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EPA’s inaction has hurt farmers and ethanol makers

ethanolIn less than two weeks, the Environmental Protection Agency (EPA) is set to release its proposal on biofuel volume requirements for the Renewable Fuels Standards (RFS) for 2014, 2015 and 2016 and will finalize them this fall.

That’s all well and good, except for one thing: The requirements for 2014 are more than 18 months overdue, and this year’s requirements are already months late.

A lot has changed while the EPA dithered on its decision, and it hasn’t been good for agriculture or the ethanol industry.

First, big harvests pushed corn prices down sharply since November 2013, when the EPA first proposed reducing the amount of ethanol in the RFS. The EPA’s proposal to reduce the ethanol volume requirements, followed by its inaction, certainly didn’t help the corn market.

Another adverse consequence of the EPA’s delays was the choking off of investment in biofuels facilities. It was especially hard on the plants making advanced or cellulosic ethanol, such as the Iowa ones using corn stover.

Choking off investment

A recent study by the Bio­technologies Industry Organi­za­tion (BIO) paints a grim picture.

The report says some $13.7 billion that would have been invested in these promising biofuels ventures during the past two years went elsewhere because of the EPA’s indecision. The thousands of American jobs that would have been created by those investments never materialized.

The timing of the EPA’s lack of action really could not have been worse, the BIO report said. "Just as the industry reached the stage of commercialization, EPA rulemaking delays generated instability in the RFS program and intolerable investment uncertainty," according to BIO executive Brent Erickson.

Iowa Gov. Terry Branstad made a similar point recently when he visited Quad County Corn Processors in Galva, which is using technology that allows corn kernel fiber to be converted into cellulosic ethanol. Without the EPA delay, Branstad said Iowa would have more investments in new advanced biofuel technologies, like the one in Galva.

As we all know, missing deadlines can have adverse consequences. However, in this case, it seems that by missing the RFS declines, the EPA has forced those adverse consequences on farmers and ethanol makers.

 



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