Biofuels groups dismayed over EPA backtracking10/17/2019 | Biodiesel, Policy, Economics
By Bethany Baratta, ISA senior writer
Nearly two weeks ago, ag and biofuels industry groups—including the Iowa Soybean Association (ISA) and the Iowa Biodiesel Board (IBB)—praised the Trump administration and the Environmental Protection Agency (EPA) for its proposal to prospectively reallocate gallons based on a three-year rolling average of small refinery exemption (SRE) volumes to account for future waivers.
Earlier this week, EPA reneged on its deal, announcing it would instead rely on a three-year average of exemptions recommended by the Department of Energy (DOE). This plan is significantly different than the solution President Trump promised and will be detrimental to farmers and biodiesel plants who are already struggling, says Grant Kimberley, ISA director of market development and executive director of the IBB.
“A full accounting of SRE lost gallons was the agreement,” Kimberley said. “That was our agreement with the president. Promise made, but that promise has now been broken.”
One of the greatest skepticisms of the proposal is the uncertainty built into the guidance. One footnote says, “EPA retains the authority to deviate from DOE’s recommendation based upon ‘other economic factors,’ refinery-specific information, and other persuasive evidence that EPA should reach a different outcome.”
“We’re being told that instead of having the deal the president and our elected officials struck that provided certainty and transparency, we have to rely on the good faith of the EPA,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.
The EPA’s proposal would account for only 770 million gallons annually in expected exemptions. That’s a far cry from the average 1.35 billion gallons it exempted from 2016 to 2018.
“The proposed estimates lack transparency and undercut the president’s commitment to ensure biomass-based diesel volumes are fully met,” Kimberley said, noting DOE recommendations are not public and are considered confidential business information. “We expect markets to react accordingly.”
Four ethanol and biodiesel plants have stopped production in Iowa. Other biofuels plants around the country have cut production. Without the certainty the original plan would have provided, more plants, jobs and farmer investments are on the line.
Biodiesel adds about 90 cents per bushel to the price of soybeans after being adjusted to current marketing conditions.
“That’s real money in my pocket,” said Dave Walton, ISA board treasurer from Wilton and IBB member.
Farmers are already facing uncertainty—the weather, unfinished trade deals, market conditions and variable yields—they don’t need the EPA’s proposal regarding the future of biofuels added to the list.
“It needs to be one of the biggest priorities to ensure that I and other soybean farmers have that certainty now more than ever,” Walton said. “The EPA needs to be held accountable to make this happen.”
Kimberley said IBB and ISA plan to provide comments on the proposal. The comment period is open through Nov. 29. The EPA will hold a public hearing on Oct. 30 in Ypsilanti, Michigan.
“EPA needs to stand and hold fast with the deal that was cut by President Trump, Senators Chuck Grassley and Joni Ernst, Iowa Governor Kim Reynolds and Iowa Secretary of Agriculture Mike Naig and move forward,” Kimberley said. “We need to have this issue resolved.”
Gov. Reynolds said she would stay engaged on this issue.
“The next 30-day comment period is crucial to making sure the EPA follows through on the president’s commitment,” Reynolds said. “A robust RFS is critical for rural America, and I will never stop fighting for it.”
Contact Bethany Baratta at email@example.com.
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