With around 40% of Iowa’s corn crop used for ethanol production, presidential candidates are aware of the importance of ethanol policy to Iowa’s economy. With an eye on the 2020 race for the U.S. presidency, candidates are already coming to Iowa to speak to potential voters, and they are talking about ethanol and related renewable fuel issues.
A declared candidate for the Democratic presidential nomination, U.S. Sen. Amy Klobuchar of Minnesota visited the Lincolnway Ethanol plant at Nevada in central Iowa on April 12. After touring the facility, Klobuchar held a round-table discussion with local farmers and management staff of the ethanol plant.
The ethanol industry and corn growers are battling major oil companies and the U.S. Environmental Protection Agency over the small-refinery waivers EPA is giving the petroleum industry. The waivers allow refineries who receive them to avoid having to comply with the Renewable Fuel Standard volume obligations. The RFS is a federal law that sets the amount of ethanol and biodiesel that refineries must blend with the petroleum fuel they produce each year.
EPA’s waivers hurt ethanol demand
The small refinery exemptions granted by EPA are continuing to erode ethanol demand. The waivers have already taken 3 billion gallons of demand, or about 20%, from the ethanol industry, the panel members pointed out.
Klobuchar said, “I think part of the answer to this issue is to talk directly to the oil companies. Ethanol is part of their market, and we need to speak out, or we don’t have a chance of maintaining ethanol’s market share, as required by the RFS.”
In terms of EPA policy, Klobuchar said replacing the gallons lost by the waivers is important. That can be done by having EPA set higher renewable fuel blending requirements for the coming year. Likewise, government policy that does more to promote the production of cellulosic ethanol would also help recoup the losses suffered by the ethanol industry due to waivers granted during the past couple of years.
Klobuchar agreed with panel members that EPA needs to address how the waivers are affecting renewable identification numbers (RINs) and the market. Also, she supports the push to get EPA to allow the sale of E15 year-round nationwide. Currently, in most states, EPA doesn’t allow the sale of the 15% ethanol blend during the summer. That restriction is outdated and was originally put into the RFS when the law was written to satisfy the petroleum industry.
Last month, EPA announced its plans to finalize a new regulation allowing year-round access to gasoline with 15% ethanol nationwide. Most gasoline sold in the U.S. today is 10% ethanol. The Trump administration’s push for year-round E15 would bolster the rural economy, ethanol advocates say. Klobuchar agreed.
Large field of Democrats
Over a dozen Democrats have announced they are running for the 2020 presidential nomination and are balancing their support for ethanol while pitching bold action on climate change. To satisfy farmers as well as environmentalists who oppose biofuels, Klobuchar said she’d approach this issue by forming a coalition of common interests. Even environmentalists who don’t see biofuels as a remedy for climate change agree that oil refineries should not get waivers that exclude them from complying with the RFS, she said.
Iowa is also a leader in the number of wind farms generating electricity, another area of common ground between farmers and environmentalists, she noted. Klobuchar says she’s never taken PAC contributions from oil companies, “but the oil companies have given money to a lot of candidates.”
Regarding EPA’s April 12 announcement that it will accept public comments on a proposed regulation that would allow EPA to publicly release names and information of companies who apply for small-refinery exemptions from the RFS, Monte Shaw, executive director of the Iowa Renewable Fuels Association, released this statement:
“For far too long, the small-refinery exemption [SRE] process has been locked in a black box. We’re glad EPA is proposing to shed some light on who is applying. However, I’m reminded of the old silent movie where the damsel in distress is tied to the railroad tracks and a train is approaching. Sometimes the damsel is wearing a blindfold and sometimes she isn’t. So, while transparency is positive if the train hits, it will hurt just the same whether you saw it coming or not. The bottom line remains, with RIN prices trading at levels even Sen. Ted Cruz deemed acceptable, there is no justification for any new SREs to be granted. Refiners are raking in record profits, while biofuel plants and farmers are treading water.”