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Ethanol Decision: Winners and Losers

CornThe oil industry was not the only interest to win a victory when the EPA lowered biofuel quotas on Friday.

The American Automobile Association said the proposal would prevent a “surge in gas prices or the premature expansion of E15 gasoline sales,” the Wall Street Journal reported. Like the oil industry, the AAA argues that E15 – a blend of 15 percent ethanol, 85 percent gasoline – would damage many of today’s cars. Most ethanol sold today comes as E10 – 10 percent ethanol, 90 percent gasoline. In yesterday’s announcement, the EPA acknowledged that the US has hit the E10 “blend wall,” meaning that unless the country moves towards E15 or the government cuts its mandate, the ethanol market is effectively saturated.

The National Chicken Council has a different problem with the RFS: since corn comprises nearly 70 percent of feed,  it is the industry’s single largest input cost – and use of corn for ethanol threatens to raise feed prices.

But a number of farm groups were upset by the ruling. Ag Professional reports. The American Farm Bureau Federation said, “The intent of the Renewable Fuels Standard revised in 2007 (RFS2) was to get more renewable fuels into our nation’s pipeline and move beyond the E10 fuel blend. Today’s announcement from EPA moves us in the opposite direction.”

Meanwhile the Renewable Fuels Association expressed its disappointment, saying the government was “wavering” on the RFS for the first time. But the association said it was “confident that the final number will be the right one for the industry in 2014.”

Takeaway: The RFS has pitted sector against sector, and even pitted some companies within the same sector against each other.

Tamar Wilner is Senior Editor at Environmental Leader PRO.

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