Abstract
The Trump administration's agenda for federal policy over the next several years is taking shape, as confirmed cabinet officials and White House appointees move into their offices. Congressional Republicans and Democrats have also mapped out their policy priorities and strategies for the next few years. Republicans, with control of the White House and both houses of Congress, are focusing early on comprehensive tax reform, easing regulatory burdens for business, and repealing the Affordable Care Act. Some of the initiatives may touch the biobased economy at the margins; they may even create a more level playing field for our industry in the tax and regulatory areas down the road. Renewable chemical and biofuel producer CEOs, who are looking to build lasting businesses and a new industry, can also look at state policies for support. State initiatives begun in the past few years will continue to provide stable policy and establish the right business climate to support emerging technologies and businesses that generate jobs.
As a candidate, Donald Trump articulated his support for the federal Renewable Fuel Standard (RFS) and for biofuels during the 2016 campaign — telling the Iowa Renewable Fuels Association last January, for instance, that the U.S. should increase ethanol mandates. After the election, President-elect Trump noted that he could not have won without the support of Midwest voters and leaders, such as Iowa's Governor Terry Branstad, who are strong proponents of the program. At least one post-election poll demonstrates that 80% of respondents who voted in the Midwestern battleground states of Michigan, Wisconsin, Ohio, Iowa, Indiana and Minnesota believe that homegrown biofuel is vital to American jobs and energy security. The incoming Environmental Protection Agency (EPA) Administrator, Oklahoma's Governor Scott Pruitt, has now assured Iowa's Senators Chuck Grassley and Joni Ernst and other Senate supporters of the RFS that he will follow the law and implement the program as Congress designed it — a very encouraging signal. There is every reason to believe the Trump administration will stick to the candidate's campaign promise to support the RFS.
After more than three years of uncertainty and opaqueness in the rulemaking process, EPA appears to finally have the RFS back on track, with a 2017 rule that abandons the agency's disastrous distribution waivers asserted in earlier rules. Still, opponents of the program are looking for new opportunities to generate additional uncertainty. The merchant refiners' campaign to change the point of obligation — championed by billionaire Carl Icahn, who has a new role as White House adviser — is aimed at using the regulatory program to create a temporary business advantage. The jury is still out on how Trump will handle this position by his longtime supporter Icahn. BIO and its member companies do not want to change the point of obligation, because it would create new and unwelcome uncertainty about the future of the RFS. Instead, the industry supports greater transparency in the program's rulemakings, administration and compliance, to help all stakeholders gauge the costs and develop business strategies under the program. BIO has been working for three years now to improve transparency and data sharing in the RFS.
The Trump administration and Republican-controlled Congress are launching an initiative to reduce regulatory burdens for businesses, which is expected to begin unravelling presidential directives and regulatory rules of the past eight years aimed at reducing carbon emissions throughout our economy. Companies may benefit down the road if regulatory rules become more transparent and science based. But many businesses have already made significant investments to adopt low carbon technologies, energy efficiency, and cleaner production processes. Additionally, states have adopted market-based policy portfolios that encourage carbon reduction in transportation fuels and energy. For instance, California's Low Carbon Fuel Standard, established a decade ago, served as a model for Oregon's. Eleven states in the Northeast are discussing similar region-wide legislation. Sustainability is now a standard part of U.S. manufacturers' business models and an integral feature of the biobased economy. States can continue to lead in creating policies to support businesses that use renewable energy and renewable resources in manufacturing.
One of Donald Trump's key campaign pledges is to redress trade imbalances in order to preserve U.S. manufacturing. Biobased production can revitalize U.S. manufacturing, generate jobs and economic growth and provide new markets for U.S. agriculture. But there is an imbalance that needs to be rectified. Countries such as China, Malaysia and Brazil have for years offered tax credits to attract construction of biorefineries. Technology researched and developed in the United States is being commercialized overseas because the United States does not offer a competitive tax credit to this industry. Iowa and Minnesota have recognized the need to compete for biobased manufacturing jobs and have been forward-leaning in enacting tax credits for biorefineries and biobased products.
In 2015, Minnesota passed the Bioeconomy Production Incentive Program, which is enabling the commercial scale-up of advanced biofuel, renewable chemical, and biomass thermal production in Minnesota using the state's agricultural and forestry resources. In 2016, BIO worked closely with IowaBIO and the Iowa Economic Development Authority in helping the State of Iowa develop and enact a new five-year production tax credit for renewable chemicals. Nebraska's biorefining industry is promoting similar policies in that state; companies have recommended that the state legislature enact a renewable chemical tax credit identical to Iowa's and create an Iowa-Nebraska hub for the biobased economy. More states can follow these examples in setting tax policy to support a revival of U.S. manufacturing.
Donald Trump vowed during the campaign to renew economic growth in the United States. That will require innovative technologies and a highly educated workforce. Here again, states have been leading the way. Florida, North Carolina, Pennsylvania, Wisconsin, Ohio and numerous other states support research, development and education in the biosciences. Nationwide, 1.53 million Americans are employed in biobased product manufacturing, and the industry generates $127 billion in economic activity. The industry's impact creates an additional 2.7 million employment opportunities. The states that support development of the biosciences are achieving the greatest benefits from the economic strength of the biobased manufacturing industry.
The incoming Trump administration should recognize that its federal agenda works hand-in-glove with the state level efforts to support emerging technologies and businesses and do what it can to help them. Companies that have been building the biobased economy and those starting up to commercialize innovative technology can look to the states for the stable, supportive policies that create the environment necessary for their success. States can continue to take the lead in adopting policies that create the right economic environment for the biobased economy to grow while the new Trump administration works with Congress to further the federal agenda.