Harkin agrees lower fuel standard would hurt Iowa economy

But move wouldn't lead Iowa back into farm crisis, senator says

James Q. Lynch
Published: January 9 2014 | 11:30 am - Updated: 29 March 2014 | 1:51 am in

Gov. Terry Branstad may have been “using a little hyperbole to make a point” when he suggested lowering renewable fuel standards could lead to a return to the “bad old days” of the farm crisis, Sen. Tom Harkin suggested Thursday morning.

However, the Iowa Democrat agreed with the point Republican Branstad was making: reducing the use of conventional biofuels would not be good for the Iowa farm economy.

And, Harkin told reporters, Branstad is correct in not going along with the Environmental Protection Agency’s plans to lower the requirements for renewable fuel.

Whether the governor is right that lowering the requirements for renewable fuel use is a bad idea, Harkin said the move would not be good for Iowa.

“It’s not going to be good for the farm economy,” he said. “It’s certainly not going to be good for the Upper Midwest ... it won’t help.”

Harkin and Branstad were reacting to an EPA proposal that would lower the required consumption of conventional renewable fuel to 13.01 billion gallons, despite the law mandating consumption of 14.4 billion gallons, and below the 2013 level of 13.8 billion gallons. It also provides that biodiesel remains at 1.28 billion gallons.

“I’ve argued against that. I don’t believe that EPA has any real reason for doing that,” Harkin said and cited another study that concluded “there is absolutely no basis for the (Office of Management and Budget) assumption that this will increase gas prices. That’s just not true.”

Instead, Harkin said, the mandated volumes should be increased.

“They could solve this whole thing by making oil companies ratchet up from E10 to E15,” Harkin said. E10 and E15 refer to the percentage of ethanol in gasoline. Nut Big Oil will “fight that tooth and nail.”

Branstad also accused the EPA of “cow-towing” to the oil industry instead of promoting the use of renewable fuels that help bring down the costs of operating a vehicle, Branstad said.

“This shouldn’t be about increasing profitability of Big Oil,” he said.

Branstad promised to fight for renewable fuels as vigorously as he went to the mat to preserve wrestling as an Olympic sport.

The RFS, he said, “has been tremendously successful. We’ve had some of our best ag years because of it.”

Iowa leads the nation in production of ethanol and biodiesel, which has led to job creation across the state.

However, lowering the RFS could cost the state jobs and further depress the price of corn, which has dropped from $8 a bushel to $4 a bushel.

“That’s at or below the cost of production,” he said, and the lower farm income would ripple through the state’s farm machinery industry and other ag-related industries.

“I don’t want to be alarmist, but I was governor during the farm crisis of the 1980s and I don’t want to revisit those bad old days,” he said.

The Iowa congressional delegation is united in opposition to the EPA’s proposal to lower the RFS and the need to increase use of renewables. Branstad’s not stopping there. He hopes to use Iowa’s first-in-the-nation caucuses to leverage support.

“We want to make it clear to anyone looking at national office this is an issue that Iowans care deeply about,” he said. This is an issue that could take the Midwest from leading the nation’s recovery into a tailspin.”

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