April 27, 2011

US agency stands by biofuels mandate despite high corn prices

The US Environmental Protection Agency (EPA) does not plan to change its biofuel mandate despite corn prices that have risen to record levels, said Administrator Lisa Jackson, on Tuesday (Apr 26).

Earlier this year, the EPA approved allowing blends of up to 15% ethanol in gasoline for newer cars and trucks, an increase from the previous maximum blend of 10%.

About 40% of the US corn crop is used to make ethanol, and the biofuel is often targeted by critics who say fuel use is driving up food and livestock feed costs.

Corn futures at the CBOT have almost doubled from a year ago, and stockpiles of the grain are the tightest since the 1930s.

The EPA and USDA are monitoring corn prices, said Jackson, who recently toured ethanol plants in the US Midwest.

"Yes, corn prices are quite high, but everything we know and everything USDA knows, it does not lay a very large percentage of that – much less than 5% of any increase – on the back of some of the corn being used as feedstock for ethanol," she said.

The USDA has forecast a record five billion bushels of corn will be used to make ethanol in the year ending August 31. The government's biofuel mandate requires 12.5 billion gallons of ethanol to be produced this year, but that target is expected to be exceeded by about 10%.