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EPA: No ethanol mandate delay

Agriculture.com Staff 02/07/2008 @ 2:42pm

CHICAGO, Illinois (Agriculture Online)--Despite rumors, the Bush Administration will not delay plans to require the use of 9.0 billion gallons of ethanol in motor gasoline in 2008, Agriculture Online learned Thursday.

The Environmental Protection Agency announced Thursday that it will sign the Renewable Fuel Standard, making no delay for the ethanol mandate in the U.S. Energy bill.

EPA is raising the 2008 renewable fuels standard (RFS), which determines how much non-petroleum fuel will power your vehicle, to 7.76 percent, according to a released statement. The move is in response to the Energy Independence and Security Act (EISA), which President Bush signed in December.

Despite the ethanol mandate being included in the energy bill, passed by Congress in September, and already signed by President George W. Bush in December, rumors circulated on the Chicago Board of Trade Wednesday of a delay.

On Wednesday, the CBOT corn and soybean futures markets nose-dived at the close, when the rumor spread throughout the trading floor. Hours before the rumor, CBOT corn traded at its highest price ever at $5.65 ¾ in the July 2009 contract.

The CBOT corn futures traded lower on Thursday, with many traders wondering about the mandate rumor. Many traders say any delay to the ethanol mandate would be very bearish to the corn market.

Last November, EPA announced an RFS of 4.66 percent, based on previous law, that mandated at least 5.4 billion gallons of renewable fuels be blended into the nation's transportation fuels this year. However, EPA is now increasing the standard to 7.76 percent to comply with the new minimum of 9.0 billion gallons of renewable fuel that EISA requires.

EISA increases the overall volume of renewable fuels that must be blended each year, reaching 36 billion gallons in 2022. To achieve these volumes, EPA annually calculates the percentage-based standard, which applies to refiners, importers and non-oxygenate blenders of gasoline.

Based on the standard, each of these parties determines the minimum volume of renewable fuel that it must use. The RFS program creates new markets for farm products, increases energy security, and promotes the development of advanced technologies that would expand the production of renewable fuels.

Regarding the first increment of advanced biofuels mandated in 2010, Renewable Fuels Association officials say that it too will be met, Cyrul states. Similarly, the biodiesel should be able to meet its early targets, too, the first being 500 million gallons in 2009.

Senator Tom Harkin (D-IA), Chairman of the Senate Agriculture Committee, told Agriculture Online Thursday the ethanol mandate is important to the U.S. alternative fuel supply.

"The potential for America to supply a great deal of our energy from domestic sources is enormous, but it is critical for government to provide a signal to producers, marketers and consumers of renewable fuels that we are serious about renewables as a long-term and significant segment of our transportation fuel supply," said Harkin. "Securing a new renewable fuels standard will ensure the continued viability and expansion of locally-owned ethanol and biodiesel plants while providing a necessary incentive for investments in emerging, next-generation biofuels production."

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