Iowa Lawmakers Fear More Biodiesel Plants to Close Without Amendment to RFS Volumes

Source: By Todd Neeley, Progressive Farmer • Posted: Monday, May 27, 2024

LINCOLN, Neb. (DTN) — The congressional delegation from Iowa is pressing the Biden administration to raise the 2024 and 2025 renewable volume obligations in the Renewable Fuel Standard for biomass-based diesel and advanced biofuels, in a letter to President Joe Biden and Michael Regan, administrator of the U.S. Environmental Protection Agency.

The EPA finalized a multi-year RFS set rule that drew the ire of the biomass-based diesel and advanced biofuels industry because they contend the volumes were too low.

In the letter to the Biden administration on Wednesday, Sens. Charles Grassley, R-Iowa; Joni Ernst, R-Iowa; and Rep. Randy Feenstra, R-Iowa; said the decision to set volumes below what the industry said it can actually produce has had negative consequences in Iowa.

“In March, it was announced that two biodiesel plants, one in Ralston, Iowa, and one in Madison, Wisconsin, will close,” the letter said.

“These closures result in job losses for workers, financial hardship for families and real struggles for communities to replace integral business partners. Additionally, farmers will be left with fewer options and less of a market for their product at a time when net-farm income is expected to decrease by nearly 26% in 2024.”

The lawmakers, who asked the administration to consider amending the RVOs, said the plant closures were “partially a result” of the administration’s 2023 decision to “set RVOs at levels that were out of touch with the reality on the ground” and the growth potential of the biomass-based diesel industry production capacity.

“The policy decisions you made have real world impacts — the RVO levels in no way reflected the growth of the renewable diesel industry that had already occurred, let alone what was projected over the three-year period,” the letter said.

“As a result, the value of RFS blending credits, known as RINs (renewable identification numbers), have plummeted to less than a third of their previous value.”

On Feb. 27, 2024, the U.S. Department of Energy’s Energy Information Administration said the price of compliance credits for biomass-based diesel and ethanol decreased about 45% since the start of 2024. At that time, prices were already the lowest in about three years.

“On June 3, 2022, the EPA finalized RFS volumes for 2021 and 2022, but also took the unprecedented step of reopening and modifying the previously finalized volumes for 2020,” the letter said.

“Despite the fact that the RFS internally self-corrects when actual fuel demand is less than estimated in the rules, EPA cited COVID-related demand destruction as justification for reopening a rule and reducing the volume obligation. There is no internal correction in the RFS for scenarios where the EPA dramatically misses the mark in projecting ethanol and biodiesel availability and demand.”

The lawmakers said if the EPA has the authority to reopen an RVO rule to reduce volume obligations, then the agency “certainly has the authority to do so to increase volumes.”

They said with the “precedent now set” the EPA should “admit its error in forecasting the amount of ethanol and biomass-based diesel in the market for 2024 and 2025 and reopen the rule to increase the biomass-based diesel, overall advanced and overall volume obligations.”

The letter said without amending the volumes it could be expected that more biodiesel plants would close.

“For the biomass-based diesel industry to continue to grow, it needs certainty and predictability, and this requires RVOs that adequately reflect the growth potential of biomass-based diesel production.”

Read more on DTN:

“EPA Finalizes Multi-Year RFS Volumes,”

Todd Neeley can be reached at

Follow him on social platform X @DTNeeley

 

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