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Obama Administration Proposal Turns Back on Competition and Fuel Choice

JOHNSTON, IOWA – The Iowa Renewable Fuels Association (IRFA) today urged the Obama Administration to conduct a thorough soul-searching after the U.S. Environmental Protection Agency (EPA) announced a proposal to radically reduce Renewable Fuel Standard (RFS) levels for 2014.

“Today’s RFS announcement represents the biggest policy reversal of the entire Obama Administration,” stated IRFA Executive Director Monte Shaw.  “The EPA proposal turns the RFS on its head, runs counter to the law and is a complete capitulation to Big Oil.  The Obama Administration needs to conduct a thorough soul-searching and decide whether they are serious about cleaner fuels, consumer choice, and cutting petroleum dependence, or whether they truly want to adopt the Big Oil status quo.  There is still time to restore Congressional intent and common sense before the rule is finalized.”

In the proposed rule, the Administration adopts the position that a lack of retail distribution equipment this year equates to a renewable fuel “supply shortage” next year.  This “infrastructure” waiver was specifically rejected by Congress during the adoption of the RFS and, if allowed to stand, would effectively repeal the RFS as a factor in U.S. energy policy.  The circular logic of this proposal creates a downward death spiral for the RFS as the RFS could not be increased unless Big Oil had already begun to offer higher ethanol blends. With no pressure to move forward, Big Oil would be expected to continue hiding behind its Century of Subsidies and Federal Petroleum Mandate to prevent consumer choice for higher blends.

“It’s not just the absurdity of lowering the 2014 numbers below the 2013 level, with the new waiver framework, in essence, the Administration would be ceding power to the petroleum industry to dictate the level of each year’s RVO based on the amount of infrastructure the petroleum industry was willing to install.  That is the exact opposite of how the RFS was intended to work.  The RFS is supposed to be a tool for market access, not market restriction.”

In addition to creating an extra-legal waiver mechanism, the proposal lowers the “corn ethanol” level from 13.8 billion gallons in 2013 to only 13 billion gallons in 2014.  The proposal also freezes the biodiesel level at 1.28 billion gallons despite the fact the biodiesel industry is currently operating at an annualized rate of 2 billion gallons.

“The 2014 numbers represent the real crossroads,” concluded Shaw.  “We either move toward more competition and more consumer choice or we lock in the current petroleum monopoly.  When faced with that choice, the Obama Administration has blinked.  I think we’ve just seen how politically powerful Big Oil really is.  They just got what they wanted from the EPA when they had no chance of gutting the RFS through Congress.  With no Farm Bill and the RFS in danger of being rendered useless, I hope we don’t look back at November 15, 2013 as the beginning of the next farm crisis.”

Iowa is the leader in renewable fuels production. Iowa has 42 ethanol refineries capable of producing over 3.8 billion gallons annually, with three cellulosic ethanol facilities currently under construction. In addition, Iowa has 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually.

The Iowa Renewable Fuels Association 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.