1. Victory or Retreat Iowa Renewable Fuels Summit January 19, 2016

2. www.IowaRFA.org 2 Iowa Renewable Fuels: Then and Now 20072016 Ethanol Plants 2643 Cellulosic Plants 03 Ethanol Production 1.7 billion gallons4 billion gallons Gallons Under Construction 1.6 billion gallons0 gallons Biodiesel Plants 812 Biodiesel Production 75 million gallons242 million gallons Gallons Under Construction 185 million gallons0 gallons

3. www.IowaRFA.org 3 Renewable Fuels: 2007 2005 RFS Legislation Spurred Growth and Excitement Industry Proved Oil Naysayers Wrong About Potential Worry about Over Building Working on 2007 RFS to Expand Role for Renewables Petroleum Industry Not Yet in Full Attack Mode on RFS/Renewables

4. www.IowaRFA.org 4 Renewable Fuels: 2016 Entering 9th Year of Sustained, Multi-Billion Dollar Petroleum Industry Assault on RFS Cellulosic Ethanol a Budding Reality Worry about the Artificial Blend Wall Industry Mostly Stagnant with Inconsistent Implementation of RFS Farm Economy Headed South as Production Once Again Outstrips Demand The Renewable Fuels Industry is at a Fork in the Road

5. www.IowaRFA.org 5 Fork in the Road: Why Iowa Should Care Iowa Farm Bureau economist predicts: “another tough year” USDA said Farm Income Plunged 38% in 2015 Iowa Farmland Prices Dropped for 2nd Straight Year U of Illinois Ag Economists Warn “20% chance of harvest prices less than $3/bushel” for corn 66% chance corn price will be $4 or under

6. www.IowaRFA.org 6 Corn: Cost vs Price per bushel

7. www.IowaRFA.org 7 Not Just Farmers are Impacted

8. www.IowaRFA.org 8 Renewable Fuels: 2026 Corn Ethanol -- Growing with Corn Supply to Exceed RFS levels… Or Retreating to 2007 levels Cellulosic Ethanol – Production Measured in the Billions of Gallons… Or Retreating to other countries The Artificial Blend Wall replaced with E25/30 Optimized Engines Or Big Oil’s Last Line of Defense Holds Strong Biodiesel Hitting 10 Billion Gallons of Use… Or Retreating to niche markets Grain Prices Again Allowing Farmers to Farm for the Market Or Retreating Below Costs Leading to Either Massive Farm Bill Expenses or Massive Consolidation

9. www.IowaRFA.org 9 Fork in the Road: Victory or Retreat

10. www.IowaRFA.org 10 Fork in the Road: Victory or Retreat

11. www.IowaRFA.org 11 What Path Leads to Victory? Cut a Deal with Big Oil? Ultimate Elimination of RFS is Only Big Oil Goal Pin Our Hopes on EPA Enforcing Toxics Limits? No Interest Now, Can Change With/Within Administrations – Just look at Obama and RFS Assume Detroit will Adopt High Octane Engines? E25/30 Engines Make Sense but “Chicken or the Egg”

12. www.IowaRFA.org 12 But the RFS Won’t Help!?? Claim: RFS won’t help corn ethanol because we’re already near 15 billion gallons and it expires in 2022 anyway. So why fight for RFS?

13. www.IowaRFA.org 13 RFS Fact Check Fact:The RFS does not expire after 2022. The RFS has no sunset provision and only an act of Congress could repeal it. After 2022, the EPA is charged with using six criteria to set future RFS levels. The assumption in the law is increasing RFS levels into the future.

14. www.IowaRFA.org 14 RFS Fact Check Fact:Assuming a 15 billion gallons corn ethanol market in the absence of the RFS is dangerous. Big Oil study predicted ethanol demand of just over 6 billion gallons without RFS. Some ethanol industry observers say 8-9 billion gallons.

15. www.IowaRFA.org 15 U.S. Oil Prices: 2007-Present

16. www.IowaRFA.org 16 RFS Fact Check In absence of RFS, concentrated oil industry will dictate prices to diversified ethanol industry Distribution Monopoly, federal petroleum mandate, subsidies Marginal plants will be on/off Corn growers to suffer

17. www.IowaRFA.org 17 RFS Can Be Defended Big Oil’s Narrative that “Scrap the RFS” Consensus has formed is FALSE Big Oil LOST only Congressional vote 12 out of 14 presidential candidates disagree Any change to RFS must go through Chuck Grassley and Joni Ernst in the U.S. Senate

18. www.IowaRFA.org 18 Benefits of RFS Moving Forward Key to Biodiesel Growth in Near Term Gives Cellulosic Ethanol a Chance to Get Started Pulls Corn Ethanol ABOVE 15 Billion Gallons

19. www.IowaRFA.org 19 Breaking the Artificial Blend Wall

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22. www.IowaRFA.org 22 What will you do on February 1 st ?

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24. www.IowaRFA.org 24 Never Retreat “Small” dry-mill ethanol plants won’t work E10 ruins engines You can never replace MTBE in CA…. or NY Congress will never pass the RFS… twice You can’t supply E10 to all of America You can’t survive without the blenders tax credit You’ll never keep the RFS E15 ruins engines The “blend wall” is unbreakable

25. www.IowaRFA.org 25 Monte Shaw Executive Director mshaw@IowaRFA.org (515) 252-6249 Iowa Renewable Fuels Association www.Iowarfa.org /Iowa.Renewable.Fuels @IowaFuel /IowaRenewableFuels