Iowa Gov. Branstad declares EPA cut on biofuels a 'war on corn'

Biofuels have bipartisan support in agriculture states, including Minnesota and Illinois

Mike Wiser
Published: November 24 2013 | 7:00 am - Updated: 28 March 2014 | 11:58 pm in
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NEVADA, Iowa — Inside a cavernous metal-sided warehouse in rural Nevada, a who’s who of Iowa’s political and biofuel worlds met for what they said was nothing less than an outright attack on rural America.

That attack, said Gov. Terry Branstad, is coming from the Environmental Protection Agency in the form of new rules scaling back the national transportation fuel supply use requirement by a few billion gallons.

“There’s an army of farmers out here. Right now, you don’t have your pitchforks, but you’re ready to fight,” said U.S. Sen. Chuck Grassley, the state’s senior senator who still farms in New Hartford and who joined Branstad and others in the unheated warehouse.

He stood, microphone in hand, at a podium set up in front of a 15-foot-high golden pile of grain being dropped into the warehouse for storage from an overhead conveyor.

“We’re not just fighting big oil, we’re fighting ignorance,” he said. “We’re fighting ignorance of ethanol.”

In short, the worry is over the Renewable Fuel Standard. That’s a requirement that a certain amount of biofuels must be used in the United States each year. The first standard came about in the Energy Policy Act of 2005, requiring a minimum of 4 billion gallons be used in 2006, rising to 7.5 billion by 2012.

Those amounts, however, were greatly expanded in the 2007 Energy Independence and Security Act. The new measure required 9 billion gallons of biofuels by 2008 rising to 36 billion gallons by 2022. It also required 16 billion of those gallons to be from cellulosic biofuels and a cap of 15 billion gallons from corn-starch ethanol.

The proposed EPA rules dial back the current requirements by at least 3 billion gallons of biofuels.

“This is a war on corn,” Branstad said.

He, like many of the speakers and those in crowd of more than 300, sported a button the circumference of a peach that said “Don’t Mess with the RFS.”

Big oil vs. big ag

Friday’s news conference in Nevada mirrors events across the Midwest and in Washington, D.C., since the EPA proposal was announced.

“We’re going to try to reach a whole range of decision-makers right here in Washington,” Brad Woodhouse, former communications director for the Democratic National Committee and president of Americans United for Change, said during a Tuesday conference call with reporters. “This is not just one big industry versus one gigantic, taxpayer-subsidized in big oil, but also a campaign with grassroots following.”

The debate cuts across political lines. Biofuels have found support among Republicans and Democrats from agriculture states, including Iowa, Minnesota and Illinois.

But biofuels are opposed by powerful interests, too. The oil industry is one, but opposition has sprung up from some environmental groups as well as livestock organizations that say the Renewable Fuel Standard keeps the price of feed artificially high.

The Libertarian Heartland Institute, for instance, applauded the EPA move, saying, “The only beneficiaries of ethanol mandates are special interests who use the power of government to profit off of the American people” and encouraging Congress to go beyond the Renewable Fuel Standard and cut all ethanol mandates.

“First, clearly this is a big conflict by interests over policy priorities,” Iowa State University political scientist Steffen Schmidt said. “Oil has never liked the move to alternative energy sources of which ethanol and biodiesel are the two irritants to them. This is Texas versus Iowa and therefore has some pretty fascinating political undertones as well.”

At stake are billions of dollars in a guaranteed market, potentially thousands of agriculture state jobs and, even, said Republican U.S. Rep. Steve King of Krion, national security.

“We import still a lot of petroleum, we should not forget that,” he told the crowd who met in the storage building Friday. “Tell the EPA to ‘Keep your hands off the RFS.’ That’s our holy grail.”

By the numbers

Iowa’s ethanol industry has the capacity to produce 3.84 billion gallons of ethanol, more than any other state, and 1.8 billion gallons more than second-place Nebraska, which has the capacity to produce 2.05 billion gallons. Illinois is at 1.41 billion gallons, Indiana at 1.14 and Minnesota also around 1.14 billion gallons round out the top five, according to the Renewable Fuels Association.

Iowa is second only to Texas in annual production capacity of biodiesel, according to the U.S. Energy Information Administration. The Lone Star State produces 416 million gallons of biodiesel a year. Iowa produces 250 gallons. Missouri is 3rd with 188 million gallons, Illinois 4th with 167 million and Minnesota rounds out the top five with 107 million annually.

So it stands to reason that Iowans have more to lose from changes to the Renewable Fuel Standard than any other state.

Not necessarily, said Iowa State University economist David Swenson.

“As proposed, the rollback of the RFS to 2012 levels will have, at best, a very minor impact on the regional economies that benefitted from the ethanol boom. Having conducted several impact studies of ethanol, my conclusion is that, as proposed, the result in Iowa would likely be a few dozen jobs at best. That’s it,” Swenson said. “But the stakeholders are behaving as if the entire industry is threatened. Economics says the industry is viable as currently structured and mandated, and it will continue to be viable with only minor adjustments in the RFS.”

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