Iowa farm leaders and state officials mostly cheered the Trump administration’s new renewable fuel targets released last week, saying the standards are the first big test of the president’s commitment to ethanol and biodiesel. The Renewable Fuel Standard for conventional ethanol, typically made from corn, is kept at 15 billion gallons for 2018. But farm, industry and political leaders called the biodiesel and next-generation cellulosic ethanol goals weak.
The U.S. Environmental Protection Agency on July 5 released the proposed 2018 RFS volume target for conventional biofuels and the 2019 target for biodiesel. The biodiesel goal is set a year ahead of the ethanol goal. Fulfilling a Trump campaign promise, the conventional fuel level — for which corn starch ethanol qualifies — was maintained at its 15 billion-gallon level. The proposed 2019 biodiesel goal was flat-lined at 2.1 billion gallons, far below the industry request of 2.75 billion gallons.
Proposed RFS goals are not yet finalized
“I commend the Trump administration for its commitment to keeping the Renewable Fuel Standard for ethanol at the level set by Congress,” Gov. Kim Reynolds said in a press statement. But “I’m disappointed biodiesel levels are not higher.”
If these numbers are finalized, it would be only the second time in history that the total renewable fuel goal would be lowered. The proposed RFS numbers, which by law are announced by EPA each year, are then open for a public comment period. The administration considers the comments and has to announce the final RFS numbers by the end of November. The annual RFS goals are the minimum amounts of biofuels the petroleum industry is required to blend into gasoline and diesel fuel nationwide.
“The petroleum industry was making a big push to get President Trump to walk back his campaign commitment to corn ethanol,” says Monte Shaw, executive director of the Iowa Renewable Fuels Association. “At least on the corn side, he did uphold” his promises.
Imports of foreign-produced biodiesel rising
“The IRFA applauds President Trump for keeping his campaign promise with this proposal to support the RFS for ethanol,” says Shaw. “Maintaining the 15 billion-gallon conventional biofuels level is good news for E15, motorists and farmers. This proposal would keep the RFS on track and provide regulatory stability for ethanol producers, retailers and obligated parties alike. Unfortunately, a change in administrations did not change the EPA’s underappreciation for the potential of U.S. biodiesel production.”
Keeping biodiesel levels frozen at 2.1 billion falls short of the U.S. industry’s production capabilities, even before imports are considered. “With plants in Iowa currently running under production capacity,” says Shaw, “IRFA will be urging EPA during the public comment period to increase the final biodiesel level in the RFS for 2019. The best thing the Trump administration can do to reduce biodiesel imports into the U.S. is to throw its full support behind Sen. Grassley’s bill to reinstate and revise the blender’s tax credit, and make it a U.S. biodiesel producer’s credit, thereby ending the incentive for blenders to import foreign-produced biodiesel into the U.S. for blending.”
What EPA’s new RFS proposal would do
“The RFS has been one of America’s most successful energy policies ever,” says Kurt Hora, president of the Iowa Corn Growers Association. “It has spurred investment in rural communities and created high-tech jobs. It has given drivers more choices at the gas pump. And it has reduced our dependency on foreign oil. It moves America forward as a clean energy leader.”
EPA’s currently proposed RFS volume obligations would:
• keep conventional ethanol, typically made from corn, at the statutory maximum of 15 billion gallons next year.
• drop the level of cellulosic biofuel, considered the next generation of ethanol, by 73 million gallons, to 238 million gallons in 2018
• maintain the biomass-based diesel standard for 2019 at the 2018 level of 2.1 billion gallons (This mandate covers biodiesel, which is made from soybeans, vegetable oils and animal fats.)
Congress established the RFS in 2005 and expanded it in 2007, wanting a cleaner source of fuel that makes the nation less reliant on imported oil. The RFS, administered by EPA, requires oil companies to blend increasing volumes of renewable fuels with gasoline and diesel fuel, culminating with 36 billion gallons in 2022. “We must aggressively push for EPA to expand the RFS and the use of biofuels, not slash it,” says U.S. Rep. Dave Loebsack, a Democrat from the 2nd District of Iowa. “Folks in Iowa know that the RFS is working.”
Biodiesel mandate needs to be increased
U.S. Sen. Chuck Grassley, an Iowa Republican, calls the Trump administration’s RFS proposal “a mixed bag.” He says, “While I’m glad the EPA’s target holds steady the requirement for 15 billion gallons for conventional ethanol, the lack of any increase for biodiesel is a missed opportunity. The proposal fails to recognize the ability of the domestic biodiesel industry to produce at much higher levels.”
The proposed cut to advanced biofuels and cellulosic fuels will have a chilling effect on the push toward next-generation renewable fuels, and will certainly harm investments in this area, says Grassley. “The biodiesel industry is good for our economy, good for the environment and good for national security. It supports hundreds of thousands of jobs, is cleaner-burning and reduces U.S. dependence on foreign oil. I’m disappointed in the direction of these proposed volumes, and I hope EPA will consider increasing these levels once the stakeholders weigh in.”
Tom Brooks, chair of the Iowa Biodiesel Board and general manager of Western Dubuque Biodiesel at Farley, says EPA’s biodiesel proposal “would set this important American manufacturing sector back at a time when we stand ready to take a large leap forward. Iowa, as the nation’s top biodiesel-producing state, has expanded capacity in anticipation of better times ahead — but that is now looking bleaker.”
Future of cellulosic ethanol at stake
Jeff Broin, CEO of Poet, a large ethanol producer with plants in Iowa and other states, says the reduced cellulosic ethanol goal of the RFS “will hinder advances in developing technology.” Poet’s plant at Emmetsburg in northwest Iowa is making cellulosic ethanol from corn cobs, husks and stover biomass, and “the cellulosic part of the ethanol industry is just getting underway,” says Broin. DuPont is doing the same with its new plant at Nevada in central Iowa, helping improve and establish cellulosic ethanol production. Quad County Corn Processors at Galva is making cellulosic ethanol from corn kernel fiber. Other U.S. plants use algae and other biomass.
Some people have criticized the cellulosic ethanol standards set in the RFS law passed by Congress as being overly optimistic, given that the next generation of biofuels has been slow to develop until the past few years. Broin disagrees, saying a strong RFS mandate for cellulosic ethanol use is needed to stimulate and encourage production.
“For the biofuels industry as a whole to grow, we need to see robust cellulosic ethanol production using multiple feedstocks from across the country, and the annual RFS volumes set by EPA must keep our industry on that path,” says Broin.
Public comments to EPA encouraged
Shaw, Reynolds and others say it will be important for farmers, biofuel advocates, motorists and everyone to push for higher biodiesel and cellulosic ethanol levels by sending comments to EPA during the public comment period.
“The announced 2018 RFS level for conventional biofuels is good news for corn ethanol,” says Iowa Secretary of Agriculture Bill Northey. “I agree with others in the industry that a higher level for the 2019 biodiesel RFS volume would make sense. Now is the opportunity for all of us to provide meaningful comment to EPA. EPA officials will, hopefully, listen, as they will be issuing the final rule this fall.”
Renewable fuel advocates in Iowa and nationally have been nervous about the Trump administration’s stand on ethanol and biodiesel with Scott Pruitt leading the EPA. Pruitt aggressively opposed the RFS when he was Oklahoma’s attorney general. Upon releasing the newly proposed RFS volumes for biofuels last week, Pruitt said, “Increased fuel security is an important component of the path toward American energy dominance.”