White Paper Released on Farm Income and the RFS

Leaders of the National Corn Growers Association (NCGA) and the National Farmers Union (NFU) jointly released a new white paper Thursday on how the EPA’s proposed rule for the Renewable Fuel Standard (RFS) is threatening farm income and rural economies across the United States.

ncga-smallerThe paper cites the latest USDA data on net cash income for American farmers and ranchers, which is forecast to decline by 26 percent in 2015 from peak levels in 2013, as proof that the EPA proposal is impacting the farm economy. “That devastating forecast is worse than originally projected, and it represents the lowest farm income levels in nearly a decade, and it could get worse,” says the paper.

“There are factors other than the RFS,” said NCGA president Chip Bowling of Maryland. “(But) it has changed the basis, the price received for our corn, it has changed the way we’re buying equipment … most of that is due to the uncertainty in the Renewable Fuel Standard.”

nfu_logo2EPA is expected to release the final rule at the end of November and NFU president Roger Johnson says they have heard nothing to indicate they will change that time line. “They agreed to that in the court order,” said Johnson. “It’s hard to say what to expect from them.”

Johnson stressed that the so-called blend wall should not be included in any determination for volume requirements under the RFS. “When the RFS was put in place it was never intended that it would stop at ten percent,” he said. “It was always the intent that it would go way beyond ten percent.”

Bowling says corn growers have responded to the demand for more corn to produce ethanol and another record crop is expected this year. “We’re still expecting yields of 162 bushels per acre at minimum,” said Bowling. “We have carry over that’s growing and without a strong Renewable Fuel Standard demand for corn is going to decrease.”

Listen to the announcement from NCGA and NFU here: Press call on RFS/farm income white paper

CoBank Report – Ethanol Industry Rebalanced

The ethanol industry has rebalanced in 2015 following 18 months of record earnings. As energy prices collapsed late in 2014, so did ethanol prices and plant margins. The report from CoBank, “Ethanol Industry Reblanaces,” has found that ethanol’s supply and demand has remained well balanced, and producers have maintained positive earnings. Looking into 2016, the report finds plant operators will face dueling positive and negative shifts in the market that are likely to result in lean, yet positive margins.

CoBank logo“With corn prices expected to remain relatively static, it will be the prices of distillers grains and ethanol that determine the direction of earnings,” explained Dan Kowalski, the report’s author, and director of CoBank’s Knowledge Exchange Division. “Ethanol profitability will largely hinge on two key factors: the volatility of energy prices and the industry’s ability to maintain strong export sales. The report also points to the importance of sustained discipline in growing production capacity and output.”

Kowalski continued, “The industry will see little growth in domestic sales as a result of improving fuel efficiency in the nation’s vehicles and changes to the EPA’s renewable fuels blending mandate. The EPA’s proposed alteration to the Renewable Fuels Standard (RFS) is expected to be approved later this year, and will set a floor beneath the current 10 percent blending level. However, the new policy will not incentivize retailers to sell higher ethanol-blended fuels.”

The report finds that the potential for increased export sales will help to counterbalance the domestic picture. Brazil has increased its domestic blending rate to 27 percent. This has reduced its export ability and opened the door to U.S. producers.

The report cautions foreign markets also pose a risk to ethanol producers. China, which currently imports 60 percent of U.S. distillers grains, is expected to change its grain policies to discourage the import of corn-alternative feed grains. These changes could significantly impact producers’ bottom lines.

Senator Toomey’s Anti-RFS Amendment Tanks

Senator Pat Toomey (R-PA) introduced an amendment that would eliminate corn ethanol from the Renewable Fuel Standard (RFS). It was promptly defeated by the Senate Committee on Banking, Housing and Urban Affairs by a vote of 15-7. Pro RFS supporters came out en masse against Toomey’s amendment and thanked the Committee for making the right decision on consumer choice at the pump.

Senator Toomey“Biofuels are a key part of energy independence and energy security,” said Jon Soltz, Iraq War Veteran, and Chairman of VoteVets.org, the largest veterans group in America. “It is jarring to see a sitting U.S. Senator thumb his nose at our national security, just so he can repay his oil buddies. We need to figure out ways to use less oil. Pat Toomey is trying to make sure that we use more, and that his Big Oil pals make more profit as a result. It’s was a disgrace, but thankfully common sense won out, over Pat Toomey.”

Renewable Fuels Association (RFA) President and CEO Bob Dinneen made the following statement upon the news of defeat. “Consumers can breathe a sigh of relief when they fill up at the gas pump because today’s vote by the committee ensures that ethanol will remain the number one source of renewable fuel in the world,” said Dinneen. “The committee understood the writing is on the wall when it comes to the RFS, and that legislative proposals that seek to purportedly ‘fix’ the statute are nothing more than political gamesmanship. When Congress passed the RFS it did so with the intention of stabilizing and growing the biofuels market. The committee rightly rejected the amendment by Senator Toomey because it would have done nothing more than squelched investment and created uncertainty in the market, and would thereby have had a detrimental impact on the energy and economic future of generations to come.”

Biofuels supporters cite the RFS as the most successful energy policy ever. VotesVets.org did some research into Senator Toomey’s connections with the oil industry and found Big Oil his 12th largest contributor contributing $552,816,000. Of that, half (252,050) was made to his campaign committee over the course of the last few months, making the oil and gas industry the 10th largest contributor to Toomey this election cycle.

“It is no surprise that Senator Toomey’s amendment failed – it never had a chance of passing,” said Tom Buis, Growth Energy CEO. “Similar to legislation he has introduced before, it did not gain any traction and failed because this legislation only restricts consumer choice and attempts to dismantle a successful American industry that is creating jobs, improving our environment and reducing our dependence on foreign oil. The simple fact is that the RFS has bipartisan support and it has been the most successful energy legislation this nation has enacted in over 40 years.”

Industry Applauds Sen Talent’s RFS Efforts

Yesterday former Missouri U.S. Senator Jim Talent launched Americans for Energy Security and Innovation (AESI), an organization focused on expanding support for the Renewable Fuel Standard (RFS). The ethanol industry responded to the news favorably.

rfs-mess-2“The RFA welcomes AESI to the ongoing efforts to ensure that the RFS remains America’s most successful energy policy,” said Renewable Fuels Association President and CEO Bob Dinneen. “Former Senator Talent has been an enthusiastic and outspoken supporter of the U.S. ethanol industry. We look forward to hearing the ideas this new group will put forth to ensure that the American public has access to clean, secure, affordable home-grown sources of energy. Indeed, the RFS is law today in no small part because of Senator Talent’s leadership on the Energy Committee during his tenure representing the people of Missouri. He knows far better than most the rural economic, energy security and economic promise of the RFS.”

Tom Buis, CEO of Growth Energy added, “We are pleased that Americans for Energy Security and Innovation have joined the important fight to ensure that the RFS is protected and that America has a strong, robust and resilient renewable fuels industry.”

“Former Senator Jim Talent from Missouri has always been a true advocate for renewable fuels and rural America,” Buis added. I am confident that Senator Talent and Americans for Energy Security and Innovation will be effective in the battle to improve our environment, create jobs in America that cannot be outsourced and reduce our dangerous dependence on foreign oil and fossil fuels, all while providing consumers with a choice and savings at the pump.”

Former MO Senator Chairs New Pro-RFS Group

aesiFormer U.S. Senator Jim Talent from Missouri today launched Americans for Energy Security and Innovation (AESI), a new organization aimed at expanding support for the Renewable Fuel Standard (RFS).

“It’s an organization supported by biofuels producers and investors around the country,” said Talent, who notes that the RFS was one of his priorities when he served in the Senate between 2002 and 2007. “I’ve been very pleased by how the policy has worked,” he said.

jim-talent“(The RFS) has helped spark a revolution in value-added agriculture,” said Talent. “It’s had the effect of strengthening family farms and done it without price supports from the federal government … and it’s sparked a lot of privately funded research in biotechnology.”

Talent likens the RFS to a “gigantic strategic petroleum reserve except it doesn’t cost the government anything to maintain, it’s better for the environment, it creates large numbers of jobs and it supports family farming and agriculture across the country.”

Questioned about how this group will differ from the many organizations and coalitions already promoting the RFS, Talent said they planned to work with the other groups but they wanted to have an independent platform and he believes the more voices the better. “If you look at the amount of money being spent by organizations that are not very friendly to the RFS, I think you’ll find it dwarfs what’s being spent in support of it,” Talent said.

Listen to Talent’s announcement here: Former MO Sen. Jim Talent announces new pro-RFS group

Study: 15B Gallon RFS Can Happen in 2016

According to new research from the Center for Agricultural and Rural Development (CARD), the 15 billion gallons per year of ethanol set in the Renewable Fuels Standard (RFS) is currently achievable. With infrastructure in place, what is needed, say the Iowa State University (ISU) economists, is the Environmental Protection Agency (EPA) to adhere to the law.

“Our results show that meeting the original 15 billion gallon RFS ethanol target in 2016 is feasible,” write ISU Profs. Bruce Babcock and Sebastien Pouliot. “The two key conditions needed to meet this consumption level are to allow the market for RINs [Renewable Identification Numbers] to work as intended, which will allow the price of E85 to fall to induce consumers to buy the fuel, and for EPA to set a consistent policy signal to industry that they will indeed have to meet this target. A clear and consistent message from EPA is needed to foster investment in fueling stations that will allow enough consumers to access E85.”

E85 pump in Des Moines IA

Photo Credit: Joanna Schroeder

The data used was from actual daily fuel sales and volume prices from a major Midwest retail chain and demonstrates that E85 is a viable means to meet renewable fuel mandates. The study also reviewed the willingness of flex fuel vehicle (FFV) drivers to purchase E85 at various price points.

According to the report, “Using these new direct estimates of consumer demand, we find that owners of current flex vehicles in all US metro areas would consume 250 million gallons of E85 if it was priced at parity on a cost per mile basis with E10, and one billion gallons of ethanol if E85 were priced to save drivers 23% on a cost per mile basis. These estimates assume that no new E85 stations are installed,” write the authors. The study shows that in one metro area, the market share of E85 exceeded 15 percent when E85 saved FFV owners money on a cost-per-mile basis.

The authors also demonstrate how a strong and consistent enforcement signal from the EPA — transmitted through the market for RIN credits — can quickly transform the market for E85. They write, “Our finding that owners of FFVs like to save money on their fuel purchases is not too surprising: all of us do. Perhaps what is surprising is that EPA’s proposed decision to cut ethanol mandates reveals so little faith in their own compliance mechanism—the RIN trading system. …EPA set up the RIN trading system to create the incentive to invest in the infrastructure that is needed to expand the consumption of biofuels which, in turn, lowers RIN price. Using the power of the marketplace has proved to be an efficient method of achieving policy objectives.”

Renewable Fuels Association (RFA) President and CEO Bob Dinneen commented on the study’s findings, stating, “This report confirms that if EPA and the Administration would just let the RFS and its RIN mechanism work as intended, we would obliterate the so-called ‘blend wall’ and increase consumer access to lower-cost, lower-carbon renewable fuels that are made right here in America. The authors show that Congress’ original vision for conventional biofuels under the RFS is indeed achievable in 2016 with existing infrastructure, and that the only thing missing is the resolve and commitment from EPA and the Administration to continue building upon the remarkable success story that is the RFS.”

Prez Candidates Recommit RFS Support

Several presidential candidates have reiterated their support for the continuation of the Renewable Fuel Standard (RFS). (Click here to read articles relating to the candidates stand on energy issues).

ARF-Logo-Retina-AltSen. Santorum reaffirmed his support at a forum hosted by Heritage Action in South Carolina on Friday, at Iowa’s Faith and Freedom Presidential Forum on Saturday, and at the taping of Rural Town Hall on RFD-TV on Sunday saying that the RFS creates jobs and domestically produced fuels and keeps the U.S. secure.

“Sen. Santorum has been an unwavering champion for renewable fuels and has always stood with Iowans on this crucial issue,” said America’s Renewable Future (ARF) State Director, Eric Branstad, “It’s why he won the Iowa caucus in 2012.”

Also during the Forum, Trump said that he supports the RFS. “I am totally in favor of ethanol, 100 percent.” This is the first time Trump gave his stance on the topic publicly.

The Rural Town Hall event also marked Sen. Webb’s first public affirmation of support for the RFS and Gov. Pataki’s full support. Pataki said that the government needed to keep the promise it made with the RFS, “Washington made a commitment to those farmers and those investors, we have to keep our word.”

Branstad added, “ARF is thankful for the commitments these candidates made and that all the above candidates took the time to meet with our organization or to tour an ethanol plant. A large part of our effort was providing education to all the campaigns and it’s clear that we’ve done that. Now we can focus on letting Iowans know where each candidate stands and on turning out our army of 50,000 caucus-goers on Feb. 1.”

NFU Fly-In Focuses on RFS

The National Farmers Union (NFU) 2015 Fall Legislative Fly-In took place this week in Washington, D.C. and the Renewable Fuel Standard (RFS) was on the top of the list when growers from around the country met with White House official, Congressional staffers and members along with Senators and Representatives.

NFU members meet with MN Rep. Collin Peters during the fall Fly-In.

NFU members meet with MN Rep. Collin Peters during the fall Fly-In.

Farmers Union members expressed concerned about a stalling of the RFS by the U.S. Environmental Protection Agency (EPA), which has prevented the RFS from meeting the targets set forth in the law’s statute.

“The RFS has already made significant gains for family farmers, rural communities, consumers and the environment, and the EPA needs to stick to statutory levels for the RFS to continue these successes,” said NFU President Roger Johnson who noted that family farmers and ranchers have enormous credibility with the public and as such, are the most effective to deliver messages of importance in rural America to legislators.

NFU has been holding Fly-Ins for generations; with the only real change being the mode of transportation used by family farmers to come to Washington. This year, roughly 275 Farmers Union members gathered in Washington for the annual event. In addition to meeting with legislators, participants were also briefed by various elected and administration officials.

Executives Criticize RFS Delays on Cellulosic Growth

Executives from the advanced biofuels industry are criticizing the Obama Administration for not adhering to its promise to support the Renewable Fuel Standard (RFS). They say the lack of adhering to mandates has undercut investment in advanced biofuels and sent innovative companies, technologies and jobs oversees. In a letter they write that “broken promise…flies in the face of the President’s statements in support of clean energy and climate change policy.”

Corn stover is used by several bioenergy companies to produce cellulosic ethanol. Photo: Joanna Schroeder

Corn stover is used by several bioenergy companies to produce cellulosic ethanol. Photo: Joanna Schroeder

A call held yesterday in conjunction with the letter submission happens to follow remarks by USDA Secretary Vilsack and EPA Administrator McCarthy about the climate impact of biofuels and the RFS – with Administrator McCarthy asserting that the RFS is a crucial part of America’s efforts to combat climate change.

The proposal, argues the advanced biofuels industry, has been devastating for the development of advanced and cellulosic biofuels. Already, $13.7 billion in investments have been frozen, threatening to send American innovation and investment overseas to countries like China and Brazil. It is anticipated that President Obama will be taken to task for U.S.’s lack of leadership and commitment on climate change.

During the call, Adam Monroe, North America President of Novozymes said, “The Obama Administration’s proposal eviscerates the RFS by allowing EPA to slash renewable fuel volumes when the oil industry refuses to distribute renewable fuel. Oil companies are not going to compete with renewable fuel if they can avoid the requirement altogether by simply blocking distribution and market access.”

Vincent Chornet, President, CEO and Co-Founder of Enerkem emphasized how the Obama Administration’s decision impacts international interest in U.S. projects, stating, “This proposal forces investment out of America. Advanced biofuels are on the brink of significant growth – but the Administration’s proposal strands investment and threatens a decade of innovation and progress.”

Prez Candidate Bernie Sanders Gives RFS Support

During a recent Roske on Politics show with host Brent Roske, U.S. Senator Bernie Sanders from Vermont (Dem) gave his support of the Renewable Fuel Standard (RFS). Last month he was in Des Moines, IA for the Iowa State Fair and spoke on the Soapbox but did not mention biofuels or the RFS. However, this visit he was asked directly about the issues facing the RFS in Washington. Now that he has a pro-RFS stand on the record, America’s Renewable Future (ARF) thanked Sen. Sanders for his support who leading the polls in Iowa – one point ahead of Hillary Clinton.

Roske and SandersRoske asked, “We’re in Iowa right now. Back in 2007 you voted for the Renewable Fuel Standard in the Senate. What are your thoughts about it now?”

Sen. Sanders answered: “I think as somebody who believes climate change is the greatest global crisis that we face, I think it’s absolutely imperative that we move away from fossil fuel, from oil, from coal, move to energy efficiency and move to sustainable energies. And Iowa, by the way, in general is doing a very good job, as is my home state of Vermont,” said Sanders, “Iowa is one of the leaders in the country in wind and biofuels. So, I support the Renewable Fuel Standard, I think we got to put more emphasis on cellulosic ethanol, which a more efficient form of biofuel than we currently have.”

“Advanced biofuels like cellulosic ethanol have been a runaway success in Iowa, thanks to a strong RFS that created a partnership between first and second generation renewable fuel,” said former Lt. Gov. and ARF Co-Chair, Patty Judge. “We thank Sen. Sanders for his appreciation of the crucial part biofuels play in the creation of a sustainable energy future. We hope he’ll take us up on our invitation to tour a plant, and learn about how ethanol and other low carbon, first generation fuels are paving the way for advanced biofuels like cellulosic ethanol.”

“Biofuels support over 73,000 jobs in Iowa, reduce pollution and emissions, give consumers a choice at the pump, and reduce our dependence on foreign oil,” added Judge. “The RFS is a critical policy for Iowans and certainly an issue that will help them decide who to support in the caucus.”