EPA may delay decision on ethanol requirements

11 15, 2012 by Detroit News

The Environmental Protection Agency may delay a decision on whether to waive federal requirements on the amount of corn-based ethanol used in the nation's 240 million gas tanks because of this summer's drought.

The governors of eight states and nearly 200 members of Congress asked the EPA to waive requirements of the Renewable Fuel Standard signed into law in 2007 by President George W. Bush that mandate the production of increasing quantities of ethanol.

A decision is due Tuesday, but the EPA signaled it may delay the decision.

"EPA is completing its review and analysis of the RFS waiver requests and the agency plans to reach a decision shortly," the agency said in a statement.

The Michigan Farm Bureau said last month it opposes granting the waiver, saying it doesn't believe keeping the requirements in place "would severely harm the economy of Michigan at this time. We do not have final harvest numbers, making it premature to determine what our total crop supply will be in 2012."

But poultry and livestock producers are harmed by higher corn prices.

The governors of Maryland and Delaware, also home to poultry producers, told the EPA in October that without a waiver they would face "the loss of thousands jobs."

In August, a top United Nations official urged the Obama administration to suspend ethanol requirements under the 2007 Renewable Fuel Standard as fears of food shortages grow around the world.

The law assures big demand for corn. Ethanol requirements are popular in corn-growing states, making it politically difficult to waive them.

The requirements are opposed by many groups, including livestock producers who say the diversion of corn to ethanol raises feed prices — and, ultimately, prices at the supermarket.

The Michigan Farm Bureau said state farmers planted about 2.6 million acres of corn in 2012. Corn is the state's largest crop.

In a typical year, Michigan produces 322 million bushels of corn depending on weather and acres planted. The estimated demand for livestock, dairy and poultry feed in Michigan is typically about 70 million bushels.

Two dozen prominent scientists and academics wrote the EPA supporting the waiver, including John M. DeCicco and Ivette Perfecto of the University of Michigan School of Natural Resources and Environment.

"The (Renewable Fuel Standard) diverts potential food crops to produce fuel, which drives up food price volatility and global food prices," they wrote.

The National Corn Growers Association, including the Michigan branch, opposes the waiver, noting that average annual farm income has jumped from $63 billion before the law to $90 billion on average between 2007-2012.

The group didn't dispute that the drought has caused higher feed prices, but said "higher feed prices are only one piece of a complicated economic puzzle." The corn growers argue petitions haven't met the burden of showing "severe harm to the economy."

Corn prices have jumped more than 400 percent in the last seven years as the U.S. has boosted the amount of corn-based ethanol.

Under the 2007 law, the nation is increasing the use of ethanol in vehicles to 15.2 billion gallons this year, up from 5 billion gallons in 2007. By 2022, the U.S. must use 36 billion gallons of biofuel, though 21 billion gallons are supposed to be from advanced cellulosic ethanol.

To use the ethanol required, the EPA has approved the use of a more ethanol-rich blend called E15 — which is 15 percent ethanol — up from the E10 used at most pumps today.

E15 is only approved for vehicles from 2001 and newer, because automakers say engines can be corroded by it.

Automakers have fought the fuel, arguing it could also hurt newer vehicles. Just a handful of stations are currently selling the fuel.

From The Detroit News: http://www.detroitnews.com/article/20121113/AUTO01/211130413#ixzz2CIkDCsIh