Renewable Fuel Standard Focus of Iowa Summit

Des Moines Register:

The Republicans' stances differed little except on the Renewable Fuel Standard, a federal mandate that outlines how much ethanol and biodiesel must be blended annually into the country's fuel supply. Most said they understand and accept the need for the mandate, at least until it can be phased out. Santorum and Huckabee in particular passionately defended it.

But Pataki expressed vocal opposition to the RFS, as did Cruz, whose answers were met with applause.

Ryan Hoover, a 28-year-old who farms in northern Iowa and sells real estate, said he'd always liked Christie and Huckabee, and on Saturday, Cruz caught his attention.

"I gained some respect for Ted Cruz — his ability to answer questions head-on and not sidestep," Hoover said.

Perry's answer on the RFS was hard to pin down, some Iowans said.

"I don't know what (Perry) said. I'm not sure he knows what he said," Monte Shaw, executive director of the Iowa Renewable Fuels Association, told the Register in an interview. "I was so confused with his RFS answer, I couldn't concentrate on the rest of his speech."

Perry said he tried to get a waiver for all or part of the mandate in 2012, given drought conditions that drove the price of corn to record highs for livestock ranchers in Texas and elsewhere.

"I was doing what was right for producers at the time," Perry said. But he also said he opposes mandating use of biofuels.

"I don't think Washington, D.C., (should decide), whether it's what our children's curriculum should be or health care needs to be, or picking winners or losers on agricultural products," he said.

Walker said he doesn't like "a whole lot of government interference" and thinks the Renewable Fuel Standard could be reduced in the future.

"But I do believe — and we've talked about this before — it's an access issue, and so it's something I'm willing to go forward on continuing the Renewable Fuel Standard and pressing the EPA to make sure there's certainty in terms of the blend levels set."

Bush, too, foresees eventually eliminating the RFS. For now, though, Bush said he thought the U.S. Environmental Protection Agency should create a more certain playing field. "The uncertainty makes it hard to make investment decisions. … Ultimately, whether it's ethanol or any other alternative fuel, the markets ultimately will have to decide this."

Bush added: "The law that passed in 2007 has worked. Look at the increase in production. It's been a benefit to us as we've reduced dependency on foreign oil. But as we move forward, over the long haul, there should be certainty to invest, and we ought to continue to innovate the lowest-cost energy sources in the world so we can grow economically."

In other words, Republican candidates hate the RFS, but only a few are willing to say that to Iowa farmers less than a year before the Iowa caucuses. Sounds like the days of the ethanol mandate are numbered.  The policy was misguided from the start, and led to a bubble in farmland and commodity prices, putting marginal land in production and higher food prices for consumers.  If the mandate is discarded, I am not sure what impact that will have on the ethanol industry itself, but I expect it will add further pressure on crop and land prices at a time when they will already be under stress.