EPA to Texas: keep blending that ethanol

BY MARJORIE KORN, MEDILL NEWS SERVICE

The U.S. Environmental Protection Agency denied a waiver request made by the State of Texas to reduce by half the amount of ethanol blending mandated in the Renewable Fuel Standard (RFS) on Thursday. Thus the currently mandated 9 billion gallons of blended ethanol in 2008 and 11.1 billion gallons in 2009 stands.

The request originated with Texas Gov. Rick Perry, but has been supported by fellow Texan, Sen. Kay Bailey Hutchinson, as well as a host of food processors, ranchers and poultry farmers who blame U.S. ethanol mandates and subsidies for higher costs of commodities, narrow profit margins and the rising cost of food.

“After reviewing the facts, it was clear this request did not meet the criteria in the law,” EPA Administrator Stephen L. Johnson said in a press release. Johnson said RFS was important both to “reduce America’s greenhouse gas emissions and lessen our dependence on foreign oil, in aggressive yet practical ways.”

On his Web site, Perry responded, “I am greatly disappointed with the EPA’s inability to look past the good intentions of this policy to see the significant harm it is doing to farmers, ranchers and American households.” Perry blamed RFS for driving up food prices and cutting into the margins in the livestock industry.

But ethanol proponents, especially corn farmers and biofuels activists, laud the EPA’s decision. Jim Greenwood, president and CEO of Biotechnology Industry Organization (BIO) said in a press release, “The EPA’s decision today sends a strong message that we must continue moving forward toward sustainable production of advanced biofuels to reduce both our dependence on imported oil and greenhouse gas emissions from transportation, and to increase production of biofuels from non-food sources.”

This is just the latest blow to the efforts of a coalition of ethanol dissenters in Washington, who have been looking for a way to break into the ethanol industry’s stronghold on the Capitol. A whole host of agriculture departments of major universities have released economic reports on the impact of ethanol on the cost of corn—including The Agricultural & Food Policy Center at Texas A&M—with many concluding that the impact of higher oil costs has been a primary driver of commodities and food prices.

Anti-ethanol’s cause hasn’t been helped by the fact that corn prices on the CME Group exchange have fallen significantly in the past two months. December corn futures contracts rose 14 cents, or 2.7 percent, to $5.42 a bushel. Wednesday, corn contracts hit $5.22 per bushel, the lowest price since March 24, and corn is down 32 percent from a record high $7.99 per bushel on June 27.

Photo by Marjorie Korn, Medill News Service

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