Again today, we praise the Trump administration's Environmental Protection Agency for its decision to allow year-round sales of E15, a fuel blend of 15 percent ethanol and 85 percent gasoline. The decision ended a ban on sales of E15 during summer months.
Without question, the decision is good news for Iowa, the nation's No. 1 producer of corn-based ethanol.
However, we temper our enthusiasm for the decision with concern about continued exemptions from the Renewable Fuel Standard granted by the EPA to refineries and the continued Trump administration trade war with China. With those challenges to agriculture states unresolved, we find it hard to agree with President Trump's assessment of himself in Iowa on Tuesday as "the best thing that ever happened to farmers."
* The federal RFS began with the Energy Policy Act of 2005 and was expanded and extended by the Energy Independence and Security Act of 2007. It requires transportation fuel sold in the U.S. be blended with a minimum volume of renewable fuels. However, 50 waivers amounting to more than 2.5 billion gallons of ethanol volume were granted to refineries by the EPA over the last two years; more waiver requests await EPA decisions today.
"... as we have repeatedly cautioned, EPA’s ongoing mismanagement of the RFS through blanket small refinery exemptions (SREs) needs to stop,” American Coalition for Ethanol Chief Executive Officer Brian Jennings said in an AgWeb story following the EPA's E15 decision. “The net effect of E15 year-round with 2.61 billion gallons worth of SREs that aren’t reallocated means we’re still in the hole when it comes to ethanol demand through the RFS. EPA is currently sitting on nearly 40 requests for refinery waivers from the 2018 compliance year. We discourage EPA from erasing any benefit of today’s rule by granting more waivers at a time when rural America can least afford it.”
U.S. Sen. Charles Grassley is one vocal critic of the waivers.
“The word hardship is in the law, you gotta be hardship cases,” Grassley said in April. “And when a lot of these companies that are making a billion dollars a year get an exemption, it just doesn’t add up to hardship.”
* Agriculture continues to bear a heavy burden in the U.S.-China trade dispute Americans have watched escalate since the first tariffs were imposed more than a year ago. According to the USDA, sales of U.S. farm commodities to China (Iowa is the second-largest exporter of ag products, behind only California, and leads the nation in soybean, corn and pork exports; China is the world's second-largest importer of U.S. ag products) fell from more than $20 billion in fiscal 2017 to $16.3 billion in fiscal 2018 and are forecast to decline even more, to $9 billion, in this fiscal year. A recent Iowa State University report said Iowa farmers could lose up to $2.2 billion from U.S. trade wars with China and other nations, producing a ripple effect on state tax receipts, jobs and other industries. On Monday, President Trump said he would raise tariffs on Chinese imports further unless he makes progress in trade talks he plans to have with Chinese President Xi Jinping at the G20 summit later this month (the Chinese, by the way, have confirmed no such meeting).
Again, the E15 decision was welcome news in farm country. However, its positive impact is offset by the negative impacts of EPA refinery waivers and the trade fight with China. We urge leaders in Iowa (as well as in Nebraska and South Dakota) to keep up the pressure on the Trump administration for change on both fronts.