With the clock ticking on ethanol plants, Iowans urge Trump to reverse damage to biofuels industry

Source: By Donnelle Eller, Des Moines Register • Posted: Monday, September 16, 2019

A farmer-owned ethanol plant in northwest Iowa has shut down — the second in Iowa — facing growing losses that leaders blame on the Trump administration.

The plant’s directors are unsure when, or if, Siouxland Energy Cooperative will reopen.

Its future depends on whether Donald Trump restores billions of gallons of ethanol and biodiesel demand that the renewable fuels industry says his administration extinguished through exemptions to oil refiners.

“The clock is ticking on many of these plants,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“It doesn’t take very long to burn through millions of dollars,” given low biofuel prices, he said.

President Donald Trump gives remarks after touring the Southwest Iowa Renewable Energy ethanol plant on Tuesday, June 11, 2019, in Council Bluffs, Iowa.

Photos: President Donald Trump visits Iowa ethanol plant

Since taking office, the Trump administration has granted 85 oil refineries a pass from blending 4 billion gallons of renewable fuel into the nation’s fuel supply.

MORE:‘A slap in the face’: Trump’s ethanol waivers are sparking rebellion in farm country

The waivers have killed demand for 1.4 billion bushels of corn used to make ethanol, and wiped out demand for 825 million bushels of soybeans that go into biodiesel, industry leaders say.

That hit is significant for Iowa, where farmers grow much of the corn and soybeans used to make ethanol and biodiesel. The state leads the nation in renewable fuel production.

The administration’s latest round of waivers, granted in August, have sparked outrage among Iowa farmers, many of whom have stood behind the president as he battled over trade with China and other countries.

Those trade disputes significantly cut exports of soybeans, pork, ethanol and corn, and further depressed already low commodity prices.

“That was the final blow,” said Kelly Nieuwenhuis, Siouxland’s board president.

“Unless something changes, the farmers I talk with will have a hard time supporting the president.”

Tug-of-war for White House support

The waivers have sparked an intense lobbying battle at the White House.

The president met Thursday with Iowa Republicans — Gov. Kim Reynolds, U.S. Sens. Chuck Grassley and Joni Ernst — and other Midwestern GOP leaders to talk about actions the administration can take to replace the gallons lost to refinery waivers.

Iowa’s GOP leaders wouldn’t discuss the meeting, but those in the ethanol industry worry that oil industry representatives, expected to meet with the president Monday, will sandbag efforts to reallocate the lost gallons.

The U.S. Environmental Protection Agency determines each year how much ethanol and biodiesel must be blended into the nation’s fuel supply, under a federal mandate called the Renewable Fuel Standard.

The EPA can grant exemptions to small, financially distressed oil companies, but biofuel advocates say the agency has been awarding them to giants such as ExxonMobil and Chevron Corp.

And the agency has failed to reallocate the exempted gallons to those companies not receiving waivers.

The EPA has been “handing out waivers like candy,” Nieuwenhuis said.

“We’ve never encountered the political gamesmanship that we’ve seen with this administration,” he said.

Trump’s EPA could “decimate the investment farmers have made in this industry,” Nieuwenhuis said.

‘These are good-paying jobs. It’s their livelihood. It’s their families’

Nieuwenhuis told 42 Siouxland Energy employeesFriday that the facility wouldn’t restart production following a two-week maintenance shutdown.

The 80-million-gallon ethanol plant is losing about $1.5 million each month, given reduced demand and low prices, Nieuwenhuis said.

MORE: Can Trump provide a renewable fuels solution that wins back farmers?

Idling the plant will stem the bleeding to about $500,000 a month, he said.

The cooperative wants to hold onto its employees for as long as it can, in the hope that the Trump administration will reallocate billions of gallons of ethanol.

Nieuwenhuis said Siouxland employees are worried.

“These are good-paying jobs,” he said. “It’s their livelihood. It’s their families.”

The shutdown hurts farmers in Iowa, South Dakota and Minnesota who supply the Sioux Center plant with 25 million bushels of corn each year.

“The last thing I’d want to do is to stop grinding that corn,” said Nieuwenhuis, who farms near Primghar and is a member of the Iowa Corn Promotion Board.

Idling the plant comes just after Plymouth Energy’s announcement in July that it would close its 50-million-gallon plant in Merrill, about 30 miles south of Siouxland Energy.

Plymouth, which uses 18.5 million bushels of corn annually, said it couldn’t see the industry recovering in the near future, “absent a deal with China or a serious pullback in production.”

Last month, Poet, the nation’s largest ethanol producer, said it would close an Indiana plant and ratchet back production at half its other plants, with the biggest cuts happening in Iowa and Ohio.

The South Dakota company expects to buy 100 million fewer bushels of corn and “consolidate numerous jobs” across its 28 operations. It has seven in Iowa.

Ethanol production uses about 40% of the U.S. corn supply. “This situation isn’t just affecting people in Iowa,” Nieuwenhuis said.

Report: Plan to replace lost gallons coming

Trump tweeted last month that “a giant” ethanol package could be coming soon.

“The Farmers are going to be so happy when they see what we are doing for Ethanol,” the president tweeted.

 Early reports about Trump’s proposed ethanol package would come too late to help struggling operations, biofuels leaders said, and offer too little, such as providing incentives that encourage the production of “flex-fuel” vehicles that can use higher ethanol blends.

Bloomberg reported Friday that the White House has developed a plan to replace gallons lost to EPA waivers, using a three-year rolling average, beginning in 2020, under the Renewable Fuel Standard.

The industry hopes at least 1 billion gallons of ethanol are replaced annually.

Some farmers say they’ve felt betrayed by the president, who visited Iowa in June to announce the administration’s approval of year-round use of E15, shorthand for gasoline blended with 15% ethanol. Almost all gasoline sold in the U.S. contains 10% ethanol.

Farmers and ethanol leaders warned Trump that the small refinery exemptions could reverse E15 gains, advice the president didn’t appear to take.

“All we need the Trump administration to do is follow the law,” Nieuwenhuis said.