More US senators join call to end ethanol mandate

06 August 2008 20:01  [Source: ICIS news]

WASHINGTON (ICIS news)--Senators Jim Webb (Democrat) and John Warner (Republican) of Virginia want the federal bio-ethanol mandate suspended, saying in a letter circulated on Wednesday that the mandate is hurting their state’s economy.

 

The two Virginian senators join the state of Texas, Senator Kay Bailey Hutchison (Republican-Texas) and more than 50 Republican members of the US House of Representatives in seeking a temporary waiver of the federal renewable fuel standard (RFS).

 

That standard, mandated by the Energy Independence and Security Act (EISA) of 2007, requires US biofuels production of 36bn gal/year (136bn litres/year) by 2022, with a target of 9bn gal/year for this year.

 

According to the Renewable Fuels Association (RFA), US domestic production of ethanol - which is entirely corn-based - has just reached the 9bn gal/year level. 

 

However, Webb and Warner told Environmental Protection Agency (EPA) director Stephen Johnson that the ethanol mandate is having unintended consequences that are causing substantial cost increases for Virginian livestock breeders and consumers.

 

“This waiver is intended to help Virginia’s agricultural community, including poultry, dairy and livestock producers, and consumers who have been hit hard by a dramatic rise in feed costs as a result of increased usage of corn-based ethanol,” the two senators wrote.

 

The RFA ethanol trade group argues that it is the increased cost of crude oil and resulting fuel costs that have driven price hikes for animal feed and human foods.

 

However, Webb and Warner put the blame on ethanol-driven demand for corn, noting that “since February 2006, the price of corn, wheat and soybeans has grown more than 416% … as farmers shift into higher levels of corn production to meet the RFS mandate”.

 

The EPA is expected to rule in a matter of days on the Texas request for a 50% reduction in the ethanol mandate.

 

Energy analysts at investment bank Friedman, Billings, Ramsey & Co and others expect the EPA to rule against Texas and in favour of maintaining the ethanol mandate.

 

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By: Joe Kamalick
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