Despite Push in Senate, Low Odds for Legislative Changes for Ethanol, RFS

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Sen. Ted Cruz’s (R-Texas) victory in the Iowa Republican caucus has spurred critics of federal biofuel mandates during the time the Senate is set to consider an amendment that would gut the program, but one which will not likely see a final Senate vote nor get in any final legislation and be signed into law, sources signal.

Opponents seek votes on proposed Senate energy bill amendments. Some opponents of the Renewable Fuel Standard (RFS) say the Senate could vote on proposals to reform the program’s ethanol mandate or sunset the entire renewable fuel standard in 2022 as part of a broad energy bill now being debated in the chamber. Sen. Pat Toomey (R-Pa.) has proposed an amendment that would do away with RFS mandates for traditional renewable fuels while preserving existing requirements for advanced, next-generation alternatives. But the Toomey amendment is not seen having the votes for approval, and definitely not the 60 likely necessary under a Senate agreement.

“The verdict from the cornfields of Iowa [Monday night] was that the RFS is no longer a third rail that GOP leadership should be afraid to touch,” said Stephen Brown, vice president of federal government affairs for refiner Tesoro Corp., in an e-mail. “They can man-up and do something constructive here to confront this fatally flawed program. They key is finding the right approach to help set that stage.”

Cruz, while noting his support for growing the biofuels market, called for an end to subsidies for all forms of energy and said he wanted to see the renewable fuel standard phased out.

“A clear message coming out of Iowa is that whatever political influence ethanol used to have in the state, those days are now over,” George David Banks, executive vice President of the American Council for Capital Formation said in a statement. “Very few Iowans are going to their caucus in support of continuing to prop-up our failed federal corn-ethanol mandate regime, and that’s not something likely to escape the notice of politicians and policy makers in Washington.”

Bob Shrum, a Democratic campaign adviser, said the Cruz win proves that declaring fealty to ethanol is “no longer necessary politics in Iowa... Ted Cruz, who I don’t agree with on much of anything, proved that this is no longer the third rail of Iowa politics,” Shrum said on a conference call organized by groups opposed to the RFS.

But ethanol proponents immediately responded, disagreeing with the idea that the Iowa caucus results were a setback. “The narrative coming out after last night’s Iowa caucus that the domestic ethanol industry is somehow on the ropes is false,” said Bob Dinneen, president of the Renewable Fuels Association (RFA) trade group.

Ethanol defenders said that Cruz’s win was far from a landslide and that RFS supporters Donald Trump and Marco Rubio captured a greater combined share of the caucus vote.

Legislative analysts discounted any major policy changes in Congress during an election year, and especially due to the influence of some senators defending ethanol like Sen. Chuck Grassley (R-Iowa). “You look at one person that made a big deal out of doing away with the RFS. He came in tops, but you got to remember that other people supporting ethanol got 72 percent of the vote if you add them all up separately,” Grassley said during a conference call Tuesday. “And then you have to wait until who’s going to be the next president of the United States, and we’re only through one state, so at this point I wouldn’t draw too many conclusions about ethanol.”

America’s Renewable Future said “Big Oil” was claiming “a false victory” in the wake of the Iowa results. “Their No. 1 candidate has moved closer to ethanol and further from oil,” the group said in an e-mailed statement. “He has even committed to repealing subsidies for the oil industry. Those are unmistakable signs that the relevancy and importance of ethanol are dominant.”

Comments: In Congress, especially this one, it is far easier to stop something than it is to get something new, whether or not it is called reform or gutting a program or programs. And anyone betting against Sen. Grassley on this issue will very likely lose the wager.

NOTE: This column is copyrighted material; therefore reproduction or retransmission is prohibited under U.S. copyright laws.