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GREENER Fuels Act could negatively impact Iowa corn growers

By Staff | Mar 16, 2018



In what could become a huge blow to the ethanol industry, U.S. Rep. Peter Welch, D-Vermont, and U.S. Sen. Tom Udall, D-New Mexico, introduced companion bills on March 8 that ag leaders say would dismantle the Renewable Fuel Standard (RFS) and end blending obligations for conventional, advanced, cellulosic, and biomass-based diesel fuels.

Referred to as the “GREENER Fuels Act,” the legislation would phase out the corn ethanol mandate, cap ethanol blending at 9.7 percent, establish a fee of 10 cents per renewable identification number (RIN) to support an environmental initiative, and ultimately alter the cellulosic mandate.

Numerous agriculture groups stand firmly against the bill.

Additionally, U.S. Sen. Ted Cruz, R-Texas, is also is seeking a 10-cent cap on the tradable RIN, which are attached to batches of ethanol. This would be in exchange for the sale of higher ethanol blends year-round.

Refiners are able to either blend ethanol into their fuels or buy credits from those who do in order to hit the renewable fuels standard.

Kevin Skunes, president of the National Corn Growers Association, released a statement saying that “allowing the RIN market to operate freely with year-round sales of E15 would increase the production and consumption of renewable fuels, increase the supply of RINs available for compliance and lower RIN values. Increased use of biofuels is already moving us in this direction, and increased use of E15 and higher blends will get us there faster.”

U.S. Rep. Kristi Noem, R-South Dakota, said in a statement that farmers cannot afford to take another hit.

“Unfortunately, under the rumored proposal, RFS demand for corn could drop dramatically, damaging prices and causing unnecessary pain for producers,” she said. “We have to fight this.”

On March 5, President Donald Trump met with members of the biofuels industry and oil refiners to discuss the RFS. Iowa’s U.S. senators, Charles Grassley and Joni Ernst, were present.

Grassley released a statement after that meeting that illustrated how devastating any changes would be to rural America.

“Both sides made their case and the only agreement was to look at economic studies for impact. No decisions were made,” he said. “Low corn prices are already squeezing farmers’ bottom lines. If the RFS were undermined with a RIN price cap or waiver, that would be made even worse. Thousands of jobs in rural America could be lost.”

“An emerging solution appears to be year-round E15, which would drive down RIN prices,” he added. “After crossing the 15 billion gallon a year threshold, RIN prices would drop dramatically and remain low. And studies prove it.”

In an opinion piece released by Grassley’s office to the Houston Chronicle after that meeting, Grassley emphasized that there is plenty of room for biofuels and gasoline to co-exist.

“The marriage of renewables like biofuels with conventional fuels only strengthens those benefits, in addition to a cleaner, healthier environment, job creation, the growth of consumer choice at the pump and the development of new markets for farmers in Texas, Iowa and throughout the country,” he said. “A cap on RIN certificate prices, which are voluntary compliance mechanisms under the RFS, would destroy ethanol demand, undermine the integrity of the RFS and weaken the country’s all-of-the-above energy strategy and national security.”

Monte Shaw, executive director of the Iowa Renewable Fuels Association, also was in attendance. He said in a statement that Trump “quickly grasped how allowing the year-round sale of E15 would increase ethanol blending and the supply of RFS credits, thereby lowering their cost for refiners.”

“While refiners continue to ask the president to abdicate his support for the RFS, (the) meeting clearly highlighted that E15 can boost biofuel use and lower RFS credit prices without destroying the RFS,” Shaw said.

Cruz also has met directly with Trump to discuss his proposal for RFS waiver credits that critics say would obliterate the demand for biofuels. Grassley and Ernst were also in attendance at this meeting, and stated they refused to accept the proposal and informed the president that the idea would “destroy ethanol demand.”

Complicating this matter further, but showing support for the renewable fuels industry, is a new study released by ABF Economics and commissioned by the Iowa Renewable Fuels Association, which found that nearly 50,000 jobs in Iowa alone are directly linked to biofuels production.

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