Debate over the viability of the U.S. renewable fuel standard seems to be coming to a head in Washington, where Senate Republicans have asked the Environmental Protection Agency (EPA) to use its regulatory authority to halt the increase of ethanol production.
Twenty-four Senate Republicans, including presidential candidate John McCain, sent a letter to the EPA last week asking it to suspend or restructure rules set in the energy bill passed last December, calling for a five-fold increase in ethanol production by 2022.
These Republicans say the increase in demand for ethanol made from corn is largely responsible for growing food shortages around the world and soaring grain prices that are affecting livestock producers and ultimately the cost of food in U.S. supermarkets.
"This subsidized (ethanol) program–paid for by taxpayer dollars–has contributed to pain at the cash register, at the dining room table, and a devastating food crisis throughout the world," McCain said in a statement.
The EPA has the power to waive or restructure the fuel standard requirements, if they cause unintended harm to consumers or the environment. But the national Farmers Union and politicians representing corn-belt states are firmly opposed to changing the rules, which call for an increase to 15 billion gallons of corn ethanol by 2015 and an additional 21 billion gallons of advanced cellulosic ethanol by 2022.
Senator Charles Grassley (R-Iowa) said Monday he will fight any attempt to reduce or delay the renewable fuels mandate, which has benefited farmers in his state.
Senator Kay Bailey Hutchison (R-TX) is drafting legislation to freeze the ethanol requirements at 2008 levels of 9 billion gallons her office said last week, because livestock producers in her state say they can’t afford to feed high-priced grain to animals.
And meanwhile, Canada government is preparing to pass its own renewable fuels standard, requiring all gasoline sold in Canada to contain 5% ethanol by 2010. The measure has won support in Canada’s House of Commons and must still pass a vote in the Senate.
If passed the new standard is expected to create a demand for roughly 500 million gallons of ethanol, 400 million of which could be produced by Canadian ethanol plants, according to industry figures. Much of the corn for those 400 million gallons, as well as the remaining 100 million gallons, would need to be imported, creating an even larger demand in the U.S.
With cellulosic ethanol (made from non-food sources) not yet making a significant contribution to the commercial supply of ethanol and continually increasing gas prices, it is unclear how the U.S. Congress will respond, as traditional parties lines are being split into regional interests.
However, this being an election year, many analysts think legislators will be unwilling to change the standard, which is favored by a large midwest electorate. And since President Bush last week reaffirmed his support for ethanol, it is unlikely that the EPA, which seems to be fully under the administration’s control, will act to reduce the demand.
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