WASHINGTON — The Obama administration must decide in coming weeks if it will temporarily lift requirements to blend ethanol into the nation’s gasoline supply. The issue has been largely dormant on the campaign trail, but it’s critical to the success or failure of the next generation of biofuel plants under construction today that won’t rely on corn to make fuel.
A public comment period ended in early October, and now the administration must decide by Nov. 13 whether or not to temporarily suspend the Renewable Fuel Standard, created in 2005 and modified in 2007 to help the ethanol industry get off the ground by requiring its use in gasoline.
Ethanol is required to be blended into gasoline to help keep pollution down, and it has the added benefit of lowering dependence on crude oil, about half of it imported and the other half drilled domestically.
The governors of Arkansas, North Carolina and several other states want the ethanol mandate suspended amid rising corn prices brought about by this summer’s punishing drought. Governors of corn states are opposed.
The administration is widely expected to reject the request for a one-year suspension of ethanol mandates, but the move is actually just an opening salvo in a much larger fight that’s coming in the next Congress over the Renewable Fuel Standard. That debate comes just as the ethanol industry readies to launch commercial-scale, next-generation biofuels.
Also at issue: Whether mandates, passed in 2005 when oil demand was at its peak, are realistic given falling energy consumption, a boom in low-cost natural gas production, rising corn prices and improvements in the fuel efficiency of cars.
The ethanol industry this year lost, as part of deficit reduction efforts, federal subsidies that had surpassed $20 billion. And the mandates requiring future use of ethanol in the fuel supply are both complex and controversial. They currently call for ethanol to comprise 10 percent of the nation’s fuel supply, or about 13.2 billion gallons. But that volume is scheduled to grow to 15 billion by 2015 and 36 billion by 2022. The 36 billion gallons, half of which must come from non-corn sources, would still represent just 7 percent of anticipated future U.S. fuel consumption.