Iowa Governor Kim Reynolds signed an executive order declaring that future diesel engine vehicles purchased by the state must be able to use 20% biodiesel Tuesday at the Iowa Farm Bureau’s Annual Meeting.
The Iowa Department of Transportation fleet has already been using B20 biodiesel since 1994, a press release said. While the order may not drastically change Iowa’s existing vehicle purchase tendencies, it is a gesture of support to an industry long dissatisfied with federal biofuel policies.
Iowa farmers and others have for months expressed displeasure with the Trump administration’s repeated Renewable Fuel Standard exemptions to oil refineries. The exemptions undercut what would otherwise be guaranteed demand for biofuel, and several failed ethanol plants have blamed the exemptions for their closure.
Environmentalists and other stakeholders argue about the environmental benefits of ethanol and biodiesel. The fuels reduce fossil fuel use and emissions but are produced through resource-intensive agriculture, which expends almost as much energy as the fuels store.
The fuels are pivotal to Iowa’s economy regardless. A Des Moines Register article about the executive order said Iowa is the nation’s biggest ethanol and biodiesel producer.
An Iowa plant that produces ethanol from cellulose found in corn residue announced Tuesday that it will stop commercial operations in February.
Cellulosic ethanol is widely regarded as a more environmentally friendly version of the plant-based fuel because it provides a use for waste products like cobs and stalks rather than an incentive to put more land into industrial corn production.
Typical ethanol, made from corn kernels, has an “energy return on investment” (EROI) of less than 2:1, most sources agree. This means that the fuel supplies only about as much energy as was put into growing and refining the product. Researchers believe EROI for cellulosic ethanol could be somewhat higher than for corn-based ethanol, but still much lower than for other energy sources.
Despite the apparent benefits, cellulosic ethanol has been slow to take off. The Renewable Fuels Association 2019 Ethanol Industry Outlook report indicated that cellulosic sources provide only about 3.4% of U.S. ethanol production capacity.
The Des Moines Register reported that personnel of the plant, owned by POET, blamed the “pause” in production on the U.S. Environmental Protection Agency for granting Renewable Fuel Standard exemptions to oil refineries in recent years. The RFS sets minimum levels of biofuel that gasoline and diesel must contain, so exemptions reduce what would otherwise be a guaranteed demand for biofuel.
Cellulosic ethanol production has lagged behind forecasts since it first entered commercial purview, however. In 2007, the Bush administration called for 100 million and 250 million gallons of commercial cellulosic ethanol production in 2010 and 2011 respectively. Actual commercial production did not begin until 2012, according to MIT Technology Review.
In July 2018, ethanolproducer.com thought national production of cellulosic ethanol could top 15 million gallons, far behind the EPA’s goal of 7 billion gallons for that year.
The POET cellulosic ethanol plant in Emmetsburg, Iowa opened in 2014, according to the Register. The facility cost $275 million to build and received about $120 million in state and federal incentives. The plant has a capacity to produce 20 million gallons of cellulosic ethanol annually, according to POET, and has spent years working on “optimizing” the production process to reach full capacity.
The plant will continue doing “research and development” on cellulosic ethanol while producing regular corn ethanol at another plant next door, according to the Register. Another cellulosic ethanol plant in Nevada, Iowa closed in 2017, the Register also reported.
On Friday, the U.S. Environmental Protection Agency and Department of Agriculture proposed new rules promoting ethanol consumption over petroleum. This move is considered primarily to be an economic strategy aimed at reducing the pressure placed on farmers by ongoing trade wars.
The plan would involve increasing biofuel sales above the current 15 billion gallons annually. It would also make 15 percent ethanol fuels more available at gas stations domestically as well as increase access to foreign markets. Iowa farmers say they have lost hundreds of thousands of dollars due as U.S. trade policy has destabilized agriculture markets and EPA waivers have decreased demand for ethanol.
Iowa is the nation’s leading producer of ethanol biofuels, and the industry supports nearly 43,000 jobs in the state. Elected officials from Iowa have criticized the Trump administration on previous moves perceived as harming the biofuel industry. In August, the EPA granted 31 waivers to oil refineries, exempting them from laws requiring them to blend biofuels into their gasoline.
Since January 2017, the Trump administration has granted 85 biofuel waivers to small refineries. The new proposal claims that larger refineries will carry the extra burden by blending in ethanol for those exempted, although this is something that the EPA has not successfully enforced in the past. Farmers say that the new plan also lacks details on how these rules will be enforced going forward.
On Friday, the U.S. Environmental Protection Agency granted waivers from federal biofuel law to 31 small oil refineries. Members of Congress from Iowa on both sides of the aisle have criticized this move for hurting the state’s renewable fuel industry.
Under the Renewable Fuel Standard, refineries are normally required to blend biofuels like ethanol into their gasoline, or to purchase credits from those that do so. However, exemptions are available for small refineries that can prove that compliance with the rule would cause significant financial strife.
From 2013 to 2015, the EPA granted no more than eight waivers per year, but since Trump took office, the number of waivers has quadrupled. This latest round brings the total to 85 since 2016, and includes refineries owned by ExxonMobil and Chevron.
13 ethanol plants have recently shut down, three of them permanently, in part due to the loss in demand caused by these waivers. The country’s largest ethanol producer POET blamed the EPA as it was forced to close an Indiana plant on Tuesday.
Senator Chuck Grassley accused the government of not keeping its word and “screwing the farmer when we already have low prices for grain.” Iowa is the leading producer of corn and ethanol production in the U.S., and the industry supports nearly 43,000 jobs in the state.
Iowa produced about 80 million more gallons of biodiesel in 2018 than 2017, bringing the total up to about 365 million gallons. The Iowa Renewable Fuels Association estimates that Iowa generated about one fifth of total biodiesel produced in the U.S. last year.
Monte Shaw, the director of the IRFA, attributed the increase in production to reduced foreign imports of biodiesel. Last spring, the United States International Trade Commission determined that Argentina and Indonesia were selling biodiesel in the U.S. at unfairly low rates, harming the domestic industry. Subsequent tariffs increased demand for U.S.-produced biodiesel.
Much of the demand was met with soybean oil, which totaled about 81 percent of the market share, up from 2017. Corn oil comprised 10 percent, while animal fat dropped to 5 percent, and used cooking oil contributed about 4 percent of the share.
Shaw believes Iowa could produce even more biodiesel, up to 400 million gallons in its 12 facilities, if nationwide Renewable Fuel Standard levels were higher. These levels determine the minimum quantity of biofuel that U.S. transportation fuels must contain and are administered by the Environmental Protection Agency. Levels increase each year. In 2019, 2.1 billion gallons of biodiesel should be mixed into U.S. diesel. By 2020, the amount should increase to 2.43 billion gallons.
Iowa congressman Dave Loebsack encouraged Democratic presidential candidate Hillary Clinton to make renewable energy a major part of her platform during an event earlier this week, as reported by the Cedar Rapids Gazette.
Much of Loebsack’s emphasis was on energy issues important to Iowans such as biofuels, wind, and solar.
“Energy policy is exceedingly important in Iowa. The renewable fuel standard has been important in Iowa, not just for ethanol, not just for corn ethanol, but for cellulosic ethanol, for biofuels of other sorts as well. These are also good for the environment. They can bring together people as far as I’m concerned,” Loebsack said at the forum.
Loebsack – currently the lone Democrat in Iowa’s congressional delegation – represents Iowa’s 2nd District, the southeast corner of the state that includes Iowa City. The Sioux City native and former Cornell College political science professor has held his seat since 2006.
Full video of the panel discussion is available on politico.com.
During a public hearing of EPA’s new Renewable Fuel Standard in Kansas City on Thursday, Iowa governor Terry Branstad questioned the new policy and the economic impact it will have on the Hawkeye State.
“The EPA has a choice: protect the deep pockets of Big Oil and their monopolistic practices or nurture consumer choice, renewable energy growth and a healthy rural economy,” Branstad said.
The proposed plan, which was set by congress, calls for a reduction of 4 billion gallons this year and an additional 5 billion gallons in 2016. Branstad cited the financial impacts the proposal would have on Iowa’s economy pointing out that corn has gone from $6 per bushel in August 2013 to $3.45 per bushel currently. He said this has caused uncertainty in the market and has led to fewer investments in biofuel technologies.
Proponents of the new standard say that it would increase overall biofuel production and use over time. Officials from the oil industry also argue that retailers are not equipped to sell gasoline with ethanol levels greater than 10 percent and that customer demand has not warranted an investment in new infrastructure.