In August, I had the opportunity to join Governor Kim Reynolds, Congressman David Young and Secretary of Agriculture Mike Naig in a meeting with EPA Acting Administrator Andrew Wheeler at the Iowa State Fair. The topic of discussion was one that impacts Iowa’s economy greatly — the Renewable Fuel Standard. Mr. Wheeler accurately noted that the RFS is an important program not just for farmers and biofuel producers, but the whole country. He assured us that “the Trump administration wants to move forward with implementing the RFS in both the spirit and letter of the law.”
President Donald Trump has made very clear his support for the RFS program. But his administration and many members of Congress have endured intense pressure from the oil industry to bargain away the future of this successful program. The oil industry cynically demands concessions from the biofuel industry while tallying up its successes in undermining the program. The fact is, they have nothing to offer the biodiesel industry in return for their demands to maintain their monopoly.
Iowa leads the nation in biodiesel and soybean production, so what happens with biodiesel in the RFS now will impact our state for years to come. Iowa’s biodiesel industry and soybean growers want more concrete assurance from EPA on the future of the RFS. In particular, we want EPA to stop the practice of handing out refinery exemptions. Since the start of this year, EPA has retroactively granted 48 “small” refineries exemptions from the RFS program for 2016 and 2017. In my opinion, the vast majority of them represented a grave misuse of the provision of the law meant to aid small refiners facing financial hardship, and were intended to undermine the RFS outright. Many of these refiners were part of very large companies that pocketed or posted billions in profits over the last year or more. The National Biodiesel Board estimates the exemptions have reduced biodiesel demand by about 300 million gallons.
That is virtually equal to Iowa’s annual biodiesel production. Iowa is the nation’s leading biodiesel-producing state, with about 400 million gallons of production capacity. On the promise of growth, the Iowa biodiesel industry has made substantial investments and increased its capacity by more than 20 percent in the last few years. Yet, we’re operating 25 percent below that capacity. Planned expansion projects are on hold until we see that the government is committed to year-over-year growth of the RFS. That represents a lost opportunity for jobs and revenue.
Iowa’s family farms are hurting, and this RFS uncertainty adds insult to injury. A quarter of Iowa’s economy is connected to agriculture. At a time of record production, soybean prices are well below what is considered break-even. Today, farming income is at its lowest level in more than a decade, caught in the crossfire of trade disputes and other market dynamics.
Biodiesel demand can help reverse this, because biodiesel makes farming more profitable. A study by Informa Economics shows biodiesel contributes about 63 cents per bushel of soybeans, which benefits soybean farmers. Most of this comes from more value for the soybean oil, which has the benefit of lowering the price of meal for livestock producers. Combined with greater value for animal fats left over from meat production, biodiesel makes livestock production more profitable, helping to increase our available food supply and reduce food prices at the same time.
Public opinion research shows the RFS matters to Iowans. In a poll commissioned by the National Biodiesel Board, 85 percent of respondents from Iowa said it is important to them that President Donald Trump keep his promise to support the RFS. And a resounding 75 percent of Iowa voters think federal policy should encourage expanded use of biodiesel.
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Iowa’s biodiesel industry relies on a strong RFS and needs more certainty that the federal government will uphold this law. Too often, Iowa’s biodiesel producers — and farmers — come out last as the oil refining industry tallies up its wins. The impact of EPA’s small refinery exemptions is like wiping out a year’s worth of our biodiesel production in the nation’s top biodiesel-producing state.
We look forward to a new chapter with a new EPA acting administrator on this critical Iowa issue, and urge EPA to stop handing out waivers faster than fried food gets handed out at the State Fair.
• Grant Kimberley is the executive director of the Iowa Biodiesel Board, director of market development for the Iowa Soybean Association and a sixth-generation farmer.