US biofuels to weather political storm – CF

07 May 2008 22:16  [Source: ICIS news]

HOUSTON (ICIS news)--There was only a remote risk that the current backlash against the US biofuels industry would cost it government support and thus impact fertilizer suppliers, a CF Industries official said on Wednesday.

 

"There are lot of entrenched interests in ethanol," said Anthony Nocchiero, the fertilizer company's chief financial officer. "It's a battle that has already been fought and won."

 

Soaring global food prices have stirred a wave of blame against biofuels and in particular ethanol, which consumes a quarter of the US corn crop.

 

Congress has mandated that US output of corn ethanol be ramped up to 9bn gal this year, from just below 7bn gal/year in 2007.

 

The state of Texas and 24 US senators have requested a rollback of the official targets.  

 

On Tuesday, US refining and petrochemical industry officials joined in the call for a change in biofuels policy, saying the push for ethanol is unsustainable.

 

Nocchiero said that it would be politically difficult for such a change to come about, citing the important role of corn belt states in the US election campaign process – which happens to have its starting point in Iowa.

 

"If anything changes, it would change very slowly," he predicted.

 

While biofuels demand for corn and soybeans may have kicked off the cycle of high prices for agricultural commodities, the market values were now being sustained by underlying demand not related to biofuels, he said.

 

Even if there was a change in future targets, the existing infrastructure would continue to provide a layer of demand, Nocchiero said.

 

According to latest data from the Renewable Fuels Association (RFA), there were 147 ethanol refineries in the US with capacity to produce 8.5bn gal/year. Another 55 were under construction, and six existing plants were undergoing expansions.

 

For more on ethanol visit ICIS chemical intelligence

 

To discuss issues facing the chemical industry go to ICIS connect

 

Bookmark Simon Robinson’s Big Biofuels Blog for some independent thinking on biofuels

By: Stephen Burns
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