The EPA proposal for the 2017 biofuels mandate would drive consumption of renewable fuels by at least half-a-billion gallons above the traditional rate of a 10 percent blend into the gasoline supply, say U-Illinois economists Scott Irwin and Darrel Good. The petroleum industry has argued the fuel market is saturated at the 10 percent rate.
Writing at farmdoc Daily, Irwin and Good calculate “the EPA is continuing to provide a substantial push above the E10 blend wall for conventional biofuels,” which are almost totally corn ethanol. “A key question going forward is how long this push can last in the face of rising gasoline consumption.” As gasoline consumption rises, the impact of the mandate diminishes.
The economists said there are three major ways to satisfy the push above 10 percent — drawing upon credits accumulated for past use of biofuels, larger use of ethanol at higher blend rates such as E15 or E85, and increased use of biodiesel.
Separately, USDA announced $8.8 million in payments for production of advanced biofuels at facilities in 39 states. The largest payments were $683,648 to Louis Dreyfus Agricultural Industries in Indiana, $623,825 to Owensboro Grain Co. in Kentucky and $486,725 to Ag Processing Inc. in Nebraska, all for biodiesel production, according to a USDA list. The Advanced Biofuel Payment Program, created in 2008, assists in use of feedstocks such as crop residue, food and yard waste, vegetable oil, and animal fat, said USDA.