Loebsack: Ethanol mandate cut a ‘slap in the face’ for Iowa

Source: By Christopher Doering, Des Moines Register • Posted: Wednesday, February 25, 2015

WASHINGTON – Any move by the federal government to reduce how much ethanol must be blended into the country’s motor-fuel supply would be devastating to rural communities and Iowa, Rep. Dave Loebsack said Tuesday.

The Iowa Democrat said any efforts by the Environmental Protection Agency or Congress to change the Renewable Fuel Standard (RFS), a law that requires refiners to buy alternative fuels made from corn, soybeans and other products to reduce the country’s dependence on foreign energy, would lead to a loss of jobs and batter local economies that depend on the largely corn-based fuel.

“Regulatory and legislative efforts to weaken the Renewable Fuel Standard are misguided and fail to acknowledge the success of renewable fuels,” Loebsack said at a biofuels summit in Washington.

Critics of the mandate, including the American Petroleum Institute, argue that lawmakers were too aggressive in setting the blending levels in 2007. They contend that because consumers are driving less and vehicles are more fuel-efficient, blenders are struggling to meet the increasingly higher targets put in place and mix in enough of the renewable fuel — an obstacle known as the blend wall.

A way to get more ethanol into the fuel supply would be to increase the percentage — currently most gasoline is 10 percent ethanol — but higher blends such as 15 percent ethanol have failed to gain widespread acceptance.

The EPA, which has the flexibility to adjust the annual blending level proposed by Congress under certain conditions, seemed to hint at the mandate’s problems when it proposed 2014 ethanol produced from corn levels that were well below the amount initially set by Congress.

Iowa produced 3.9 billion gallons of ethanol last year — the most of any state, and about 27 percent of U.S. production.

“It was a slap in the face to rural communities and our economy when … the EPA announced it was going to cut the RFS requirements,” Loebsack said. “That proposal would have had a devastating impact on Iowa and other states, costing tens of thousands of jobs in my state alone.”

But the EPA pushed back the timeline for finalizing the mandate multiple times before announcing in November that it would not set the fuel standards due to widespread opposition from Midwest leaders and farm groups.

Bob Greco, downstream director with the API, a trade group representing more than 550 oil and natural gas companies, said the EPA’s move to pull back the 2014 proposal was potentially troubling.

“Our concern is that the administration will look for ways to push through the blend wall,” Greco said in an interview. “While it’s positive that they’ve acknowledged the blend wall, the fact that they are pulling back the 2014 proposal, which was based on an acknowledgment of the blend wall, I think is a reason for concern.”

The EPA said last week it plans to announce the proposed blending rate for 2015 and 2016 this spring. In the meantime, lawmakers in Congress are expected to try to act on legislation that would roll back or end the mandate.

Republican and Democratic lawmakers in the House have proposed legislation that would do away with the corn component of the Renewable Fuel Standard and cap the amount of ethanol that can be blended into conventional gasoline at 10 percent. The same bill failed to pass two years ago. Senate lawmakers introduced a similar measure in January but it never made it to a vote.

“When you look at something, it takes a lot of power, a lot of cohesion … if it’s in Congress’ hands,” said Colin Johnson, a fourth-generation farmer in southern Iowa. “I’m hopeful for the sake of Iowa and rural agriculture that (the RFS) stays where it is, and I’m pretty confident that it will.”