The long-anticipated EPA ruling on RFS mandates for 2014 was released on Friday, and industry reaction to a cut in the RFS mandate to 13 billion gallons was quick and unanimous. The corn and ethanol industry had been hoping the agency would increase the amount of ethanol that will be required to be blended in fuel next year; but, in a surprise move, the EPA cut the amount of corn based ethanol that must be used in 2014. 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. Bob Danine says this is the wrong decision at the wrong time, “We are in the midst of harvesting the single largest corn crop in our nation’s history, 14 billion bushels. Farmers planted that crop with the expectation of a growing renewable fuels market, not an artificially constricted one.”
EPA justified the proposal by saying there was not enough retail distribution to support an increase to justify increasing ethanol use. Danine said the proposal will pressure corn prices and increase the corn surplus, “This proposal would take 500 million bushels of demand away from farmers.” Brian Jennings, Executive Vice President for the American Coalition for Ethanol, said in a statement, “The EPA, using the E10 ‘blend wall’ as an excuse to reduce ethanol use, rewards oil companies for doing nothing to comply with the RFS or inevitability of higher ethanol blends, and sets a dangerous precedent by taking the teeth out of the most consequential policy Congress has ever enacted to reduce greenhouse gas emissions of transportation fuel.”
Tom Buis, with Growth Energy, said the EPA decision violates the spirit and intent of the RFS legislation, “This proposed rule goes directly against the best interests of our nation and American consumers. The RFS is working to reduce our dependence on foreign oil, create jobs, clean our air and save consumers at the pump. It makes no sense to roll back a successful policy just because Big Oil stands to lose profits – profits that come directly from the wallets of American drivers. Any attempts to do so undermine the intent of the Energy Independence and Security Act of 2007, in which the RFS was strengthened.”
The American Meat Institute, however, released a statement praising the EPA proposal. “The EPA’s decision to reduce the ethanol mandate is long overdue,” said AMI Vice President of Regulatory Affairs and General Counsel Mark Dopp on a call with reporters this afternoon. “While this is a positive step, the fact remains the RFS is a flawed policy that requires Congressional action. Even with a record corn crop expected this year, the damaging ripple effect of this defective policy has moved through the meat and poultry complex for the past several years. The time for Congressional action is now.” Bob Stallman with the American Farm Bureau Federation said the EPA decision is a step backward for the US, “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 EPA also proposed lowering the amount of biodiesel produced in 2014, a move that angered the soybean industry. “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, MS, 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.”
Some groups said the EPA proposal represents a change in policy by the Obama administration. “The 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.”
Indiana Reaction
Kevin Wilson, Indiana Soybean Alliance President and farmer from Walton, IN, said, “As the home of the world’s largest integrated soy biodiesel plant in Claypool, Ind., this rule could adversely affect not only Hoosier farmers whose soybeans serve as feedstock for this industry, but also the livestock farmers who benefit from the soybean meal produced as a co-product of biodiesel and the rural communities that have seen economic growth because of the industry,” Herb Ringel, Indiana Corn Growers Association President and farmer from Wabash, IN said, “The EPA’s decision to significantly reduce the volume of corn-based ethanol required within the Renewable Fuel Standard will hurt corn farmers, our rural communities, the ethanol industry, and our consumers throughout the state.”
The industry now has 60 days to file comments with the EPA and most groups says they plan to send a strong message to the EPA. “We look forward to commenting on the proposed targets and EPA’s flawed methodology so that we can continue to support the biofuels industry,” said Roger Johnson with National Farmers Union.