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Keep renewable fuels industries strong
July 22, 2019

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It's important to the Hawkeye State's economy that the federal government's support for ethanol and biodiesel remain strong.

A recent study conducted by ABF Economics, based in Doylestown, Pennsylvania, concludes that the state's ethanol and biodiesel producers contribute greatly to our state's prosperity. The ABF analysts calculated that the renewable fuels industries are responsible for about 3 percent of Iowa's GDP $5 billion annually. They directly or indirectly generate roughly 48,000 jobs in Iowa. That translates into $2.5 billion in income each year for Iowa households.

Recognizing the importance of renewable fuels to Iowa's robust economy, Gov. Kim Reynolds and our two U.S. senators Charles Grassley and Joni Ernst have expressed alarm at a draft federal regulation released July 5 by the U.S. Environmental Protection Agency. The proposed rule sets the Renewable Fuel Standard blend levels for ethanol for 2020 and for biodiesel in 2021. Reynolds, Grassley and Ernst are concerned that the EPA is undermining the commitment made by President Donald Trump to the growth in renewable fuels. The proposed regulation essentially calls for ethanol and biodiesel production to remain constant rather than grow.

"The RFS (Renewable Fuels Standard) was intended to send a clear market signal for the growth of biofuels and, unfortunately, this rule falls short," said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

According to Grassley, the EPA is also undercutting ethanol producers by the granting of an excessive number of waivers from ethanol blending to smaller refineries. He argues that these waivers are being allowed in situations that were not intended by Congress when it passed RFS. This practice is depressing the demand for ethanol.

That point was strongly supported by Reynolds in a statement issued on the day the would-be regulation was released.

"I am incredibly disappointed to see that the EPA has failed to reallocate the millions of lost gallons due to their brazen and unprecedented use of small refinery exemption waivers," she said. "A robust RFS is essential to a healthy ag economy in Iowa and across the country."

Earlier this year Trump showed his commitment to ethanol production by directing that the EPA end its restriction on the sale of E15 during the summer months. Unfortunately, in its latest RFS draft rule and its refinery waiver policies, the EPA continues to hamper the growth of renewable fuels sales. This pattern of disregarding Trump's support for renewable fuels needs to stop. We urge the president to take whatever action is needed to make the EPA's rulemaking consistent with his priorities.

Iowa is the nation's top producer of renewable fuels. Our state's 43 ethanol refineries are capable of producing more than 4.5 billion gallons annually. The state's 11 biodiesel facilities could produce 400 million gallons each year. The EPA's unsatisfactory RFS rule needs to be changed. Beyond that, the EPA's lack of enthusiasm for our renewable fuels industries needs to end.

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