Crop associations upset with EPA reducing RFS

Published online: Nov 21, 2013
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Several agricultural associations expressed their disappointment over the Environmental Protection Agency's decision last week to reduce the Renewable Fuel Standard.

Groups issuing statements included the American Farm Bureau Federation, the National Corn Growers Association, The American Soybean Association, the Advanced Ethanol Council, the Renewable Fuels Association, the Missouri Corn Growers Association and more.

The American Farm Bureau Federation was one of the largest associations to speak out against the reduced RFS. Bob Stallman, president, AFBF issue the following statement.

"The American Farm Bureau Federation is disappointed in the Environmental Protection Agency's proposed reduction in the amount of ethanol that must be blended into the nation's gasoline supply. This decision strikes a blow to conventional ethanol production as well as dampens the prospects for advanced biofuels.

"The intent of the Renewable Fuels Standard revised in 2007 (RFS2) was to get more renewable fuels into our nation's pipeline and move beyond the E10 fuel blend. Today's announcement from EPA moves us in the opposite direction. This decision has the potential to pull the plug on new technologies and investments that are currently in place and needed to produce advanced biofuels.

"The ethanol industry, from farmers to investors and everyone in between, needs stability and certainty."

The National Corn Growers Association expressed its outrage Friday in the wake of the announcement that EPA will significantly weaken the Renewable Fuel Standard by reducing the volumes for corn-based ethanol for 2014.

"This recommendation is ill-advised and should be condemned by all consumers because it is damaging to our tenuous economy and short-sighted regarding the nation's energy future," said NCGA President Martin Barbre. "Agriculture has been a bright spot in a failing U.S. economy, but current corn prices are below the cost of production. EPA's ruling would be devastating for family farmers and the entire rural economy."

NCGA went to say that the EPA's proposed renewable volume obligations set the annual targets for the utilization of cellulosic, biodiesel, advanced and total renewable fuel within our transportation fuels. The proposed rule caps corn-based (or conventional) ethanol at 13 billion gallons. These proposed volume obligations are a drastic reduction from the mandated RVOs in statute. The new proposed rule cuts 1.4 billion gallons from the conventional ethanol cap that was set at 14.4 billion gallons, according to NCGA.

Barbre noted the EPA proposal will make investments in new biofuels plants very risky, stagnate investment in infrastructure by petroleum marketers and send the wrong signals to automakers who want more direction on where they should be spending millions of targeted investments on research and development.

"Ethanol and the RFS have been a great success story. Now, the EPA is sending a terrible message that we no longer have a long-term energy policy for biofuels, which was the original intent of this forward-thinking legislation. The Administration has clearly backed away from their commitment to renewable energy and this proposal blatantly contradicts the President's Climate Action Plan," Barbre said. "The goal of the RFS is to reduce our dependence on imported oil to make our country more energy independent and more secure. It has done that while also revitalizing rural America."

The American Soybean Association expressed its concern that the biomass-based diesel levels for 2014 and 2015 would be reduced below the amount actually produced in 2013. The rule, which establishes the amount of biofuels that obligated parties must utilize for 2014 and the amount of biomass-based diesel for 2014 and 2015, proposes a biomass-based diesel RVO of 1.28 billion gallons, less than the amount produced by the industry in 2013. EPA has also proposed to reduce the total advanced biofuels requirement, which also limits the opportunities for biodiesel.

"The level set forth in the proposal is unnecessarily low and will stifle the growth and job creation potential demonstrated by the biodiesel industry over the past several years," said Danny Murphy, a soybean, corn and wheat farmer from Canton, Miss., and ASA's president. "Biodiesel, including biodiesel produced from soybean oil, is the most prevalent advanced biofuel currently produced in the United States. Biodiesel is the first and only EPA-designated Advanced Biofuel to reach 1 billion gallons of annual production. The industry has met or exceeded the RFS Biomass-based Diesel volume requirements each year they have been in place."

ASA will continue to work with EPA and industry partners to demonstrate the flaws represented by this proposal and looks forward to achieving a final rule that does not hinder the momentum and positive economic benefits generated by biodiesel.

Just days before EPA announced plans for a lower Proposed Rule for the 2014 Renewable Fuel Standard (RFS) in 2014-15, a study released by the National Biodiesel Board (NBB) found the decision could impact nearly 8,000 jobs.

According to a news release from NBB, the U.S biodiesel industry is supporting more than 62,000 jobs and $2.6 billion in wages in 2013, with production on pace for a record of 1.7 billion gallons. The industry is the largest producer of EPA-designated Advanced Biofuel in the nation.

The Advanced Ethanol Council also expressed its disappointment in the proposed 2014 required volume obligation (RVO) for the RFS.

"While only a proposed rule at this point, this is the first time that the Obama Administration has shown any sign of wavering when it comes to implementing the RFS," said Brooke Coleman, executive director of the Advanced Ethanol Council (AEC). "EPA is in the right ballpark for cellulosic biofuels, and we are confident that the final number will be the right one for the industry in 2014. But bigger picture issues must be resolved in the final rule because advanced biofuel investors also pay attention to the big picture."

The Council pointed to unnecessary reductions to the advanced biofuel pool, unfounded concern about imaginary blend walls, and not enough faith in the mechanics of the RFS program among certain Administration officials as the primary issues that need to be resolved during the comment period.

"What we're seeing is the oil industry taking one last run at trying to convince administrators of the RFS to relieve the legal obligation on them to blend more biofuel based on clever arguments meant to disguise the fact that oil companies just don't want to blend more biofuel. The RFS is designed to bust the oil monopoly. It's not going to be easy," added Coleman.

The Renewable Fuels Association issued its statement, "Despite its lack of statutory authority to do so, EPA proposed cutting the RVO for conventional renewable fuel from the statutory level of 14.4 billion gallons to 13.01 billion gallons. If finalized, this cut of 1.39 billion gallons would have severe economic and environmental consequences ...

"Cutting ethanol consumption by 1.39 billion gallons will increase demand for gasoline by 948 million gallons. According to Louisiana State University, that bump in demand for gasoline will increase gasoline prices by 5.7 cents per gallon across the board. As a result, American drivers will spend $7.6 billion more on gasoline purchases in 2014. Further, oil refiners will keep $2.5 billion in their pockets though avoided purchases of ethanol, while also saving roughly $300 million on infrastructure investments. It all adds up to a $10.3 billion windfall for Big Oil."