Iowa biofuel groups to EPA: Don’t electrify RFS or jeopardize significant soybean-crush investments

Representatives from Iowa’s two major biofuel groups, the Iowa Renewable Fuels Association and the Iowa Biodiesel Board, testified at the virtual U.S. EPA public hearing this month on the federal Renewable Fuel Standard program, asking the agency to increase the advanced biofuel and biobased diesel volumes for 2023-’25 from the proposed figures released in early December.

“To be blunt, the biomass-based diesel number is woefully low,” said Nathan Hohnstein, IRFA’s policy director.

Hohnstein pointed to U.S. Energy Information Administration reports showing that biodiesel and renewable diesel production today already exceed EPA’s proposed blending level for 2025.

He also addressed concerns that the proposed rule appears to shift the benefit of new “eRINs” from the renewable fuel producer to electric vehicle manufacturers.

“Between the deemphasis of advanced biofuels and rewarding electric vehicles with eRINs, critics have called this draft rule the first step to the electrification of the RFS,” Hohnstein stated.

He went on to urge the EPA to follow the intent of Congress that the RFS be a market-moving mechanism.

Click here to view Hohnstein’s full comments.

Grant Kimberley, executive director of the Iowa Biodiesel Board and director of market development for the Iowa Soybean Association, told EPA, “Based in part on the promise of a growing biofuels market, significant investments have occurred in feedstock infrastructure, like new soybean crushing plants. EPA’s proposed volumes would put those in jeopardy.”

He added that Iowa’s 11 biodiesel plants, which produced 349 million gallons last year, also “stand to lose” under the proposal, as do farmers, livestock producers and consumers.

“The biodiesel industry remains important to animal agriculture, as growth in soy-oil markets benefits those who use soy meal,” Kimberley said. “Every additional bushel of soybeans processed in the U.S. increases supplies of protein, which is a primary input cost for many of the items consumers buy in the grocery store, including meat. Recent market reactions support the notion that increased use of soybean oil for biodiesel and renewable diesel production affects supplies and the price of soybean meal. Simply stated, more meal supplies will lower the relative cost to produce staples like pork, chicken, turkey, eggs, dairy, and even plant-based alternatives. A strong [renewable volume obligation] helps keep the prices of these protein products affordable on tables across the globe.”

Kimberley added that growth in many feedstocks is ongoing, and that while soybean oil is only one feedstock option, increased supplies of it alone justify increasing the biobased diesel volumes under RFS.

“The negligible increase that EPA proposed will send negative signals to the market and impact existing announcements and future investments,” he said. “In the immediate reaction to the proposed rule, we have already seen soybean-oil prices fall by 18 percent, and soybean-meal prices rise by 8 percent. Those changes in the market are felt throughout the entire economy. The proposed volumes for biomass-based diesel and overall advanced biofuel volumes through 2025 are not consistent with the industry’s projected growth, or with the administration’s own goals to reduce greenhouse-gas emissions. Sending the right market signals through increased volumes, in contrast to what EPA currently proposes, would boost our state’s rural economy and Iowa soybean farmers, who rely on strong commodity demand to support their livelihoods and feed the world.”