via a special arrangement with Informa Economics, Inc.
Other strategies: building up infrastructure
for second- and third-generation fuels
This column is copyrighted material, therefore reproduction
or retransmission is prohibited under U.S. copyright laws.
The Environmental Protection Agency (EPA)
should raise the maximum amount of ethanol it requires to be blended with
gasoline for non-flex fuel vehicles in order to help the U.S. ethanol
industry, USDA Secretary Tom Vilsack said on Tuesday, although he did
not specify how high the cap should be.
The U.S. government currently sets the ethanol-to-gasoline
blend rate at 10 percent. Ethanol groups have complained the
cap is stifling development and growth of the alternative fuel industry.
They have suggested rates of 15 percent, or even 20 percent, but Bush
administration officials had previously been discussing a percentage
boost to 12 percent or so.
An increase in the percentage that can go into gasoline would
be a way to stimulate the corn-based ethanol industry, Vilsack said,
and that is why he said he is advocating a shift and talking
about options together with EPA Administrator Lisa Jackson. "Obviously
we're encouraging [Jackson] to consider an adjustment to the blend ratio,"
"My hope is that we can get a blend rate that is higher than
10 percent," Vilsack said. "That is going to create more opportunities
for the ethanol industry. We're encouraging EPA to do that. We hope
that they'll listen to our concerns."
Comments: As I have previously
noted, EPA must decide whether to change the blend rate. USDA and other
federal departments offer advice and information to the agency.
Vilsack said other strategies to improve future biofuel use include
building up infrastructure for second- and third-generation biofuels.
Background: The federal Renewable Fuels Standard requires
use of 21 billion gallons a year of advanced biofuels, such as cellulosic
ethanol, by 2022 -- beginning with 600,000 gallons this year. It sets
a peak of 15 billion gallons a year of corn ethanol. The target this
year is 10.5 billion gallons.
Comments: Regarding the
blend percentage, the issue is primarily back to the same position it
was during the closing days of the Bush administration, where officials
were inclined to okay a small boost in the blender percentage, but that
decision was never announced, for whatever reasons.
Vilsack is correct when noting the EPA will make the final recommendation.
Whether an Obama-led EPA is different on this matter from the Bush EPA
remains to be seen.
A longer-term perspective is evident in that Vilsack's
call for a higher percentage signals what could happen in the future
should corn carryover stocks get into a burdensome situation –
a recommendation could be made to Congress to again boost the mandate
for corn-based ethanol. I am not predicting this, but note the possibility
if stocks bulge and/or prices plummet “too much.” That potential
policy alternative is considerably different from the days when the
executive and some in the legislative branch favored acreage diversion
programs. And since acreage diversion programs have been removed from
the policy toolbox by past legislation, this or any future administration
will have to examine things like the blend percentage or other steps
to address any oversupply situation.
This column is copyrighted material, therefore reproduction or
retransmission is prohibited under U.S. copyright laws.