Iowa Biofuel Producers Urge Swift Passage Of Tax Package

Iowa Biofuel Producers Urge Swift Passage Of Tax Package

Passage of biodiesel, cellulosic ethanol tax credits by Congress is crucial to provide balance in U.S. energy policy.

The Iowa Renewable Fuels Association reported on November 19 that nine of Iowa's advanced biofuel producers sent a letter to the entire Iowa Congressional Delegation encouraging the swift passage of a tax extenders package which includes provisions for biodiesel blending, cellulosic production, and accelerated depreciation, prior to final adjournment of the 113th Congress.

TAX POLICY FAVORS OIL: With U.S. energy and tax policy tilted so far in favor of petroleum, if Congress does nothing on the tax extender legislation, there is a very real possibility that many plants in the biofuels industry will suffer. The U.S. will be left with a defacto petroleum mandate.

"Iowa's entire congressional delegation has shown steadfast support for these important policies, and today we're calling on them to take concrete steps to advance legislation extending these vital provisions that support energy security, American jobs, and a cleaner environment," said Denny Mauser, a farmer and a member of the board of directors at Western Iowa Energy, a biodiesel plant at Wall Lake. "In the face of more than 100 years of preferential tax treatment for petroleum—a literal Century of Subsidies—these incentives keep advanced biofuel projects moving forward to the benefit of all Americans." 

Tax subsidies keep oil wells pumping when oil prices drop
The letter from the Iowa biofuel producers states, "It is absolutely critical to our industry that this Congress pass a tax extenders package, which includes provisions for biodiesel blending, cellulosic ethanol production and accelerated depreciation, prior to final adjournment." The tax extender legislation is one of the few items expected to be considered by Congress in its current lame duck session. Congress is expected to adjourn by mid-December to go home for the holidays and close out this year.

Citing recent comments from the petroleum industry outlining how tax subsidies keep their wells pumping even when the oil market drops, the letter noted, "With U.S. energy and tax policy tilted so far in favor of petroleum, if Congress does nothing on the extenders package, there is a very real possibility that many of our industries will suffer. The U.S. will be left with a defacto petroleum mandate."

To read the entire letter which was sent, please click here.
The nine advanced biofuel companies operating in Iowa that signed the letter are: Companies that operate in Iowa such as Ag Processing (AGP), DuPont Cellulosic Ethanol, Fiberight, NuMake, LLC, POET – DSM Advanced Biofuels, LLC, Quad County Corn Processors, Renewable Energy Group, Inc. (REG), Western Dubuque Biodiesel, and Western Iowa Energy signed the letter.

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The letter was sent to U.S. Senators Tom Harkin and Chuck Grassley, as well as Representatives Dave Loebsack, Tom Latham, Steve King, and Bruce Braley. For more information, visit the Iowa Renewable Fuels Association website.

Iowa is the nation's leader in renewable fuels production. Iowa has 43 ethanol refineries capable of producing more than 3.8 billion gallons annually, including 22 million gallons of annual cellulosic ethanol production capacity and one cellulosic ethanol facility currently under construction. In addition, Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually. The IRFA was formed in 2002 to represent the state's liquid renewable fuels industry. The trade group fosters the development and growth of the renewable fuels industry in Iowa through education, promotion, legislation and infrastructure development.

Oil and ethanol groups agree that EPA is hurting their industries
U.S. ethanol producers and the oil industry responsible for mixing the renewable fuel into the gasoline supply rarely agree on anything. But the two foes say the failure of the Environmental Protection Agency to finalize how much ethanol should be mixed into the country's motor fuel supply in 2014 has created uncertainty and hindered the ability of the free market to work.

"The market is kind of frozen right now because the EPA hasn't responded," says Bob Greco, downstream director with the American Petroleum Institute, a group representing more than 550 oil and natural gas companies. "The EPA, because of the way the Renewable Fuel Standard is structured, moves markets by making these decisions. You've got billions of dollars of investments threatened."

It's been more than a year since EPA first issued its proposal
In November 2013, the EPA proposed reducing ethanol produced from corn in 2014 to 13.01 billion gallons from 14.4 billion gallons initially required by Congress when it passed the 2007 Renewable Fuel Standard, a law that is still in effect today and requires refiners to buy alternative fuels made from corn, soybeans and other products to reduce the country's dependence on foreign energy.

The EPA has yet to finalize the number of gallons of renewable fuel that needs to be produced this year. Even though federal law requires the agency to complete the blending requirements for the following year by Nov. 30; so in the case of 2014, that deadline was the end of November of last year. An oil trade group says EPA hasn't met the deadline since 2011.

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A spokeswoman with the EPA, which is expected to restore at least some of the proposed cuts when it issues its final rule, declined to comment on the timing of the final rule or the criticism being levied by those critical of the delay. Greco, who's American Petroleum Institute has been a long-time critic of the Renewable Fuel Standard and has called for Congress to repeal the mandate they view as "unworkable." So far this year blenders that mix ethanol into gasoline have had only the proposed 2014 figures to use as their guide.

EPA indecision on RFS is sending negative message about biofuels
Monte Shaw, head of the Iowa Renewable Fuels Association, says while the EPA's delay has not forced ethanol plants to close, it has sent a negative message about the next generation of fuel made from crop residue, grasses and wood chips and other plant materials. It has also prevented corn-based plants from using cheap, surplus grain to boost output.

If EPA hadn't proposed the cut, notes Shaw, "There would be a market signal out there saying let's continue to expand biofuel production and use. It's what you are not seeing that's important. You're not seeing an ethanol plant being built. You're not seeing production expansion at existing facilities."

A decision by the EPA to lower the Renewable Fuel Standard would likely affect future renewable fuel production and the construction of new facilities around Iowa, the nation's leader in renewable fuels production. Senator Chuck Grassley, R-Iowa, says constituents he spoke to recently while in the state are waiting on EPA to make a decision. "There's a lot of interest by people concerned about what EPA might do," Grassley notes. He says, "if the EPA doesn't restore the ethanol blend level to what Congress mandated, the ethanol industry would sue "and there would be a lot of farmers supporting that lawsuit."

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