Talk Renewable Fuels With Presidential Candidates

Talk Renewable Fuels With Presidential Candidates

Iowa legislators are being urged to discuss renewable fuels issues with candidates running for U.S. president. Here are key issues facing ethanol and biodiesel, and questions to ask candidates if you get the chance.

Walt Wendland, president of the Iowa Renewable Fuels Association, sent the following letter to all Iowa Republican legislators on October 13, 2011. He's urging them to talk about renewable fuels to the Republican candidates for U.S. president who are making regular campaign appearances in Iowa in preparation for the upcoming Iowa caucuses.

"This letter is a good opportunity to update all state legislators, Democrat or Republican, on the many federal issues facing renewable fuels today. In fact, it's a good opportunity for all Iowans to read this and learn about the various issues facing ethanol and biodiesel," says Monte Shaw, executive director of the IRFA.

Walt Wendland is the CEO of Golden Grain Energy, an ethanol plant near Mason City, Iowa and Homeland Energy Solutions near Lawler, Iowa.  He is currently serving his second term as president of IRFA.

Dear Legislator:

Every four years like clockwork a host of folks wanting to be the next leader of the free world descend upon Iowa, followed by a horde of national media.  Given Iowa's leadership role in renewable fuels, corn, soybeans, etc. – the debate often turns toward issues like ethanol, tax credits or the federal renewable fuels standard.

As the state's largest trade association representing Iowa's ethanol and biodiesel producers, the Iowa Renewable Fuels Association (IRFA) is working hard to inform presidential candidates, their staffs and the national media about the importance of renewable fuels to US energy security and job creation.

Given your role as an elected official, you will likely have an ample opportunity to interact with many of the presidential candidates as they seek your endorsement or offer their help with your own efforts.

IRFA urges you to take this opportunity to stress the importance of renewable fuels and agriculture to the candidates. Renewable fuels are one of the key driving forces behind the robust ag economy. And Iowa's ag economy has helped our state weather the recession much better than most other states.

When talking with candidates, or when considering who you might endorse, IRFA urges you to keep their positions on renewable fuels and agriculture in mind.  Iowa is the one early primary state where rural issues can have their voices heard. IRFA encourages you to ask direct questions and demand straight answers. There are many important issues facing Iowa renewable fuels producers that need to be on the radar screen of presidential candidates.

Equitable Energy Tax Policy: The federal blenders tax credits for ethanol and biodiesel are schedule to expire at the end of this year. Yet the billions in permanent tax benefits for the petroleum industry are being protected by Republican leaders in Congress. Incenting hugely profitable, 100-year old oil companies but not their much newer challengers is neither fair nor equitable. It's bad public policy. What is the candidate's position on tax incentives for oil companies?

The Federal Petroleum Mandate: Federal law requires that at least 85% of each gallon of gasoline you put in your car comes from petroleum (unless you drive a flexible fuel vehicle). A consumer who violates this federal mandate is subject to fines of $37,000 per day. In other words, it is illegal for you to choose the ethanol blend of your choice. What is the candidate's plan to end this federal petroleum mandate and give consumers the freedom to choose the ethanol blend of their choice?

The Fuel Distribution Monopoly: It is essentially impossible to build a new refinery in the U.S.  Those refineries in existence have been consolidated in recent years under larger and larger petroleum companies.  These petroleum companies dictate, to a large extent, the fuel choices (or lack of choices) in the U.S.  With very little competition, the petroleum companies decide what products to refine and put into the petroleum pipelines (distribution network) – a distribution network often created with government assistance including loan guarantees and the use of eminent domain.

So this coming summer in Iowa, there will be consumers wanting to purchase E15 for their vehicles and there will be retailers wanting to offer E15 to those consumers.  But the refiners will refuse to supply the proper petroleum blendstock for use with 15% ethanol.  Therefore it will be impossible to sell E15 in Iowa – the capital of ethanol – during the summer.  That is not a free market with consumers in charge.  What is the candidate's plan to bust the fuel distribution monopoly and put the power of choice in the hands of consumers?

The Federal Renewable Fuels Standard: The federal renewable fuels standard (sometimes called "RFS2") is a policy designed to help fuels like ethanol and biodiesel overcome the unfair tax treatment, federal petroleum mandate and fuel distribution monopoly challenges outlined above.  But foremost, the RFS2 was a response to the fact that U.S. dependence on foreign oil means Americans are essentially funding both sides of the war on terror.  What is the candidate's position on protecting the RFS2 from assaults by petroleum interests?

In urging the candidates to oppose the RFS2, some anti-renewable fuels groups have called it a mandate or said government should not pick "winners and losers."  If a candidate uses this excuse for not clearly supporting the RFS2, they leave the petroleum mandate and distribution monopoly in place.  In this case, what is the candidate's specific plan to have the federal government stop picking foreign petroleum as the winner?

Proposed E15 Ban: In one of the most outrageous displays of petroleum industry power, Members of Congress from oil states have introduced amendments that would effectively ban the sale of E15.  E15 was recently approved by the EPA after clearing the arduous federal testing process required for any fuel wishing to compete with petroleum. The move to ban E15 is anti-free market and anti-consumer choice. What is the candidate's position on the attempt to ban E15?

Clearly there is neither a level playing field nor a free market for fuel choice in America today.  In order to unlock the many benefits of renewable fuels, federal policy must stop putting new fuels at a disadvantage to the entrenched petroleum interests content on keeping the U.S. dependent on oil from countries that, at best, don't like us and, at worst, are funding terrorist attacks against us.

IRFA appreciates your consideration of our request to engage presidential candidates on these important issues facing renewable fuels.  Our staff stands ready to provide any further information or assistance you may require.  And we'd love to hear any feedback you get from your interactions with the candidates.

Iowa's first-in-the-nation role comes with rights and responsibilities.  We get the right to ask these types of issue-based questions important to rural Americans.  But we have the responsibility to do so thoughtfully and ensure the contest is not just a "beauty contest."  We know that Iowans take those responsibilities seriously and we thank you for the role you are playing.

Sincerely,

 

Walt Wendland

President, IRFA

 

IRFA president's statement on Texas Governor Rick Perry's energy plan

Background:  U.S. presidential candidate Rick Perry, who is governor of Texas, on October 14 unveiled his energy policy during a campaign event in Pennsylvania.  IRFA president Walt Wendland issued the following statement:

"In a recent op-ed in the New York Times on the need to promote flexible fuel vehicles to break the petroleum monopoly, former Reagan National Security Advisor Bud McFarland wrote: 'Doing nothing is equivalent to mandating a monopoly by a single fuel (whose price is set by a foreign cartel).'  Well, the Perry energy plan is 'do nothing' when it comes to diversifying our fuel supply away from foreign oil.

"The Perry plan would leave America dependent on that single fuel – petroleum – with OPEC in charge of its price. The Perry plan would leave intact the federal petroleum mandate. The Perry plan would leave in place the fuel distribution monopoly of oil companies.

"But the most indefensible part of the Perry plan is that it would lock in tax subsidies for petroleum while eliminating them for all other competing fuels. That might make sense in Texas, but it's a stupid policy for America. Governor Perry has said he doesn't want the government to pick winner and losers. But the Perry energy plan does just that – and foreign oil is the winner."

Notes: The federal tax credits for ethanol and biodiesel are set to expire at the end of this year. However, petroleum tax subsidies are in the tax code permanently with no scheduled expiration dates – some have existed since 1913. Therefore, under the Perry plan, petroleum tax subsidies would continue "business-as-usual" forever.
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