US EPA delays decision on Texas ethanol waiver

22 July 2008 20:34  [Source: ICIS news]

HOUSTON (ICIS news)--The US Environmental Protection Agency (EPA) said on Tuesday that it needs more time to consider a request by the state of Texas to waive a federal mandate for ethanol consumption.

The EPA said the request has attracted enormous public interest, including more than 15,000 comments, which it said “raised substantive issues and included significant economic analysis”.

“Given the amount of work that remains to sufficiently answer the Texas request…, it is now clear that a final decision on the request will not be completed by 24 July,” said EPA administrator Stephen Johnson.

A decision on whether to waive the mandate will likely be made in early August, the EPA said.

Under the mandate the US will be required to blend 9bn gal (34bn litres) of ethanol into its gasoline this year, but Texas governor Rick Perry wants the EPA to cut that figure by half due to an impact he claims US ethanol production is having on food prices.

US ethanol is corn-based and critics, including the Texas governor, point to increased production of the biofuel as the main factor behind a surge in the price of corn this year.

US food companies have also blamed ethanol for higher beef and poultry prices, claiming the biofuel is squeezing their margins by making corn feed more expensive.

The US ethanol industry has rejected those claims, arguing that ethanol has had but a minor impact on the price corn and food.

The Renewable Fuels Association (RFA), a lobbying group that represents 90% of the US ethanol industry, claims only about 20 cents (€0.13) of every US dollar spent on food actually goes to farmers.

Most of the remaining 80 cents, the association claims, goes into transportation and packaging costs.

The RFA said that crude oil, not ethanol, is the culprit behind higher food costs due to surging packaging and fuel costs.

($1 = €0.63)

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By: William Lemos
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