Rival parties fight threat to ethanol

‘Big oil’ is “wrong” about the dangers, Iowa Gov. Brandstad says

By J. Taylor Rushing, correspondent
Published: June 18 2014 | 5:20 am in Business Rotator, Government, Iowa, News, Subject,

WASHINGTON — The U.S. Environmental Protection Agency has accomplished the seemingly impossible — it has united major political parties in opposition to a key agency proposal threatening Iowa’s ethanol industry.

Since October, Iowa’s congressional delegation and state leaders have taken an all-hands-on-deck approach to an unprecedented EPA proposal that would lower the national mandates for corn ethanol and biodiesel fuel production. Overall, critics say, the effect would be to set the ethanol and biodiesel industries on a path of less production in future years in an era when more, not fewer, renewable fuels are needed in the United States.

Such critics of the proposal include, at the top of Iowa’s Republican state and federal officeholders, Gov. Terry Branstad, Lt. Gov. Kim Reynolds, Agriculture Secretary Bill Northey, U.S. Sen. Chuck Grassley and U.S. Reps. Tom Latham and Rep. Steve King. From the Democratic side, opposition has come from U.S. Sen. Tom Harkin and Reps. Bruce Braley and Dave Loebsack.

They have written letters to the EPA, lobbied the Obama administration, delivered speeches and statements in Congress or attended a January EPA hearing in Des Moines to speak out against the proposal. They also signed a letter in December to President Barack Obama, EPA administrator Gina McCarthy and U.S. Agriculture Secretary Tom Vilsack.

“I’m not at all happy, and many of us have made our concerns known at the White House, believe me,” Harkin said. “I am optimistic that the proposal will be refined ... and will be scaled back so we can go ahead and meet the demands we have out there for ethanol, especially.”

News of the EPA proposal leaked in October and was made official in November.

The proposal would lower the required biofuels production this year from 18.15 billion gallons to 15.21 billion gallons. Production of advanced biofuels, meanwhile, were proposed to be as low as 2 billion gallons, far lower than the 3.75 billion gallons called for in 2014 under the 2007 expansion of the Renewable Fuels Standard.

A lowering of the standard would be a first since Congress created the program in 2005. In signing the bill at the time, then-President George W. Bush hailed the law as a “major step” toward reducing U.S. dependence on foreign oil.

IOWA LEADS NATION IN ETHANOL PRODUCTION

Iowa leads the United States in ethanol production, with more than 40 plants producing more than 4 billion gallons annually. Given the nationwide production total of 15 billion gallons, Iowa supplies about 27 percent of the total, according to the U.S. Renewable Fuels Association.

Iowa is second in the nation in biodiesel fuel production, after Texas, with 12 plants statewide producing 184 million gallons as recently as 2012, or about 17 percent of total U.S. biodiesel output.

Together, the ethanol and biofuels industries account for more than $5.5 billion in the state, generate $4 billion of income for Iowa households and contribute to about 62,000 jobs, according to the Iowa Renewable Fuels Association. Since renewable fuels depend on feedstock produced by farmers in-state, the largest impact of the industries is in agriculture, with nearly 18,000 jobs affected.

The EPA proposal is not yet final. But new developments came in recent weeks, with news reports that oil interests and airlines may have inappropriately lobbied the Obama administration to lower the Renewable Fuels Standard requirements.

That news angered Braley so much that he wrote the EPA’s inspector general June 6 to request an investigation. The congressman in November wrote Obama to say he was “angered” and “frustrated” with the EPA proposal under Obama’s leadership, going so far as to accuse the White House of “caving to Big Oil.”

Opposition to the Renewable Fuels Standard traditionally has come from oil interests, which argue that the mandate forces producers to “blend” fuels that older engines can’t handle, and food retailers, who complain it forces higher prices. Critics say the mandate forces fuel and food prices to rise because so much corn is being taken out of the food industry and used for ethanol production instead.

Grassley said the proposal “would hurt the development of clean, renewable, domestic energy.”

“It’s disappointing to consider that President Obama, who campaigned in Iowa on his support for biofuels, would allow his EPA to undermine this successful policy,” Grassley said early this month.

Grassley and Harkin in January joined 29 other senators in a letter to the EPA stating their opposition to the proposal.

Also in January, at the EPA hearing in Des Moines, Branstad and Reynolds said that if the EPA proposal becomes reality, it would cost 45,000 jobs nationally, according to the Iowa and U.S. Renewable Fuels Association. A state figure was unavailable.

Like Braley, Loebsack has tried to use his status as a Democrat to his advantage with the Obama administration. In January he met with McCarthy at the EPA and in February introduced legislation supporting the renewable fuels industry.

“I have taken the fight directly to the White House and Environmental Protection Agency to share the serious concerns I have heard from folks across Iowa.” Loebsack said.

OIL INDUSTRY WRONG, GOVERNOR MAINTAINS

For his part, Branstad has taken particular aim at a traditional Republican ally — “Big Oil,” arguing that the industry is “wrong” about the dangers of higher blends of ethanol fuels. Specifically, he called for more E15, E85 and “blender pumps” as part of the solution, referring to fuel pumps that dispense particular percentages of ethanol. E30 pumps “appear to be the sweet spot for the greatest fuel efficiency,” although other types of blender pumps offer savings to consumers as well.

“In some cases in Iowa, E85 can be anywhere from 50 cents to a dollar cheaper per gallon than regular gasoline,” he said. “When consumers have the choice, like they do in Iowa, they choose ethanol and other biofuels. The oil companies are preventing fuel choice in other parts of the country and consumers lose, paying much more for fuel.”

Harkin went one step further, calling for more outlets around the country for ethanol-blended fuels.

“What we need more than anything is more E85 pumps and more flexible-fuel cars,” he said. “That’s the answer to the problem, not cutting back on our Renewable Fuel Standard.”


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