EPA proposal could impact local ethanol, biodiesel production

A public hearing Aug. 1 in Washington, D.C. could have an impact on Iowa farmers who grow corn used in ethanol production and industries which produce and support biodiesel fuel.

The meeting will give members of the public and representatives of renewable fuels industry a chance to weigh in on the Environmental Protection Agency’s proposal to lower the amount of biofuels mandated to be used in the United States in 2019.

Each year, the EPA releases ethanol and advanced biofuels volume requirements, or the amount which must be used in the U.S., under the Renewable Fuel Standard. The proposal released July 5 calls for a reduction in advanced biofuels from 4.28 billion gallons in 2018 to 4.24 billion gallons in 2019.

A reduction in required use can affect gasoline prices at the pump and corn prices for U.S. and Iowa farmers. This is the first year since the RFS was created the federal government has recommended a reduction in the amount of advanced biodiesel use.

This reduction, coupled with zero growth proposed in the 15 billion gallon level of ethanol used in blended fuels such as E-85, E-15 and E-10, has many in the renewable fuels industry speaking out.

Renewable Energy Group, Inc. employs 26 full-time employees at its biodiesel plant in Newton. Company spokesperson Anthony Hulen said REG has no plans at this time to scale back production at its Newton facility, as the biodiesel minimum volumes are set through 2018.

If the EPA proposal is implemented, it would affect volume requirements for 2019, and Hulen said it’s premature to speculate if a reduction in the Reported Volume Obligation that far into the future would cause REG and other U.S. biodiesel plants to scale back production.

“Towns like Newton are a prime example of the energy security and, more importantly, jobs benefits that this industry provides,” Hulen said.

REG and other industry insiders are lobbying Washington lawmakers to reinstate and reform a $1 billion tax credit which expired last year for advanced biofuels manufacturers. Hulen said the problem REG has with the tax credit as written is the money is available to foreign biodiesel producers. He said its creating an “explosion” of imports and hurting American biodiesel makers.

There are few issues which unite Iowa’s lone Democrat in Washington, second congressional district Congressman Dave Loebsack, with the state’s three Republican representatives and Republican senators. But the RFS has enjoyed bipartisan support since its inception in the Energy Policy Act 2005. Iowa’s complete Washington delegation almost immediately voiced opposition to the EPA’s proposed RVO reduction.

In a statement about the reductions July 5, Loebsack — who represents Jasper County — criticized President Trump for the proposal. Under President Trump, the EPA has made deregulation a priority, and Loebsack is accusing the administration of “turning its back” on rural farmers.

“Never in its history has the EPA reduced the amount of advanced biofuels required to be used in the U.S. under the Renewable Fuel Standard (RFS),” Loebsack said. “Additionally, the amount of conventional biofuels, like ethanol, to be used in the U.S. will remain stagnant. Now is not the time to sit on our laurels. We must aggressively push for the EPA to expand the RFS and the use of biofuels, not slash it.”

Congressman Steve King, R-Iowa, went as far to call it “executive overreach.” Republican Sen. Chuck Grassley was more tempered in his response, calling the proposal a “mixed bag.”

“While I’m glad the EPA’s proposal holds steady the requirement of 15 billion gallons for conventional ethanol, the lack of any increase for biodiesel is a missed opportunity.” Grassley said in a written statement. “The proposal fails to recognize the ability of the domestic biodiesel industry to produce at much higher levels. The proposed cut to advanced and cellulosic fuels will have a chilling effect on the push toward next generation biofuels, and will certainly harm investments in this area.”