Western Railroad Discussion > EPA declines to change ethanol rule

The US Environmental Protection Agency declined a request to scrap or suspend its mandate for ethanol additives in motor fuels. The decision is considered a win for corn farmers, some speculators, railroads, and ethanol producers. It's considered a loss for environmentalists, oil companies, refiners, and food industry groups. The decision will support the current high price for corn, and continue the lucrative transport of ethanol by railroads.

The key to this puzzle is the combination of a poor corn production year due to the drought (less corn made) with a target specified in tons of corn for ethanol made by Congress. When fuel use drops (as it has) less ethanol is required for fuel, but Congress requires more ethanol be purchased than is needed for fuel.

NY Times:

>> Since Congress specified a year-by-year gallon quota for biofuels in 2007, total fuel demand in the United States has dropped, so the percentage of ethanol fuel in gasoline has reached unexpected highs.

Farm groups and trade associations for companies seeking to make ethanol from nonfood sources like wood chips or crop residues have applauded the mandate, however. They say that if the corn ethanol mandate is reduced, there will be less demand for their biofuels products as well.

At the Advanced Ethanol Council, Brooke Coleman, the executive director, pointed out that the quota rules include a provision that allows the oil industry to postpone up to 20 percent of its obligation to a future year “if there is a good year one year and a less good year the next.” <<

http://www.nytimes.com/2012/11/17/business/energy-environment/epa-upholds-ethanol-standard-on-use-in-gasoline.html?ref=energy-environment

The alignment of environmentalists (who see ethanol as a dirty fuel, sucking up a food source) with refiners (who see ethanol as an expensive heavily subsidized product) is very rare.

Lackawanna484 Wrote:
--------------------------
> NY Times:
>
> Farm groups and trade associations for companies
> seeking to make ethanol from nonfood sources like
> wood chips or crop residues have applauded the
> mandate, however. They say that if the corn
> ethanol mandate is reduced, there will be less
> demand for their biofuels products as well.
>

That's the key statement. If we want to get away from using corn as an ethanol feedstock then the mandate shouldn't be eliminated; there then would be little incentive to continue the push to non-food sources.

BTW the drought has had another impact: ethanol companies are looking at ways to increase their use of sorghum (milo), which is cheaper and requires much less water to grow.


Allen



Edited 4 time(s). Last edit at 11/21/12 12:46 by bradleymckay.

Nuovoenzymes has made a breakthrough on their new additive which should increase
ethanol propagation over 2%, doesn't sound like much when you're talking billions
of gallons it's a big number. The alternatives to corn are coming along but a lot
of that inertia has been derailed by the fact that DDG is such a major dollar
product especially as an adder to low protein feeds.