Sunday, October 19, 2008

Politicizing Ethanol

Amid a growing backlash to federal requirements that ethanol be blended into gasoline, the Environmental Protection Agency denied a request by Texas to waive the mandate.

The decision, while expected, deals a blow to Texas Gov. Rick Perry, who asked for the waiver after corn prices climbed sharply this spring. He said that the requirements on the amount of corn-based ethanol that has to be blended into gasoline was severely harming the state's economy (in particular its livestock sector).

In denying Texas's request, the EPA estimated that waiving the national mandate, which requires that the United States produce 9 billion gallons of ethanol fuel this year and 36 billion gallons by 2022, would reduce corn prices only slightly (by only seven cents a bushel).

The EPA's move, however, certainly won't be the last word about biofuels. The action now moves to Congress and even the presidential candidates.

Since May, Texas Sen. Kay Bailey Hutchison, a Republican, has been pushing to "freeze" ethanol blending at last year's levels, when 4.7 billion gallons of domestic ethanol were produced. Hutchison's bill has been cosponsored by 11 other Republican senators, including Republican presidential hopeful John McCain.
McCain, in fact, is a longtime ethanol critic, and his views contrast sharply with those of his Democratic presidential rival, Barack Obama, who has strongly supported biofuel incentives in the Senate. (His home state, Illinois, is one of the country's top agricultural producers, and his victory in corn-centric Iowa's primaries helped launch his candidacy.)

Even as corn-based ethanol has come under attack from some quarters, Obama has defended it as a good "transitional" fuel.

In announcing the decision today, EPA administrator Stephen Johnson said the agency, after consulting with economists and reviewing 15,000 public comments, concluded that the alternative fuel standards are "strengthening the nation's energy security and supporting American farming communities."

Read it all here.

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