Final RFS Volumes Hurt Consumers, Fuel Choice and Farmers

The Environmental Protection Agency (EPA) recently announced the final renewable fuel targets for 2015 and 2016 under the federal Renewable Fuel Standard (RFS), setting the final RFS levels well-below the levels called for by Congress in the law.

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Iowa Renewable Fuels Association (IRFA) Executive Director Monte Shaw cried foul on EPA’s use of the mythical “blend wall” to justify its lowering of the RFS levels.  Shaw noted, “The so-called ‘blend wall’ is a fabrication of the oil industry to explain its anticompetitive behavior.  There is simply not a blend wall issue; there is a consumer access issue. At virtually every station offering consumers the choice of fuel blends containing more than 10 percent ethanol, ethanol accounts for well more than 10 percent of total fuel sales.  Iowa retailers with blender pumps, offering blends from zero to 85 percent ethanol, consistently average 20 to 25 percent ethanol content across their total fuel sales.”

Shaw concluded:  “With the Obama Administration so intently focused on curbing greenhouse gas emissions, cleaner-burning renewable fuels should be allowed to grow, and not be held back.  This final rule is a severe step backwards for consumers, farmers, the environment and energy security.”

Iowa Governor Terry Branstad stated, “I am extremely disappointed that the EPA’s final decision failed to follow the renewable volume levels set by Congress. Unfortunately, today’s decision shows the lack of interest in providing consumers choice at the pump, creating jobs and increasing incomes in Rural America, and reducing our dependence on foreign oil.  This rule falls far too short of a robust RFS and short of the standards set by Congress.”

Iowa Lt. Governor Kim Reynolds added, “This entire process has negatively impacted Iowa families through reduced commodity prices, farm incomes, and farmland values. We were hopeful that the EPA would fully recognize the importance of renewable fuels after years of regulatory uncertainty.  However, the EPA’s decision only marginally improves volume levels in a step that will hurt Iowa families, businesses, and farmers.”

“At a time when corn prices are below the cost of production, this will be a blow to Iowa’s rural economy,” stated Iowa Corn Growers Association (ICGA) President Bob Hemesath. “Contrary to the erroneous criticism spread by the oil industry, biofuels can meet growing consumer demand for these home-grown fuels. We should be strengthening our commitment to renewable fuels, not taking a step backwards.”

“While an increase of biofuels from the original proposed rule is welcome news, the simple truth is, this falls far short of promises made to Iowa farmers by Congress in 2007.  We know the EPA is using a flawed methodology to calculate the biofuels targets, which amounts to a win for Big Oil,” said Iowa Farm Bureau Federation (IFBF) President Craig Hill. “What’s worse is this makes it apparent that the EPA under this administration is continuing its pattern of ignoring and violating Congressional intent, at the detriment of farmers and our economy, which is especially troubling in Iowa, where one out of every five jobs comes from agriculture.”

Renewable Fuels Association (RFA) President and CEO Bob Dinneen said, “EPA’s decision turns our nation’s most successful energy policy on its head. When EPA released its proposed RFS rule in May, the agency claimed it was attempting to get the program back on track. The EPA’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. EPA’s decision will severely cripple the program’s ability to incentivize infrastructure investments that are crucial to break through the so-called blend wall and create a larger market for all biofuels.”

Dinneen added, “There is simply no reason for EPA to adopt API’s blend wall narrative. Data shows that EPA, in its initial RFS proposal, understated the likely market for E85 and non-ethanol conventional biofuels in 2016 by at least 440 million gallons. The data suggests there will be at least 14.7 billion gallons of undifferentiated renewable fuel blended next year. With approximately 2 billion surplus RIN credits already available for refiners to use for compliance in 2016, and with another 900 million RINs potentially becoming available from 2015 over-compliance, the EPA’s decision to lower the 2016 RVO below the statutorily imposed level of 15 billion gallons is simply unnecessary.”

Growth Energy CEO Tom Buis stated, “What EPA has done here is a dramatic departure from a program that was working. I believe when we finish our review of the final rule that we will want to stand up for the program, stand up for consumers, stand up for carbon reduction, stand up for rural America , and put this program back where it belongs.”

National Biodiesel Board (NBB) CEO Joe Jobe stated, “This decision means we will displace billions of gallons of petroleum diesel in the coming years with clean-burning biodiesel. That means less pollution, more American jobs, and more competition that is sorely lacking in the fuels market. It is a good rule. It may not be all we had hoped for but it will go a long way toward getting the U.S. biodiesel industry growing again and reducing our dangerous dependence on fossil fuels.”

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