The Iowa Corn Growers Association and other farm groups and state leaders are critical of the U.S. Environmental Protection Agency's recent proposal setting the amount of renewable fuel that should be blended into the nation's motor fuel supply for the next couple of years. The ethanol numbers are too low, says ICGA.
Meanwhile, the Iowa Biodiesel Board, representing the state's biodiesel industry, issued a statement last week saying it welcomes the EPA's proposal to increase volumes for biodiesel and other "advanced biofuels" under the RFS. However, the biodiesel supporters are still calling for improvements for biodiesel in EPA's final rules, which EPA expects to be issued later this year, probably in November.
Corn growers critical of EPA's proposed volumes for ethanol
In late May the U.S. EPA released its 2014, 2015 and 2016 Renewable Volume Obligations, or RVOs, under the Renewable Fuel Standard (RFS). RVOs are set annually by EPA as a target for the amount of renewable fuel to be blended into gasoline and diesel fuel. The 2014 and 2015 RVOs were significantly delayed in their release, as EPA took almost two years to decide where to set the amounts.
"While at face value the numbers might appear to be an improvement over the EPA's first proposal released back in 2013, this new rule still doesn't meet the requirements Congress set when it passed the RFS law in 2007," says Jerry Mohr, a farmer from Eldridge and president of ICGA. "EPA also continues to use a flawed methodology which is almost more damaging than the RVO numbers themselves."
Mohr adds, "Now is a critical time for farmers to step up and engage EPA on this issue that will significantly impact our farms since the rule won't be finalized until this fall. Unfortunately, so far, EPA continues to fail our farmers and consumers as EPA sides with Big Oil on this issue."
Corn demand will be cut by 1.3 million bushels over three years
The current RFS statute requires 14.4 billion gallons of conventional corn-based ethanol be blended in 2014 and 15 billion gallons be blended in 2015 and 2016. But EPA wants to lower those targets. For 2014, the proposed rule calls for 13.25 billion, for 2015 13.4 billion, and in 2016 the proposed rule will provide 14 billion gallons. This means over three years 3.75 billion gallons less of corn-based ethanol will be used, reducing corn demand by 1.3 billion bushels.
"ICGA is extremely concerned about the impacts EPA's proposal will have on the corn industry and rural economies," says Mohr. "We have the largest corn carryover stocks since 2005, corn prices are already below cost of production, and so far it appears we will grow stocks even larger with the current growing conditions for the 2015 crop."
ICGA says this will negatively impact the ag economy by:
•Hurting the economies of rural communities at a time when corn prices are already low.
•Creating higher fuel prices for consumers at the pump as more gasoline will be used, driving up petroleum demand and prices.
•Increasing greenhouse gas emissions with more gasoline usage to adversely impact air quality.
•Decreasing investment in advanced and second generation biofuels such as cellulosic that would allow expansion of renewable, homegrown fuels.
•Decreasing investment in biofuels infrastructure like E15, E85 and flex fuel pumps.
"This is a proposed rule and farmers still have time to influence the outcome," says Mohr. "EPA's 60-day public comment period ends July 27. We are asking the administration, on behalf of Iowa's corn farmers, to meet the standards laid out by Congress on the RFS and let the industry drive investment to offer higher blends and volumes of ethanol to support U.S. farmers."
Increase for biodiesel volumes is proposed by EPA
While EPA is proposing lower amounts of ethanol be used, the agency is proposing that higher amounts of biodiesel be blended by refiners during the next few years. The Iowa biodiesel board is pleased with this recent announcement by EPA.
In biodiesel's primary RFS category, "biomass-based diesel," EPA has proposed 1.63 billion gallons in 2014, with gradual growth of about 100 million gallons per year to a standard of 1.9 billion gallons in 2017. Growth is also planned for the Advanced Biofuel category, which biodiesel also qualifies for. It is scheduled to be finalized in November.
Grant Kimberley, executive director of the Iowa Biodiesel Board, says, "As the top biodiesel-producing state, we are enormously relieved the biodiesel industry's long limbo is almost over. Although the prolonged uncertainty strained our producers, we seem to be headed back on course for the original intent of the RFS for biodiesel."
EPA's biodiesel proposal seen as step in right direction
EPA's proposal marks a significant increase for biodiesel volumes from their original proposal in 2013, which would have held the biodiesel standard flat at 1.28 billion gallons through 2015. "Although the proposed volumes in later years are lower than the reasonable increases we had requested, and we look forward to opportunities for greater growth, these volumes still represent advancement," says Kimberley. "We are grateful to EPA for hearing us, and adjusting the volumes to promote steady growth in renewable fuel rather than abruptly reversing course."