U.S. Renewable Fuel Standards Upend Ethanol Tariff Fight

Federal Agency/Executive Branch, Federal Legislation, Field/Orchard/Plantation Crops/Residues, International, Marketing/Market Forces and Sales, Policy

February 15, 2010

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by Brian Baskin (SugarcaneBlog.com, Dow Jones) U.S. ethanol producers are facing their toughest fight yet to keep long-standing trade protections intact. Producers of ethanol, which in the U.S. is usually distilled from corn and then blended to make gasoline, have for three decades enjoyed a tariff that has discouraged imports. The big loser has been the second-largest producer, Brazil, which can usually undercut U.S. ethanol prices by refining sugarcane instead of corn. While corn ethanol’s allies in the U.S. Congress managed to strengthen import barriers as recently as 2008, the 54-cent-a-gallon levy faces a tough battle for renewal this year.

The power shift comes as Brazilian ethanol is seen bridging a gap that could form if domestic ethanol production falls short. California will require a 10% cut in greenhouse-gas emissions from vehicles over the next 10 years– with cane ethanol counting as having a lower carbon footprint than corn ethanol. The U.S. Environmental Protection Agency took a similar step last week, designating cane–but not corn–ethanol as an “advanced biofuel,” which will make up nearly 60% of the 36 billion gallons of the total renewable fuel requirement in 2022. READ MORE

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