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Proposal to undermine RFS could lead to farm crisisProposal to undermine RFS could lead to farm crisis

Texas Sen. Ted Cruz continues to push Trump Administration to kill Renewable Fuel Standard.

Rod Swoboda

February 28, 2018

5 Min Read

At a White House meeting February 27, U.S. Senator Ted Cruz (R-Texas) urged President Trump to adopt Cruz’s proposal to allow the use of Renewable Fuel Standard (RFS) waiver credits. Supporters of ethanol and biodiesel say that would gut the demand for biofuels. Iowa Senators Chuck Grassley and Joni Ernst, who attended the meeting, refused to accept the proposal and told the president the waiver idea Cruz is pushing “would destroy ethanol demand.”

Grassley and Ernst held a telephone press conference after they attended the White House meeting. Curtailing ethanol and biodiesel demand would drive corn and soybean prices to significantly lower levels and further reduce farm income, they said.

Related: White House biofuel meeting ends without breakthrough

Gutting the RFS could force farmers into bankruptcy

“While we are glad President Trump did not make a final decision on the RFS and no deal was struck at the February 27 meeting, it’s very clear he has been presented misleading and one-sided information,” says Monte Shaw, executive director of the Iowa Renewable Fuels Association.

Shaw adds, “It’s no secret that President Trump values American manufacturing jobs. In a cynical attempt to preserve the petroleum monopoly, Cruz is telling the president that gutting the RFS could help Pennsylvania Energy Solutions (PES), the big East Coast oil refiner that recently went bankrupt. Not one independent expert on this situation agrees with Cruz, and even the EPA’s own analysis disagrees.”

 The facts are clear, says Shaw: “Undermining the RFS will not save one refinery job in Pennsylvania, but it could push thousands of farm families into bankruptcy.”

 Related: Changes brewing for RFS?

Waiver would destroy biodiesel, cellulosic ethanol

In recent weeks, Senator Cruz has relentlessly attempted to blame the bankruptcy of the PES oil refinery on the price of RINs (Renewable Identification Numbers), the compliance mechanism for the RFS. However, every single independent expert, including noted oil economist Phil Verleger, the University of Pennsylvania Kleinman Center for Energy Policy, Reuters, and even EPA professional staff, agree that RINs are not the cause of the PES bankruptcy. 

“The Cruz RFS waiver credit scheme would destroy biodiesel and cellulosic ethanol, and severely reduce corn ethanol demand,” says Shaw. “Ag commodity prices would be hit hard. With farm income already down and farm bankruptcies up, this blow would likely spark a farm financial crisis the likes of which we haven’t seen since the 1980s.”

Related: Dispute between Cruz, Grassley stays hot

Will Trump keep his promise to defend RFS?

Shaw adds, “I remain optimistic President Trump will stand by his commitment to defend the RFS. But, if he flip-flops to adopt the Cruz RFS waiver scheme, it would be a complete abdication of the President’s repeated pledge to voters to defend the RFS. I believe the political fallout would be beyond anything I’ve witnessed in 25 years.”

During the February 27 White House meeting, Iowa Senators Grassley and Ernst spoke against what Cruz had to say. Grassley and Ernst also pointed out that the vast majority of refiners are enjoying record profits while many farm commodity prices remain mired below cost of production. Rather than unnecessarily destroy demand for biofuels, the two Iowa Senators urged Trump to take steps to boost biofuel use.

Related: King Corn reigns in Donald Trump's Washington

Allowing year-round sale of E15 is a better answer

“We at IRFA agree with Senators Grassley and Ernst,” says Shaw. “If President Trump wants to ease RIN prices while not destroying the RFS, there are steps he can take quickly. He could order EPA to approve year-round sale of the E15 ethanol blend and bring more transparency to the RIN market. Everyone at the White House meeting agreed those steps would lower RIN prices. So why not move forward instead of letting the oil industry hold these ideas hostage, an effort to destroy the RFS?”

IRFA represents Iowa’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuel production with 43 ethanol refineries capable of producing 4 billion gallons annually – including nearly 55 million gallons of annual cellulosic ethanol production capacity. Iowa has 12 biodiesel facilities with capacity to produce over 350 million gallons annually. For more information visit www.IowaRFA.org.

Senate confirms Northey to USDA leadership post

On February 27 by voice vote, the U.S. Senate confirmed the nomination of Iowa Secretary of Ag Bill Northey to the position of USDA Under Secretary for Farm Production and Conservation. In response to Northey’s confirmation, IRFA’s Shaw commented: 

“Today’s vote was long overdue, but very welcome. Bill Northey has been an outstanding Secretary of Ag for Iowa and will undoubtedly be an excellent leader at USDA. The Trump Administration needs more voices that echo, not contradict, Trump’s own support for the Renewable Fuel Standard. Bill Northey’s confirmation by the U.S. Senate is a victory for farmers and biofuel supporters across the country.”

Related: Northey confirmed for USDA post

Iowa Senators Grassley and Ernst defend RFS

For four months, Ted Cruz used his hold on the Bill Northey confirmation vote as a political football in an attempt to undermine the RFS, says Shaw. “While it took too long, Cruz finally realized Northey had no interest in being confirmed on the back of dismantling the RFS.” 

Taking part in the February 27 White House discussion, Grassley and Ernst were influential in getting Cruz to allow Northey’s nomination to be voted on in the Senate. Iowa’s two U.S. Senators spoke “against the false narratives Cruz continues to use in his efforts to gut the RFS and preserve the petroleum monopoly on our fuel supplies.”

Northey was nominated to fill the USDA position in September 2017. Cruz then put the hold on Northey’s confirmation, attempting to force changes in the RFS. Cruz released his hold February 27 to allow Northey’s confirmation vote in the U.S. Senate and Northey was confirmed unanimously.

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