallons will be restored beginning next year.

Read the original article: Farm, Renewable Fuel Groups Angered by EPA Plan to Replace Lost Demand for Ethanol, Biodiesel