The EPA decision on RFS disappoints

We share concerns expressed within Iowa and the renewable fuels industry about the Environmental Protection Agency’s final decision on the Renewable Fuel Standard for next year.

The federal RFS requires transportation fuel sold in the U.S. to be blended with a minimum volume of renewable fuels. In May, the EPA proposed to lower the RFS for next year below the level set by Congress in 2007 because it doesn’t believe the industry can meet the more aggressive target.

In a June editorial, we pledged support for efforts by Iowa’s congressional delegation to prevent a reduction in the RFS because we believe in both the importance of renewable fuels for our state and nation and believe the industry capable of meeting the higher RFS level proposed by Congress.

In its decision, issued on Monday, the EPA said refiners will be required to blend 18.11 billion gallons of renewable fuels in 2016, an increase from the 17.40 billion gallons proposed in May, but still below the 22.25-billion-gallon 2007 congressional target.

Here is a sampling of reaction:

“This rule is a slight improvement, but it still sells biofuels short,” Sen. Charles Grassley, R-Iowa, said. “The EPA just doesn’t appreciate that farmers and biofuels producers can generate enough renewable fuels to meet the goals set by Congress. The EPA doesn’t seem to appreciate that the law on the books requires strong biofuels targets and that consumers like the chance to use alternate fuels. Instead, the EPA took a flawed approach that seems to buy into Big Oil’s rhetoric.”

“EPA’s decision today turns our nation’s most successful energy policy on its head,” Bob Dineen, Renewable Fuels Association president and chief executive officer, said. “When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track. Today’s decision, however, fails to do that. It will deepen uncertainty in the marketplace and thus chill investment in second-generation biofuels. Unlike Big Oil, the ethanol industry does not receive billions in tax subsidies, and the RFS is our only means of accessing a marketplace that is overwhelmingly and unfairly dominated by the petroleum industry.”

“By not passing the RFS levels recommended by Congress and lowering the ethanol targets, the EPA once again has failed Iowa farmers and consumers,” Iowa State Sen. Bill Anderson, R-Pierson, said. “By ignoring the will of the agriculture community and Congress, the EPA’s decision will most likely have a detrimental impact on Iowa farmers. This comes at a time when low commodity prices are causing financial issues for many producers.”

“The EPA volumes announced today are a move in the right direction, and they correctly call the oil industry’s bluff about our ability to surpass 10 percent ethanol use in the U.S.,” Jeff Broin, founder and chairman of Poet, a South Dakota-based ethanol company, said. “However, these numbers fall well short of our capability to provide clean, domestic ethanol to America’s drivers.”

In our view, the EPA’s reduction in the RFS level advocated by Congress will result in negative consequences for the renewable fuels industry. As a result, Iowa – the nation’s number one producer of ethanol and number two producer of biodiesel – will suffer, perhaps more than any other state, we fear.

Not only was the EPA decision disappointing, but the fact it came from an administration who says it’s committed to clean energy was disappointing, as well.