Is There An "Oooops" In US Ethanol Policy?

CattleNetwork.com
03/24/2010 08:25AM Average rating:

Brazil will be one of the beneficiaries of the EPA finding that greenhouse gases will be reduced by ethanol, soy-diesel, and ethanol made from sugarcane. While the decision is good for US corn and soybean producers, questions are being raised why US biofuels want both a mandate for use as well as tax credits and import tariffs. US biofuels policy is being taken to the woodshed.

Corn will be supplying the first 15 billion gallons of ethanol per year through the year 2015, with little displacement by either cellulosic ethanol or ethanol from foreign sources. Beyond that level, ethanol from biomass and related sources is responsible for meeting federal mandates. If Brazilian sugarcane can supply some of the cellulosic ethanol now, Iowa State University economist Bruce Babcock suggests that would mean increased demand for biofuels and that would increase the demand for corn and soybeans. In a recent newsletter Babcock questions why the biofuels industry wants both the mandate to use ethanol, as well as a tax credit that lessens its cost and an import tariff on foreign sources of ethanol. Calling them “difficult to defend policies,” Babcock says the biofuels industry is spending political capital to maintain the policies.

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