EPA Upholds Federal Mandate For Ethanol In Gasoline

The Environmental Protection Agency declined on November 16 to relax its requirement of the use of corn ethanol in gasoline, rejecting a request from several states related to a steep decline in the nation’s corn production.

A summer drought that withered crops led to a spike in prices, hurting the livestock industry and others that depend on corn for food. Estimates indicate that as much as half of the nation’s crop will be used to produce ethanol this year to meet the federal renewable energy standard for transportation fuel.

To approve a change in the standard, the agency would have to conclude that the fuel rule would "severely harm" the economy. The EPA said it had analyzed 500 potential market variations and that most of them showed no impact from the use of corn for ethanol; those that did showed an average impact of seven cents a bushel, less than one percent of the price, it said.

A coalition of livestock groups expressed frustration with the decision, as did the National Council of Chain Restaurants, which says its costs have also risen because of the use of corn in ethanol production.

Several environmental groups are also opposed to the ethanol requirement, saying that corn ethanol production is not clean energy. "If the worst U.S. drought in more than fifty years and skyrocketing food prices are not enough to make EPA act, it falls to Congress to provide relief from our senseless federal support for corn ethanol," Michal Rosenoer, Biofuels Specialist at Friends of the Earth, said in a statement. She said the mandate was "exacerbating our economic and environmental problems."

That would put some environmentalists in rare alignment with the oil industry, which is required to use an increasing amount of ethanol in its fuel production but complains that its system is glutted with the substance.

Since Congress specified a year-by-year gallon quota for biofuels in 2007, total fuel demand in the United States has dropped, so the percentage of ethanol fuel in gasoline has reached unexpected highs.

Farm groups and trade associations for companies seeking to make ethanol from nonfood sources like wood chips or crop residues have applauded the mandate, however. They say that if the corn ethanol mandate is reduced, there will be less demand for their biofuels products as well.

NAFA Fleet Management Association
125 Village Blvd., Suite 200
Princeton, NJ 08540

Telephone: 609.720.0882 Fax: 609.452.8004