August 28, 2012 (TSR) – Eight groups representing a cross section of the US biofuels industry asked the White House on Monday to keep the ethanol mandate in place, despite governors’ calls to shrink it in response to a drought.

The trade groups argued that altering the Environmental Protection Agency’s Renewable Fuel Standard would increase retail gasoline prices, chill investment in advanced biofuels and hurt the US economic recovery.

They added that it would not lower grain prices, as livestock producers contend.

“With so many Americans in distress from the 2012 drought, it may be difficult to accept that the flexibility provisions built into the RFS and the market itself are working to minimize the consumer impact of lower grain yields,” the groups said in a letter to President Barack Obama. “But that is exactly what is happening.”

The groups were the Advanced Biofuels Association, Advanced Ethanol Council, Algae Biomass Organization, American Coalition for Ethanol, Biotechnology Industry Organization, Growth Energy, National Biodiesel Board and Renewable Fuels Association.

The RFS requires refiners to blend 13.2 billion gallons of corn-based ethanol into gasoline supplies this year and 13.8 billion gallons in 2013.

Governors of Arkansas, Georgia, New Mexico, North Carolina and Texas have asked EPA to waive all or part of the ethanol mandate for 2012 and 2013. They argued the policy has exacerbated the toll a severe drought is having on poultry, dairy, hog and other livestock producers, who rely on corn for feed.

EPA said it would decide whether to act on the requests within 90 days of receiving them, which amounts to mid-November for the first one, which was filed on August 13.

Analysts have said the governors’ attempts to alter the ethanol policy face extremely low odds, given plentiful renewable fuel credits that refiners can use for compliance and predictions that ethanol demand would not drop much after a waiver.

Source: Platts


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