The biofuels industry got a big win in the Iowa legislature this week, as the state House and Senate approved a bill requiring most gas stations in the state to dispense a higher ethanol blend known as E15 from at least half of their pumps.
All but a handful of Democratic legislators voted for the bill, and no Democrat spoke against the proposal during Senate or House floor debate.
It was the latest example of how Iowa Democratic politicians have embraced biofuels industry talking points and avoided challenging any policies seen as supporting ethanol.
STALLED BILL FINALLY MOVES FORWARD
Governor Kim Reynolds pushed for legislation last year to mandate that retailers sell E15 at all but one pump. Lobbyists for fuel retailers strenuously opposed the bill, which failed to advance despite a lobbying push from the renewable fuels industry as well as corn and soybean growers.
This year's version was supposed to soften the blow for small retailers, which would not be able to recoup the cost of installing new equipment for dispensing E15. House members approved House File 2128 by 82 votes to 10 in early February. Just three Democrats (Mary Mascher, Phyllis Thede, and Cindy Winckler) joined seven Republicans (Eddie Andrews, Steven Bradley, Mark Cisneros, Tom Jeneary, Gary Mohr, Cherielynn Westrich, and Skyler Wheeler) to vote against that bill.
The ethanol mandate moved quickly through the Iowa Senate Agriculture Committee, and seemed to be on a fast track to the governor's desk. But it stalled in the chamber's Ways and Means Committee, which has jurisdiction over tax matters, for more than two months.
After backroom negotiations involving the governor's staff, agriculture groups that support the mandate, and fuel retailers that had lobbied against it, Senate Ways and Means Committee chair Dan Dawson unveiled an amendment to the bill on April 25. Katie Akin reported for Iowa Capital Dispatch,
Gas stations that sell fewer than 300,000 gallons a year would be eligible for a waiver, under the amended bill. That amounts to about a third of Iowa gas stations, which account for just 6% of overall sales, according to Sen. Waylon Brown, R-Osage.
Fueling stations are eligible for state funding to help them make the required infrastructure changes to sell E15. The smallest retailers could receive a state grant for up to 90% of an upgrade cost.
Akin quoted State Senator Pam Jochum, the ranking Democrat on Ways and Means, as saying she would "hold my nose and vote for this today, very reluctantly [...] primarily because I have in my community a biodiesel plant.“ Jochum added, "I’ll be darned if I can figure out why we think mandating this is a good idea on E15.”
Other Democrats on the committee questioned what would happen if the federal government goes back to prohibiting E15 sales from June through mid-September. President Joe Biden announced earlier this month that the U.S. Environmental Protection Agency would waive the usual ban on E15 sales during the summer months (a policy grounded in smog concerns), in order to help "get [gasoline] prices under control and reduce the costs for families."
According to Brown, the bill's floor manager, "Reynolds could waive the requirement to sell E15 if federal law once again prohibited it in the warmer months."
DEMOCRATS ECHO REPUBLICANS IN CELEBRATING BILL
When the Iowa Senate debated the revised House File 2128 on April 26, three Republicans raised serious concerns.
State Senator Adrian Dickey, who has owned fuel retailers, said the bill had improved since last year. But even with the subsidy, retailers won’t profit from investing in pumps that can supply E15. The exemption for small retailers was of limited value, according to Dickey, since stores that opted out would be at a competitive disadvantage compared to stations selling the cheaper ethanol blends.
Dickey also said the goals are not realistic, and the bill sets an “impossible” timeline for state agencies and installers. He predicted the legislature would be back in the coming years to fix those problems. (Oddly, he voted for the bill anyway.)
Two other Republicans opposed the bill on philosophical grounds. State Senator Dennis Guth, a farmer who owns “a few shares” in an ethanol plant, questioned whether government should be picking winners and losers. He said he supports E15 “in every way that I can. But I don’t think it’s the government’s job to use their big club to make things happen.”
Similarly, State Senator Jim Carlin advocated for “conservative Republican values” and a “free market,” as opposed to the government telling “a business what infrastructure they need to have. And if they don’t comply they will be at a competitive disadvantage of nine cents a gallon."
In contrast, the Democrats who spoke in the Senate echoed Republican proponents in talking up the economic value of the bill. State Senator Kevin Kinney, who is a farmer and has a biofuels plant in his district, asserted (wrongly) that "32 percent or more of our budget is directly related to the ag industry" as he called the bill "a step in the right direction."
State Senator Todd Taylor said the bill would help the economy in urban and rural Iowa. He also asserted it would promote "clean air and clean energy, and renewables for the future are what we need for growing our economy, creating jobs and sustainable jobs."
GOP Senator Brown claimed the legislation would boost Iowa's GDP by $457 million and support 3,500 new jobs, while adding $550 million to Iowa household income and increasing state and local revenues by $180 million over five years. He also asserted Iowa would be "in a great position" to help provide energy independence for the nation.
Senators approved the bill by 42 votes to three (Carlin, Guth, and Democrat Joe Bolkcom). Two Democrats who are strong environmental voices, Rob Hogg and Claire Celsi, were absent during the Senate debate. Asked whether they would have supported the bill, they declined to comment for the record.
The House debated the revised House File 2128 for only a few minutes. Floor manager Lee Hein briefly explained the amendment. Democratic State Representative Mary Wolfe said she would be a yes on the amendment and the bill. House members then approved the bill by 81 votes to thirteen. The opponents were Democrats Ako Abdul-Samad, Marti Anderson, Liz Bennett, Bruce Hunter, Chuck Isenhart, Mary Mascher, Art Staed, Thede, and Winckler, and Republicans Cisneros, Jeneary, Westrich, and Wheeler.
After the bill received final legislative approval, Reynolds said in a written statement,
This is a historic win for Iowa families, for our agriculture and biofuels industry, and for Iowa’s entire economy. By increasing access to more affordable, homegrown biofuels made right here in Iowa, we are lowering the price at the pump and getting America back on track toward energy independence.
I am proud that my biofuels legislation will lead to the single greatest expansion of biofuels in our state’s history, while providing our industry with consistency in the face of ever-changing federal policy. I commend the legislature for working with me to advance this bill and I look forward to signing it into law in the coming days.
A statement from Iowa Senate Minority leader Zach Wahls, released earlier the same day, struck many of the same notes.
This legislation is a win-win for the Iowa economy, especially in our small towns and rural areas.
By taking another step to support homegrown biofuels, the Legislature is showing its support for Iowa farmers, for creating good-paying jobs, and for reducing our reliance on foreign oil. We are also giving Iowans more choices at the pump when they fill up.
UPDATE: Iowa House Minority leader Jennifer Konfrst wrote in the April 29 edition of her weekly newsletter,
When lawmakers convened for a day this week, we took one step forward. Growing Iowa’s strong agricultural and manufacturing heritage has made us a world leader in renewable energy such as wind, solar, ethanol, and biodiesel. While the proposal approved this week wasn’t perfect, it will continue that tradition while keeping tens of thousands of jobs and pushing new dollars into our economy.
DEMOCRATS UNWILLING TO CHALLENGE PRO-ETHANOL POLICIES
Iowa Democrats have almost uniformly supported policies to benefit the ethanol industry since the first federal Renewable Fuel Standard became law in 2005. The orthodoxy surrounding this issue—which University of Iowa research engineer Chris Jones has dubbed "The Iowa Singularity"—has influenced federal policy, because presidential hopefuls from both parties have pledged allegiance to ethanol when campaigning in Iowa.
Many Iowans don't realize that corn-based ethanol was intended to be a transitional fuel toward cellulosic ethanol, produced from plant material rather than grains. But cellulosic production never proved viable on a large scale.
Instead of questioning the value of an ongoing massive government investment in ethanol, most Iowa Democratic politicians have stuck with the program, demonstrating their loyalty to the industry at every opportunity.
Over-the-top praise for the new Biden administration policy on E15 sales was a classic example of the dynamic. U.S. Representative Cindy Axne (D, IA-03) accompanied the president to the Guthrie County ethanol plant where he made the announcement on April 12. Axne said in a news release,
I have been fighting tooth and nail to make sure biofuels is a part of the clean energy solution. Investing in biofuels not only helps Iowa’s farmers and rural communities, but also reduces our nation’s reliance on fossil fuels and brings down prices for Iowa families. Ethanol is significantly cheaper at the pump, helps reduce our carbon emissions, and provides good paying jobs right here in Iowa. I am immensely grateful for the President’s announcement to ensure E15 remains available year-round and for his continued work, along with Secretary Vilsack, in supporting Iowa farmers and rural communities.
The Iowa Democratic Party released a statement from chair Ross Wilburn, which read in part,
Supporting Iowa’s ethanol industry not only helps our economy, but also reduces our dependence on foreign oil and gives us leverage against greedy oil corporations and Putin’s Price Hike.
I’m proud of President Biden and Congresswoman Cindy Axne's commitment to this foundational Iowa industry that is crucial to the success of many communities all over our state.
It seems improbably that E15 could contribute meaningfully to U.S. energy independence, considering that only about 2.3 percent of gas stations across the country are equipped to sell the higher ethanol blend.
Former Iowa State University economist Dave Swenson has argued that over-production is responsible for many of the ethanol industry's problems, which Iowa politicians typically blame on federal government policies. He has also challenged industry estimates about ethanol's economic impact. In a July 2019 commentary for this website, Swenson wrote that rural Iowa "is more than farm sector economics."
The celebrated ethanol boom of the last decade increased employment in that sector by about 1,400 jobs statewide, but nearly all of the counties that hosted new plants have declined in population this decade.
More recently, Swenson has speculated that ethanol "probably reached peak production” before the COVID-19 pandemic, which caused demand to collapse as Americans drove less. Speaking to the Cedar Rapids Gazette's John Steppe last year about the proposal to mandate E15 pumps at Iowa gas stations, Swenson predicted such a law would have a "marginal" impact on the industry, because "Just a small fraction of Iowans don't burn gasoline with ethanol.”
Many observers have questioned how "sustainable" it is for the government to keep propping up ethanol production, when U.S. and foreign auto manufacturers are steadily moving away from gasoline-powered vehicles, and electric vehicles comprise a growing share of new car sales.
DEMOCRATS OVERLOOK ETHANOL'S ENVIRONMENTAL IMPACT
Peer-reviewed research has highlighted environmental problems associated with ethanol production. Although the U.S. Department of Agriculture and industry advocates have claimed ethanol can help address climate change, a study released earlier this year indicated that “Corn ethanol is not a climate-friendly fuel." On the contrary: the Renewable Fuel Standard led to expanded corn production, more fertilizer application and water pollution, and land use changes that increased greenhouse gas emissions by at least 24 percent compared emissions from ordinary gasoline use.
University of Iowa Professor Silvia Secchi co-authored a paper in 2011 projecting how biofuels policy would affect land use and the environment in the corn belt. Writing about the new study in February, Secchi observed,
Our focus was predicting changes that had not yet happened and on water quality, the PNAS study looks at whether the changes we predicted actually happened at the national scale and comprehensively considers both water and GHG [greenhouse gas] emissions. Lo and behold, they find that the water got worse and that more land went into annual crop production and corn specifically so higher ethanol production actually caused more carbon to be released in the atmosphere than if we had used gasoline. The study is remarkable because it shows that these effects in the US alone are enough to make ethanol a loss not just for the taxpayers who have been subsidizing it directly or indirectly for decades, but also for the climate.
Jones has calculated that solar panels could produce more usable energy than ethanol, without the soil erosion, water pollution, and other by-products of conventional agriculture. He has also pointed out that Iowa farmland now devoted to corn could be used to grow other crops, which humans could consume directly. Yet few Democratic elected officials or candidates are willing to talk about better alternatives to ethanol.
In a post published last month, Jones wrote,
Iowa is the best place on earth to harness photosynthesis for the benefit of our species. We should try to do that here. But doing what we’re doing is an abomination. We grow only two plant species and use more than ½ of the calories produced to unnecessarily fuel engines. Because we can, and because it enriches a privileged few. And because we’re lazy. The opportunity costs of using 11,000 square miles of Iowa land and 60,000 nationwide for corn ethanol are huge. Ethanol is a distraction and our continued devotion to it is dangerous.
After the legislature approved House File 2128, University of Iowa Professor David Cwiertny tweeted, "Everyone who voted for this just surrendered their privileges to ever talk about how much they care about clean water. Our commitment to corn ethanol locks us into a cycle of production that is incompatible with healthy water resources."
Secchi chimed in to criticize the bipartisan decision to mandate "an obsolete technology that benefits a small minority of rich white ppl and hurts air and water. [...] Especially now as the Ukraine war impacts food availability, wasting [corn] on this is despicable political theater."
The biofuels industry is a major force behind proposed pipelines that would capture carbon dioxide from ethanol plants and transport it to North Dakota, where it might be used for fracking. Building the pipelines would compact and displace topsoil, without meaningfully reducing greenhouse gas emissions.
Democratic politicians have not been cheerleaders for the pipelines. But they haven't denounced them, nor have state House and Senate leaders championed legislation that would block the use of eminent domain for such projects.
Earlier this year, members of the Iowa Democratic Party's governing body voted to table a resolution that would have put the party on record opposing "development and construction of pipelines involved in the carbon capture and sequestration process."
Years from now, Iowans may wonder why our state's political establishment fought so hard to preserve market share for ethanol, instead of helping those now employed in the industry to prepare for the fuel's inevitable decline. Unlike many other harmful bills the Iowa legislature approved during the 2022 session, this mistake can't be pinned on a single party.
UPDATE: Jones, Secchi, Cwiertny, and Swenson recorded a podcast episode about the E15 bill on April 28. Jones suggested, and Swenson agreed, that this law could be characterized as a "fart in a hurricane," since the vast majority of U.S. consumers won't be purchasing E15, no matter what Iowa does.
Top image: Democratic State Senator Todd Taylor speaks on April 26 in favor of a bill mandating most Iowa gas stations to sell E15. Screenshot from the official legislative video.