The Farmer Perspective on New RFS Proposal

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On June 10, 2015, the EPA released its proposal for the 2015 and 2016 Renewable Fuel Standard (RFS) biofuel volume requirements. The proposal reduces the Renewable Volume Obligation (RVO), which would permit gasoline and diesel blends to include a lower volume of renewable fuels than currently mandated. According to Kendall Septon, writing for the Department of Energy’s Clean Cities Blog, the EPA “cited market constraints in accommodating increasing volumes of ethanol, along with limits on the availability of non-ethanol renewable fuels.”

Although the EPA claims that “the 2015 and 2016 proposed standards… are expected to lead to substantial growth over time in the production and use of higher-level ethanol blends and other qualifying renewable fuels,” it seems that if the EPA desires a larger supply of cellulosic biofuels and greater distribution infrastructure, then it should promote more investment in biofuels – not less. Not only does the RVO reduction seem like an illogical way to advance biofuel technology, but it is also likely to have a negative impact on biofuel industry stakeholders.

For example, “the grain farming community in Indiana and the Midwest is very concerned about the EPA’s plans to reduce its RVOs under the Renewable Fuel Standard, and they see it as an attack on the market,” explained Kyle Cline, a National Government Relations Public Policy Advisor at the Indiana Farm Bureau.

The RFS was established in 2005 and expanded in 2007 “to reduce both greenhouse gas emissions and US dependence on oil imports by establishing increasing quantities of renewable fuels that must be blended into transportation fuels” (Stock). Iowa State University Professor Bruce Babcock describes the RFS as “a tax on gasoline and a subsidy to biofuels.” These subsidies and taxes manifest in Renewable Identification Numbers (RINs), which are RFS compliance permits.

According to Cline, farmers in Indiana view the RFS in a very positive light. In creating demand for biofuels, the RFS transformed the market for corn and other foodstock. The Indiana Farm Bureau has taken the position that they “don’t want to reduce the RFS at all from the 2007 levels,” Cline explained. “We want to see cellulosic biofuels make it to the finish line,” said Cline, but a reduction would “signal to investors not to invest in biofuels.” This lack of investment would, in turn, damage the market for corn ethanol and other first generation biofuels as well as stunt the production and development of advanced and cellulosic biofuels.

“Farmers primarily support ethanol because they realize the financial benefits,” said Cline. Unlike some other renewable energy sources, biofuel production does not have a significant effect on employment. “Farms in the Midwest are really not that labor intensive. [The draw of biofuels is] more of a business proposition. Even if you are not selling directly to the ethanol plant, you are still benefiting because of overall higher demand.” Cline pointed to the influx of college graduates in towns with a growing ethanol industry and the positive implications of such a change as an example.

From a land-use standpoint, “the farmers typically use minimal tillage methods, and they maintain normal annual crop rotations because they know they need healthy soil in long run,” Cline said. In Indiana, the farmers generally rotate corn and beans, and they often raise livestock as well.

A major draw for biofuels is the ability to “grow local, use local. Farmers fill-up with the same fuel they help produce. And profits stay local instead of going aboard or into the pockets of big oil companies.” Similarly, biofuel – as a renewable energy source – can offer more energy security than oil can, and, Cline contends, “we need to reduce our dependence on imports from volatile nations.”

Sources:
Cline, Kyle. Personal interview. 8 July 2015.
Septon, Kendall. “EPA Proposes New Volume Requirements for Renewable Fuel Standard.” Clean Cities Blog. U.S. Department of Energy, 11 June 2015. Web. 10 July 2015. <http://www.eereblogs.energy.gov/cleancities/post/2015/06/11/epa_rfs_requirements.aspx&gt;.
Stock, James. The Renewable Fuel Standard: A Path Forward. New York: Columbia Univ., 2015. Print.
“Renewable Fuel Standard Program: Standards for 2014, 2015, and 2016 and Biomass-Based Diesel Volume for 2017.” Federal Register. National Archives and Records Administration, 10 June 2015. Web. 10 July 2015. <https://www.federalregister.gov/articles/2015/06/10/2015-13956/ renewable-fuel-standard-program-standards-for-2014-2015-and-2016-and-biomass-based-diesel-volume-for?utm_campaign=subscription+mailing+list&utm_medium=email&utm_source=federalregister.gov>.