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Iowa leaders, biofuels officials criticize EPA renewable fuels recommendation

Steam rises from a stack outside the POET ethanol biorefinery in Gowrie, Iowa, on May 17, 2019 (Bloomberg photo by Daniel Acker)
Steam rises from a stack outside the POET ethanol biorefinery in Gowrie, Iowa, on May 17, 2019 (Bloomberg photo by Daniel Acker)

Renewable fuels advocates and Iowa leaders have criticized biofuel blend requirements proposed by the Environmental Protection Agency as being insufficient.

The U.S. Environmental Protection Agency on Friday proposed increasing the volume of biofuels refiners must blend into their fuel annually to 20.04 billion gallons in 2020, up from 19.92 billion gallons in 2019.

The EPA said the proposed mandate included 15 billion gallons of conventional biofuels like ethanol, unchanged from 2019, along with 5.04 billion gallons of advanced biofuels, like those made from agricultural wastes, up from 4.92 billion in 2019.

Monte Shaw, executive director of the Iowa Renewable Fuels Association, criticized the proposal for failing to address small refinery exemptions, which have caused headaches for biofuels proponents.

Since President Donald Trump took office, the EPA has more than quadrupled the number of exemptions granted, saving the oil industry hundreds of millions of dollars but enraging another key constituency — corn growers — who claim the move threatens demand for their products.

“The (Renewable Fuel Standard) was intended to send a clear market signal for the growth of biofuels and, unfortunately, this rule falls short,” Shaw said in a Friday news release. “Until the EPA reins in the abuse of (small refinery exemptions) and reallocates what has already been lost, billions of gallons of biofuel demand will be destroyed each year as (small refinery exemptions) explode around our industry like fireworks above the Washington Monument on the Fourth of July.”

Iowa’s governor shared Shaw’s disapproval.

“I am incredibly disappointed to see that the EPA has failed to reallocate the millions of lost gallons due to their brazen and unprecedented use of small refinery exemption waivers,” Gov. Kim Reynolds said in a separate news release. “A robust (Renewable Fuel Standard) is essential to a healthy ag economy in Iowa and across the country. I urge EPA Secretary Wheeler to reverse course and uphold President Trump’s commitment to rural America by strengthening the (Renewable Fuel Standard) and putting an end to the abusive practice of granting waivers to profitable oil refineries.”

Oil refiners are required to blend an amount of biofuels into their fuel. However, those with a capacity of fewer than 75,000 barrels per day have the option to purchase Renewable Identification Number, or RIN, credits as a substitute if they prove that complying would cause them financial strain.

The EPA is charged with setting biofuel blending requirements for the refining industry as part of the Renewable Fuel Standard, a more than decade-old regulation aimed at helping farmers and reducing U.S. dependence on oil.

The policy has helped farmers by creating a huge market for ethanol and other biofuels, but oil refiners say compliance can cost a fortune.

As part of the advanced biofuel proposal, the agency set mandates for cellulosic fuel at 540 million gallons.

It also proposed a biodiesel mandate of 2.43 billion gallons for 2021, unchanged from 2020. The EPA sets biodiesel mandates a year in advance.

Corn and ethanol producers have long urged the EPA to lift the figures to make up for the volumes waived under the small refinery hardship program. The lack of it infuriated senators from Iowa.

“It’s unacceptable that EPA would set biofuel volumes below demand at a time when farmers, biofuels producers and agribusiness owners are forced to shed jobs and close plants. I urge President Trump to compel EPA to reverse course and keep his word to the forgotten Americans who have faithfully stood with him,” U.S. Sen. Chuck Grassley said.

“While I’m glad to see the proposed rule is on track to meet the renewable volume obligations deadline, it simply does not account for the billions of gallons of ethanol our hardworking producers have lost to EPA’s unrelenting habit of handing out ‘so-called’ small refinery exemptions,” U.S. Sen. Joni Ernst said. “Iowa farmers and producers depend on transparency from EPA.”

American farmers have been among the most affected by Trump’s trade war with China, which once was a top export market for U.S. agricultural products.

“Farmers are already in one of their worst years in recent memory, with many trying to hold on to their family farms. This proposal is yet another blow to them,” Grant Kimberley, executive director of the Iowa Biodiesel Board, said in a statement.

Shaw also was critical of the biomass-based diesel requirement, considering the U.S. consumed 2.6 billion gallons last year.

“The (Renewable Fuel Standard) is designed to be a market driving mechanism,” Shaw said in the release. “Setting the biodiesel blend level two years hence below what the industry already achieved last year cuts at the core of how the (Renewable Fuel Standard) was intended to be implemented. Congress established a separate biodiesel category for a reason, and EPA needs to begin respecting that.”

The proposed rule has been submitted by the EPA, which begins a public comment process.

“Biofuels are key to reducing our dependence on foreign oil and our carbon footprint. Supporting the renewable fuels industry also supports American farmers who are hurting from a late planting season and ongoing trade uncertainties. I believe the EPA needs to recognize the industry’s growth potential and increase the ethanol and biodiesel blending targets accordingly. We must also reform the Small Refinery Exemption that continues to undermine demand,” Iowa Secretary of Agriculture Mike Naig said in an email.

Shaw said he will be urging the EPA to increase biodiesel levels in the final rule and reinforce small refinery exemption rules.

Reuters contributed to this report.

l Comments: (319) 398-8309; mitchell.schmidt@thegazette.com

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