Energy not there in Iowa

Source: Alex Guillen • POLITICO • Posted: Monday, January 2, 2012


In this file photo, Lynn Barry, of Manilla, Iowa, unloads corn to be processed at the Tall Corn Ethanol plant in Coon Rapids, Iowa.

Energy issues used to be a centerpiece of the first-in-the-nation caucuses. | AP Photo

Ethanol and wind are getting the bum’s rush in the Iowa primary.

Energy issues — historically ethanol but increasingly wind — used to be a centerpiece of the first-in-the-nation caucuses, providing a national platform for a state that prides itself on excelling in renewable energy.

But the vast cornfields and wind-swept plains of the Hawkeye State, while important to the local economy, have taken a back seat this year.

In the past, ethanol was a hot topic in the Iowa caucuses, but in 2011, most of the GOP field came out against ethanol subsidies and greater numbers of Iowans seem to agree with them as larger, more pressing issues such as the economy and the budget take over.

“It’s an issue I think Iowans are mindful of, but with the economy and everything else like that, there are other issues that they’re more focused on,” said Craig Robinson, formerly political director for the state Republican Party and editor of The Iowa Republican.

The industry insists that its political sway is as important as ever.

“I would argue it’s bigger. That is, I mean, y’all don’t write as many stories about it, but in terms of impact on Iowans’ votes it’s probably bigger than it’s ever been because of the size of the industry,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association.

“When you look at what’s driven Iowa’s economy over the last few years, it’s agriculture,” Shaw added. “And the No. 1 driver behind agriculture is renewable fuels, in Iowa.”

Ethanol and wind are indeed bigger than ever in the Hawkeye State.

Iowa receives about 20 percent of its electricity from wind, a higher percentage than any other state, and it comes in second only to Texas in installed capacity.

Like elsewhere in the U.S., wind power in Iowa recently has grown almost exponentially. In 2007, the state had 1,191 megawatts of installed capacity, according to the American Wind Energy Association. As of September of this year, Iowa enjoyed 3708 MW, with another 792 MW in the pipeline.

“Iowans generally understand that it creates good jobs in both the manufacturing sector, operation and maintenance, [and] benefits our landowners with really good lease payments,” said Harold Prior, executive director of the Iowa Wind Energy Association.

Wind is so key to the state’s energy and economy that Republican members of its congressional delegation — Reps. Steve King and Tom Latham and Sen. Chuck Grassley — routinely break with their party to support industry subsidies.

The three have lent their support to an ongoing effort to extend the production tax credit, a key incentive for wind that expires at the end of 2012.

Because wind projects take 12 to 18 months from concept to construction, the expiration date is already beginning to affect manufacturing orders, the industry says.

As with ethanol, most of the Republican candidates are happy to see federal subsidies expire — though that didn’t stop Mitt Romney, Ron Paul, Tim Pawlenty, Herman Cain and Thaddeus McCotter from signing a turbine blade before the Ames straw poll.

The exception is Newt Gingrich, who has called for a 10-year extension of the tax credit, even longer than industry and Democratic advocates have sought. Such an extension would help create market certainty and foster investment, he said.

Meanwhile, ethanol production in 2011 hit 3.7 billion gallons out of 13.8 billion gallons nationally, about 27 percent. It’s also an 85 percent increase over 2007’s 2 billion gallons from Iowa.

Industry outreach is continuing on schedule. The IRFA mailed a voter guide the day after Christmas, giving some — Romney, Gingrich and Rick Santorum — high marks and others — Rick Perry — a failing grade.

While ethanol is still relatively significant to voters, according to Des Moines Register political columnist Kathie Obradovich, there are limits.

“If you put ethanol on a list of issues that Iowa caucus-goers care about, I would suggest that it falls pretty low on the priority level,” Obradovich said. “But ethanol is still part of the Iowa economy, and to the extent that people are concerned about jobs and the economy it’s still part of the conversation here.”

Part of the reason many outside Iowa still think of ethanol as a dominant political interest in the Hawkeye State is because outsiders don’t really understand the industry, observers say.

Pawlenty — who dropped out of the race after placing third in the Ames straw poll in August — caused a flap when he launched his campaign in Iowa by calling for the elimination of ethanol subsidies.

“A lot of those oohs and ahs came from outside the state,” Obradovich said. “A lot of people inside the state already recognized that the ethanol subsidies were on their way out and even very popular and prominent Republicans in Iowa, like Chuck Grassley, had indicated that ethanol subsidies would be phased out.”

The end of ethanol’s tax credit — officially known as the Volumetric Ethanol Excise Tax Credit — has largely been accepted by the industry, partly because extension amid budget woes was a political nightmare and partly because the industry feels that high oil prices are inadvertently making ethanol’s case.

“Everyone was like, ‘Oh my goodness, he said that in Iowa! Oh, how brave that was! And oh, how’s it going to affect him?’” Shaw said of Pawlenty. “And basically the debate was, was it brave or was it stupid? And we’re sitting here scratching our heads.”

The fact that the industry is OK with the tax credit expiring is a sign of maturation, according to King.

“The industry looks at the roadmarker and says, ‘We’re an energy competitor and we think that, given access to the marketplace, we can compete on the world market for energy,’” King said.

“If a candidate steps forward and says, ‘I’m for ethanol,’ at the same time that the ethanol industry is willing to accept the expiration of the blenders credit, then, you know, what’s the traction? It’ll look like it’s political pandering rather than a position,” he added.

Even many Iowans aren’t filled in on the next top policy for ethanol: the Renewable Fuels Standard.

“The top five priorities are RFS, RFS, RFS … You get the picture,” Shaw said.

But, unlike the ethanol tax credit, the RFS isn’t a well-known topic and talking point among primary voters.

“That issue is not as familiar, probably, to rank-and-file caucus-goers. They probably wouldn’t put it on their checklist,” Obradovich said. “I talk to a lot of voters as I go out around the state and ask them what they’re looking for in a candidate, and the Renewable Fuels Standard has never come up.”

Ethanol politics are becoming more complicated, which makes public understanding of the issue increasingly difficult.

But there are 41 plants producing ethanol in Iowa, so somebody must still care, Shaw said.

“These are people who have invested a large chunk of their retirement funds to build something in their own community to create jobs,” Shaw said. “Am I out there saying ethanol policy is a make-or-break issue for all those voters? No. But is it a make-or-break issue for a large chunk of the electorate and of the caucus-goers? Yes, it is.”

Plus, ethanol, once the young, sexy issue of the day, has become almost commonplace.

“We Iowans are used to the ethanol industry but we also get the sense that it’s pretty stable,” Robinson said. “We’re not wowed by the news of a new ethanol plant opening up anymore. It’s kind of commonplace and as such I think we say, ‘Hey, it’s looking like an industry that’s doing well and maybe they don’t need handouts.’”

However, wind is in much the same boat as ethanol — except without the historical backing.

“At this point I think that it’s not been that big a part of Iowa politics, partly because the public hasn’t understood how important it is,” King said.

The impact is easy to see, according to King.

“At one time I just stopped the lawnmower and counted, and I could count 39 just sitting in one place, and my field of vision was about 90 degrees,” he said.

“In my district, as far as we know, we’re the first congressional district in the country — at least the first one to do the calculation — that we could power all of our homes with wind alone,” King added. “That’s a pretty good chunk of wind generation.”

This article first appeared on POLITICO Pro at 9:29 a.m. on December 28, 2011.