Ag Policy Blog

A Cruz Conversion on the RFS?

By Chris Clayton , DTN Ag Policy Editor
America's Renewable Future sent out mailers to Iowa residents rating candidates on their stances on ethanol and the Renewable Fuels Standard.

A conversion has occurred in Iowa. Well, it was somewhat of a conversion.

Texas Sen. Ted Cruz -- a candidate for the GOP presidential nomination, just in case you have been out of the country for the past year -- told folks at town-hall meetings in northwest Iowa that he supports phasing out the Renewable Fuels Standard through 2022. Previously, Cruz has said he doesn't support subsidies or mandates, but believes ethanol will be used as part of the country's energy mix because ethanol is being used already.

Cruz is leading the Republican polls in Iowa, based largely on the support of evangelicals who are a key mix of the GOP base in the state.

Because of the importance of the ethanol industry, an Iowa-based group, America's Renewable Future, has been more or less stalking Cruz as he campaigns across the state. The group has been sending out "report cards" giving candidates good ratings and bad ratings on the RFS. Cruz and Sen. Rand Paul of Kentucky score bad ratings.

America's Renewable Future declared a sense of victory Wednesday, issuing a press release stating Cruz has expressed support for the RFS through 2022. Eric Branstad, son of Iowa's governor and leader of America's Renewable Future, said farmers and rural Iowa communities are going to be encouraged by Cruz's remarks. “He is clearly listening to the people of Iowa and understands the importance of the Renewable Fuel Standard to America’s economy and energy independence, as he started the caucus process calling for immediate repeal. While not perfect, this is a big step forward by Sen. Cruz,” Branstad said.

The RFS was created by Congress with a sunset in 2022. Regarding Cruz's actual comments, a questioner in Cherokee, Iowa, asked the senator, "Are you planning to jerk the rug right out from underneath us or are you going to let it expire in 2022 like it should and then stand on its own?"

Cruz responded there should be a five-year phase out from 2017 to 2022. "As you rightly noted, the RFS is scheduled to expire in 2022. When I said it should phase out, I said it should be a five-year phase out. A phase out from 2017 to 2022 is five years. I do believe there should be a gradual phase out because there has been investment-backed expectations."

Cruz went on, "But let me tell you, the lobbyists are trying the best they can to snooker the people of Iowa and convince the people of Iowa that a government mandate is the only way for ethanol to survive. Look, the problem is, the government is blocking ethanol and they are trying to convince you the mandate is the way to go. I don't want Iowa dependent on Washington. I don't think Iowa farmers want to be dependent on Washington. Because you know what that boils down to? That boils down to a bunch of politicians shaking the voters down over and over and over again. It's the Washington cartel and what I want to do is remove the barriers and allow the farmers and the ethanol producers in the marketplace to expand their penetration and, as you rightly noted, there has been no more ferocious defender of Iowa farmers than Steve King and there is a reason Steve King is standing with me in this campaign because he understands I believe passionately in a free and fair and open energy marketplace."

King represents northwest Iowa in Congress.

Cruz' statements can be heard here: http://americasrenewablefuture.com/…

America's Renewable Future also quotes Cruz saying at another town hall that he will break the so-called "blendwall." As the quote goes, "That blendwall makes it illegal for ethanol to expand its market penetration, and I intend to eliminate the EPA blendwall to get rid of that barrier, which will enable to expand ethanol to expand in the marketplace to a much larger penetration to sell more ethanol ..."

The blend wall isn't necessarily a function of EPA. It's a line in the sand drawn by the petroleum industry that has sought to keep ethanol from taking up more than 10% of the market. The oil lobby has argued for years that American automobiles aren't suited for higher blends, such as 15% ethanol, even though E15 has been approved by EPA for every auto built after 2001. Statutorily, Congress capped corn-based ethanol in the RFS at 15 billion gallons per year. When corn ethanol, biodiesel, advanced biofuels and cellulosic are all thrown in the pot, biofuels will account for 17.4 billion gallons of volume in 2016.

Cruz wrote an op-ed posted Wednesday on the Des Moines Register website further explaining his stance on agriculture, ethanol and EPA emission standards which he argues create a blend wall. http://dld.bz/…

A big lingering question is: What does Sen. Cruz mean by a five-year phase out? The RFS from 2017 to 2022 is not supposed to "phase out," but climb. This is what caused the entire controversy when EPA dialed back on the mandated blend volumes for 2014-16. Under the law, total RFS biofuel blends are supposed to hit 24 billion gallons in 2017 and continue growing to 36 billion gallons by 2022. The main failure to achieve such goals is the unwillingness of the petroleum industry to invest in the advanced biofuels and cellulosic ethanol production required to achieve such volume levels.

Cruz's comments also are contrasted by the desires of one of those "snookering" Washington lobbyists. That lobbyist is Jack Gerard, chief executive of the American Petroleum Institute, who spoke Tuesday in Washington about the state of the oil industry. According to Associated Press, "Gerard also renewed his call for the administration to scrap the Renewable Fuels Standard that promotes corn-based ethanol and other alternative fuels, labeling the mandate another relic of the past." http://dld.bz/…

Gerard also said that continuing or expanding the RFS is "a direct threat to our nation's economy." http://dld.bz/…

The campaign-donation tracking group OpenSecrets.org reports Sen. Cruz is the biggest recipient of campaign contributions from the oil and gas industries since 2014, receiving $499,243 so far from the industry. http://dld.bz/…

The Iowa caucuses are Feb. 1.

Follow me on Twitter @ChrisClaytonDTN.

Comments

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Marilyn Cogburn 1/31/2016 | 10:16 AM CST
I am looking for the Cruz campaign opinions on the current CPR program.
Jay Mcginnis 1/17/2016 | 7:41 AM CST
If the GOP is so opposed to farm and renewable energy subsidies whey are they still for oil subsidies? Climate change is real, just ask Exxon.
CRAIG MOORE 1/12/2016 | 10:16 AM CST
Jay, Cruz has more proof he is a citizen of the United States than Obama has.
Jay Mcginnis 1/11/2016 | 7:05 AM CST
Cruz needs to go back to his country of origin, which ever one that is and take his Dr. Suese library with him!
tom vogel 1/7/2016 | 9:54 AM CST
Very well summarized, Chris, and ell stated, Bonnie. I love agriculture and its success as much as anyone. However, artificial subsidies should not be part of the agricultural equation for success. I believe Senator Cruz's recommendation for a phase-out is totally reasonable. I am glad we have a politician willing to say these words in Iowa. Farmers need to be subject to the same economic risks and rewards as others in our society.
Bonnie Dukowitz 1/6/2016 | 7:38 PM CST
RFS is a huge mess. The entire mandate should be looked at. Example, I do not think coal fired electricity being taxed to the max, to heat our shed, so the series 4 engine will run, to afford feeding the cattle, in cold temperatures is a benefit to anything, including the environment. If something is of benefit, it will survive. Mandates just do not make sense.