By Jarrett Renshaw
NEW YORK (Reuters) - Joe Biden may have an ethanol problem.
The former U.S. vice president has pledged support for advanced biofuels as part of his bid for the 2020 Democratic presidential nomination.
But Biden, who leads the crowded Democratic field in opinion polls in Iowa and nationally, faces lingering questions in the U.S. Farm Belt over his push in 2014 as President Barack Obama's No. 2 to slash the amount of corn-based ethanol that refiners must blend into the country's fuel supply.
Biden, a former U.S. senator from Delaware, was considered instrumental in orchestrating the blending cuts as a way to help struggling refineries on the East Coast deal with rising compliance costs under the U.S. Renewable Fuel Standard (RFS), a 2005 law requiring oil companies to blend increasing volumes of ethanol and other biofuels into fuel, Reuters previously reported.
A federal court struck down the cuts in 2016. But the U.S. Environmental Protection Agency has yet to make the biofuel industry whole for the lost gallons despite repeated promises to do so.
That could hurt Biden in Iowa, where he kicked off a campaign tour on Tuesday. The state is America's top corn and ethanol producer, with 44 biofuel plants that help support more than 40,000 jobs. It holds the first presidential nominating contest in 2020, and any Democratic candidate who wants to win that vote and peel off some of Republican President Donald Trump's Iowa support in the general election will likely have trouble if lukewarm on biofuels.
"I really hope we can finally get some answers to what happened," said Dave Walton, a farmer who grows corn, soybeans and livestock. "Right now, I am suspicious of anything Biden will say about his commitment to ethanol, but we do need to hear from him."
Iowa farmers and ethanol producers sent a letter, seen by Reuters, to Biden in 2014 asking him to explain his actions. They also requested a meeting that never materialized, according to those who sought it.
The RFS creates demand for Walton's corn, lifting prices, while ethanol production results in a byproduct that serves as cheap feed for his livestock. Walton, a registered independent who voted for Trump in 2016, says his vote is up for grabs in November 2020 because of the president's trade wars and mixed support of the RFS.
Biden released a 22-page climate policy proposal earlier this month that promised net-zero emissions and a 100 percent clean-energy economy by 2050, largely through taxpayer investments in renewable energy and electric car infrastructure. He promised to refuse campaign contributions from oil and gas executives and strengthen regulation of oil companies.
The proposal's roughly 10,400 words did not include "ethanol," although Biden did explicitly support advanced biofuels, which fall under the RFS umbrella.
In an email on Monday, the Biden campaign did not comment on his role or motivations in the 2014 episode. The campaign said the country's energy revolution must be "fought for and with our farmers."
"By doubling down on our national renewable fuel standard obligations and implementing stronger, bolder commitments that invest in ethanol and biofuels, we can loosen big oil's grip on our nation while spurring economic growth in areas hard-hit by Trump's trade war," said Biden campaign spokesman Andrew Bates.
BACKING BIOFUELS
In Iowa, ethanol is not as much a threshold Democratic Party issue as abortion rights or gun control.
Ethanol is opposed by many Democrats, who see it as maintaining a reliance on fossil fuels and combustible engine vehicles. Environmentalists argue that using land to grow corn for fuel also ruins natural habitats. Studies on the environmental benefits of ethanol versus gasoline in car engines have shown mixed results.
But backing biofuels typically is important for political success in the state, said Cary Covington, a political science professor at the University of Iowa.
"In the general election, Iowa's largely Republican agricultural community is going to be less inclined to vote for a Democrat if they don't support ethanol. It's like, don't poke the bear and give them a reason to be against you," Covington said.
U.S. Senator Elizabeth Warren of Massachusetts, who has made success in Iowa a priority, stands out among top Democratic contenders as the most full-throated supporter of the state's ethanol industry.
U.S. Senator Bernie Sanders of Vermont supported the RFS during the 2016 campaign, and at least seven Democratic candidates have toured Iowa ethanol facilities.
Ahead of a visit to an ethanol plant in Council Bluffs, Iowa, on Tuesday, Trump took a jab at Biden. The president highlighted his administration's lifting of a ban on summer sales of higher ethanol blends of gasoline.
"We gave them ethanol, which nobody was ever going to do, which Biden didn't do in eight years as vice president," Trump said.
While Iowa farmers welcome Trump's move, they have argued its impact is negated by the administration giving exemptions to the nation's biofuel laws to small refineries, including those owned by oil majors Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX).
Tom Vilsack, a former Iowa governor and agriculture secretary under Obama, said the concerns over Biden's ethanol bona fides were "unfounded." He said the Obama administration was a friend of the biofuels industry on a number of fronts, including funding new infrastructure for higher ethanol blends of gasoline.
"I think to focus on one action and ignore all the good the Obama administration did for the biofuel industry is unfair," said Vilsack, an informal adviser to a slew of Democratic candidates who want to better connect with rural Americans.
Monte Shaw, head of the Iowa Renewable Fuels Association, said it was true the Obama administration supported the biofuels industry. But he said he was aware of only one instance where Biden intervened on the issue, and that was to lower targets.
"If he was involved in more, we'd love to hear about it. The best thing he can do is come to Iowa, sit down with key players in the industry and explain what happened," Shaw said.
