On June 25, the U.S. EPA held a hearing to address its proposed rule for the 2014, 2015 and 2016 renewable fuels standard (RFS) in Kansas City, Kansas. More than 250 people were scheduled to testify at the event. One block away from the hearing location, supporters of the biofuel industry gathered at the Rally for Rural America to show their support for the RFS.
Iowa Gov. Terry Branstad was among those testify in support of the RFS at the hearing. He opened his statement with a discussion of corn prices and land values. Less than two years ago, he said the price of corn in Iowa was $6 per bushel. Prices this week have fallen to $3.45 per bushel, well below the cost of production, he said. According to Branstad, Iowa farm values have been dropping as well. “We saw land value drop 15 percent last year,” he said, noting the decline is continuing. Regarding farm income, Branstad quoted the USDA in predicting a 32 percent drop in farm income this year.
During his testimony, Branstad explained the link between the RFS and strong rural economies. “It’s truly incredible to see what [the biofuels] industry has done, and how its grown, and the impact it’s had, and the diverse benefits its provided to farmers in the Midwest, to rural communities, and the workers,” he said.
Branstad listed off the many benefits that have resulted from the RFS, including the diversification of our nation’s energy portfolio, reduced dependence on foreign oil, reduced transportation fuel emissions, and greater consumer choice at the pump. He said the program has also helped grow family incomes in rural America, noting that the biofuels industry has increased the availability of high-paying jobs and rewarding careers in rural communities.
According to Branstad, EPA’s proposed RFS rule includes some encouraging changes involving required volumes for biodiesel. “Unfortunately on the ethanol front, the agency seems to have bought big oil’s faulty arguments hook line and sinker,” he said. “Big Oil has polluted the discourse with half-truths and a narrative that rewards their bad behavior by blocking market access to renewables.”
Branstad added that the EPA’s delays over the past two years have led to market uncertainty, hurt farmers, and frozen investment in next-generation technologies. “My hope is that the EPA is open to improving the proposal much further and meeting the original congressional intent of significantly expanding the use of biofuels throughout the entire country, not just here in the heartland of America,” he said.
The EPA has a choice, Branstad continued. The agency can either protect the deep pockets of Big Oil, or it can nurture consumer choice, renewable energy growth, and a healthy rural economy.
Missouri Gov. Jay Nixon also testified at the event. He spoke about the importance of agriculture to the Missouri economy and stressed that the farming community has met its commitment to meeting the RFS.
“The current proposal that we are dealing with today continues to fail in significant ways to meet the renewable fuel targets that are part of the law,” Nixon said.
“We all know the market targets of RFS act kind of as a ceiling in the market when it should be a floor, and that’s why this is so important,” he continued.
Nixon said it is counterintuitive for the agency that is charged with enforcing clean air laws to impose a de facto limit on ethanol, a product that so clearly emits fewer greenhouse gases into the atmosphere. “The one agency that should be saying more is saying less,” he said.
“Also troubling is the EPA uses reasoning with dubious authority in imposing these lower levels,” Nixon said. “The federal RFS allows a waiver only in the RFS would harm the economy or the environment. That’s an important legal matter to remember here… quite frankly I’m not seeing how it would hurt our economy to produce cheaper, better, cleaner fuel, and it’s certainly not going to hurt our environment.”
Nixon stressed that the federal government made a commitment to our farmers when it enacted the RFS, and the nation’s farmer have worked hard to meet that commitment. “Breaking that commitment now would hurt our economy, our rural communities and our environment,” he said.
The hearing also featured testimony from representatives of several biofuel trade groups, biofuel producers and other industry stakeholders. The American Coalition for Ethanol announced that 100 people representing ACE members were scheduled to testify at the event.
“Obligated parties may protest today that your proposal ‘breaks the blend wall’ in 2016, but EPA needs to separate the signal from the noise,” said Brian Jennings, executive vice president of ACE in a statement. “The methodology EPA is proposing actually enables oil companies to stockpile more than 2 billion gallons of carryover Renewable Identification Numbers (RINs) by 2016. So in reality, your proposal continues to limit ethanol blending to E10 even in 2016.”
“The farmers and biofuel producers who are trying to help EPA succeed in fulfilling the goals of the RFS are mystified that EPA is siding with oil companies who mock the President’s efforts to reduce greenhouse gas emissions and take EPA to court every time you roll out new renewable fuel blending targets,” Jennings continued. “EPA cannot take a passive approach with companies whose ultimate goal is to repeal the RFS. Doing so turns a program designed to promote innovation and clean air into one that chokes innovation and increases pollution.”
Tom Buis, CEO of Growth Energy, stressed that the RFS is an American success story, but that implementing the regulation as currently proposed would eviscerate the promise of the RFS. “We see the RFS as a modern American success story that has created jobs, revitalized rural America, injected much-needed competition into the vehicle fuels market, lowered the price at the pump, improved the environment, and made our nation more energy independent,” he said.
“However, EPA’s latest RVO proposal to waive the statutory renewable volume obligations would eviscerate the promise of the RFS. It would cause severe harm to farmers, the biofuels industry and the nation’s economy. This proposal is already creating great uncertainty for farmers and other industry investors,” Buis continued.
“Companies from all over the world have invested billions of dollars in first and second generation biofuels in the U.S. and are poised to do more,” Buis said. “Arbitrarily reducing the levels established in the statute threatens investments that are making commercial production of cellulosic ethanol a reality – projects that will help achieve the significant greenhouse gas reduction goals outlined in the RFS. Also threatening greenhouse gas reductions, this proposal would nearly double the demand for imported Brazilian ethanol that has to be shipped thousands of miles by sea – and it isn’t being shipped by sailboat. At the same time, U.S. produced ethanol would then be forced to be exported – often times to Brazil. This is literally a case of ships passing in the night.”
“Now is the time for EPA to move the RFS forward, not backward,” Buis continued. “EPA has the opportunity to use its authority to continue the implementation of a successful policy that has been a win-win for our nation and its citizens. They should not squander that opportunity to placate Big Oil at the expense of the American taxpayer.”
“EPA, if you seek to reduce our dependence on foreign oil, create jobs here in the US that cannot be outsourced and strengthen the rural economy, and, if you truly want cleaner air, reduced greenhouse gas emissions, a better environment for our children and lower gas prices for American consumers, tear down this blend wall,” Buis said.
Geoff Cooper, senior vice president of the Renewable Fuels Association, and Randy Doyal, chairman of the RFA, urged the EPA to implement the RFS as Congress intended and abandon the blend wall methodology in setting 2014, 2015 and 2016 volume obligations. “We continue to believe EPA is overstepping the bounds of its legal authority by proposing to partially waive the RFS based on perceived distribution capacity constraints,” Cooper said in his prepared remarks. “Nothing in the statute allows EPA to set the renewable volume obligations (RVOs) based on the so-called ‘blend wall’ or alleged infrastructure limitations. Congress considered measures that would have allowed waivers based on distribution infrastructure. But they rejected those concepts because they knew allowing such off-ramps would allow oil companies to hold the RFS program hostage.”
In his prepared testimony, Doyal said that even though gasoline consumption might be slightly lower today than Congress anticipated when it adopted the RFS, it was always the intent of the program to push beyond the blend wall and increase the share of renewable fuels in our nation’s fuel supply.
“The Clean Air Act statute does not permit EPA to take into account ‘factors that affect consumption,’ such as purported infrastructure constraints or the so-called ‘blend wall,’ in determining whether to grant a general waiver of the RFS,” Doyal noted. “By embracing the ‘blend wall’ concept, the EPA proposal not only violates the law, but also undermines the incentive to expand biofuel production and distribution capacity, and allows oil companies to only blend as much renewable fuel as they are comfortable using.”
In conjunction with the hearing, the Rally for Rural America provided an additional venue for RFS advocates. Several hundred people gathered to take part in the event. Fuels America has offered video of the event on its Periscope and Twitter pages.