For Biofuels Industry, Federal Support Is Crucial — And Uncertain

Nov 20, 2019

The comment period on an Environmental Protection Agency rule regarding the Renewable Fuel Standard (RFS) ends this month, but farm state lawmakers and biofuels advocates continue to argue the rule isn’t adequate.

And they are pushing for a deal they say the president promised them.

In August, the EPA approved waivers for 31 small refineries, exempting them from blending the required amount of ethanol into gasoline. Iowa Republican Gov. Kim Reynolds and Iowa’s two Republican senators, Joni Ernst and Chuck Grassley, among others, cried foul saying the move would violate the mandatory ethanol amounts outlined in the RFS.

Midwest Republican leaders, including Grassley, Ernst and Reynolds, say in a September White House meeting President Donald Trump promised the EPA would reconcile the waivers with maintaining the required volumes. But they say the EPA’s proposed rule to do that, which would add additional gallons to future volume requirements, will not fully account for the gallons lost to the waivers.

So when Grassley went to the White House on Tuesday to discuss other issues, he raised the RFS question again with President Trump. Also on Tuesday, Grassley met with biodiesel leaders. That sector of the renewable fuels industry has an additional, pressing concern: It’s been waiting two years for promised legislation to extend tax credits.

Grassley offered one biodiesel plant’s math as an example.

“Without the tax credit, there’s a $5 million loss. With the tax credit, there’s a $5 million profit. So that’s a $10 million… swing,” he said. “And if we don’t get this done it’s probably going to be shuttered.”

Grassley says that would eliminate 30 jobs. Several biodiesel plants have already closed or reduced production this year. Traditional and cellulosic ethanol producers have also decreased output and laid off workers.

Western Iowa Energy President Bradley Wilson, who currently serves as chairman of the Iowa Biodiesel Board, said the industry can only hold on for so long.

“Quite frankly, if they do not do (tax credits for) ’18 and ’19 — you’ve already seen some plant closings, but it’s nothing like you’re gonna see next year if they don’t take care of it this year,” he said. Wilson met this week with Democrats and Republicans in both chambers and said everyone seemed to support the tax credits, even potentially including 2020 in a bill yet this year, which would prevent a similar situation down the road.

Still, he expressed disappointment that promises made a year ago have not been fulfilled.

“It is a little disheartening that we were told this time last year that ‘hey, it’s not going to happen at the end of the year, but very first thing 2019 we’re gonna take care of the tax credit,’” Wilson said. “Well, of course, now here we are setting towards the end of November still nothing has happened with it.” 

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