Midwest needs clarity, consistency from national actions

Source: By Steve Warnstadt, Sioux City Journal • Posted: Monday, July 27, 2020

 We are more interconnected than what we think. That fact is evidenced by the coronavirus, but in other ways as well. An often-overlooked connection is that between the rural and urban economy and how they are impacted by national policies.

Wind energy is one example. Right now, 42 percent of electricity in Iowa is generated by wind. That is the largest amount of any state in the country.

The industry has created roughly 9,000 jobs between manufacturing wind turbine components, operations, and maintenance of these systems. According to the Bureau of Labor Statistics, the average annual wage for technicians in Iowa is $57,510.

In 2019, Iowa landowners received over $69 million in lease payments, providing a stable source of income. State and local governments received over $61 million in taxes. Further, the amount of carbon dioxide emissions avoided amounts to 12 million metric tons, the equivalent of 2.7 million cars. Iowa’s wind generating capacity has been cited by many companies as a contributing factor to locating operations here.

Unfortunately, there is growing pushback reflected in comments by the president such as citing turbines as a cause of cancer and being completely unreliable. While there is bipartisan support for facilitating continued growth, it faces headwinds generated from the administration.

The lack of a clear, consistent policy toward ethanol and biodiesel also challenges the state and region. Iowa leads the nation in both ethanol and biodiesel production, and thrived until the last few years.

In Iowa, a majority of the industry is locally owned and managed, relying on local suppliers and consumers. Back in 2005, the federal Renewable Fuel Standard was established. Under that law, the U.S. is to use 15 billion gallons of biofuels. Refineries have fought this provision, and sought waivers to exclude them from this requirement.

Unfortunately, the administration has frequently supported exemptions to the law. The executive director of the Iowa Renewable Fuels Association estimated that over 4 billion gallons of biofuel demand “has disappeared because of EPA policies since President Donald Trump took office.” This is part of the reason that, for the first time ever, biofuel production went down in 2019.

The administration is delaying implementing a court decision limiting waivers for refineries. This failure to act is “prolonging uncertainty and exacerbating economic harm in rural America,” according to the president of the Iowa Renewable Fuels Association.

Renewable energy is not the only area where federal policy has adversely impacted the Midwest. Most commodities have also been hit, in an indirect but easily foreseeable way.

Roughly 20 percent of all agricultural goods America produces are exported. For Iowa alone, agricultural exports amount to around $10 billion.

When the administration imposed taxes on goods imported from other countries, it was clear that those countries would retaliate by imposing taxes on US agricultural goods. When it turned out that trade wars weren’t “easy to win,” as claimed, mechanisms were created to minimize the financial damage to producers.

The financial compensation to partially offset the self-inflicted damage is approaching its third year, to the tune of over $20 billion last year alone. This is money that is borrowed at worst and paid for by increased taxes at best.

The loss of trade has also resulted in the loss of market share. Producers will have to work hard to re-establish export relations, overcoming the newly forged relationships other partners have developed. Their work may be even more difficult if American trade representatives decide to renew the trade war. This uncertainty will affect not just producers, but all who have business relationships with them.

These erratic national actions affect development in rural areas and security for us all. Clarity and consistency are needed for rural and urban areas in the Midwest to succeed.

A Sioux City resident, Steve Warnstadt is government affairs coordinator for Western Iowa Tech Community College. He is a former Democratic state senator and retired Army National Guard brigadier general. He and his wife, Mary, are the parents of one son and one daughter.