NERA Economic Consulting, in a study commissioned by the oil industry, concluded that the ethanol mandate set by law is too large to be absorbed at current fuel usage by cars and light trucks. And NERA said potential sales of blends of ethanol higher than the traditional 10 percent are too small to relieve the situation. The trade group American Petroleum Institute, while calling for repeal of federal guarantees of a share of the fuel market for renewable fuels, said the government should relax the requirement to use corn-based ethanol and waive the requirement to use second-generation biofuels in 2014, 2015 and 2016.
The EPA is to announce by Nov. 30 the biofuels mandate for those three years. It has proposed targets that are lower than ones set by law but that still gradually increase biofuel consumption. The 2007 energy law calls for using 15 billion gallons of corn ethanol annually beginning in 2015. The agency proposed a target of 13.4 billion gallons this year and 14 billion gallons in 2016. An estimated 5.25 billion bushels of this year’s 13.7 billion-bushel corn crop are forecast to be used to make ethanol.
The ethanol trade group Renewable Fuels Association said the NERA study “has no basis in reality.” Growth Energy, a pro-ethanol group, said the oil industry was trying to protect its “stranglehold over 90 percent of our fuel market.”