10 July 2008 16:43 [Source: ICIS news]
By Joe Kamalick
In part this is because the Texas case is weak, but mostly it is because President George Bush doesn’t want to shoot Republican presidential candidate John McCain in the back by angering crucial corn belt states.
The Environmental Protection Agency (EPA) is to rule by 23 July on the
The Texas governor urged EPA to chop the 2008 ethanol mandate of 9bn gallons by half because, he said, ethanol-driven demand for corn triggered “skyrocketing” increases in prices for both human foods and livestock feed, causing harm to consumers and the Texas cattle industry.
Perry is entitled to make the reduction request because under the Energy Policy Act of 2005 the EPA has authority to waive that law’s renewable fuel standard (RFS) if the ethanol mandate is causing significant harm to a state or region.
“NPRA supports the sensible and workable integration of alternative fuels into the marketplace based on market principles that allow each fuel option to seek its true value and optimum level of use,” the refiners’ trade group said in a public comment in favour of the
“NPRA opposes, however, the mandated use of alternative fuels,” the association said, adding: “There is no free market if every gallon of biofuels - including those that do not exist - is mandated.”
The reference to nonexistent biofuels is to the fact that
Under the 2007 Energy Independence and Security Act (EISA),
As might be expected, the US ethanol trade group, the Renewable Fuels Association (RFA), opposes the Texas waiver request, along with the Corn Growers Association and the National Farmers Union and a couple of thousand others who filed comments against Texas with the EPA.
The RFA probably has a winning argument, however, just on the basis of the law.
As RFA president Bob Dinneen noted in his letter to the EPA, to obtain a waiver of the renewable fuels mandate,
Dinneen argues that the claimed impacts to the Texas livestock industry would make up a small fraction of the $1,100bn (€704bn) Texas economy and is probably offset by lower retail gasoline prices due to the ethanol mix in the state’s fuel supplies.
He also contends that there is no evidence that the renewable fuel standard alone caused the higher corn prices of which Governor Perry complained and that high oil prices and the weakened US dollar are culprits as well.
Lastly, Dinneen charges that
On those grounds alone, the ethanol industry would probably win the waiver fight against
But there is a lot more.
It is there that most
Simply put, killing off the ethanol mandate would put a torpedo in Senator McCain’s already leaky election campaign.
Kevin Book, senior vice president for energy policy, oil and alternative energy at FBR Capital Markets, contends that the law favours the ethanol industry in this instance. n addition, “anyone making a politically unpopular decision in the absence of indisputable fact is going to have to answer to a large, vocal, organized and empowered voting block in November”.
($1 = €.64)
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