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Latest US proposal for ethanol could have political fallout

Published:Monday | June 1, 2015 | 6:00 AM

WASHINGTON (AP):

The Obama administration's latest plan on ethanol, the corn-based renewable fuel, probably will not have a major effect on pump prices, but could have political reverberations in Iowa and other farm states in the 2016 presidential campaign.

Under the proposed rule announced Friday, the amount of ethanol in the gasolene supply would increase in coming years, just not as much as set out under federal law. That approach drew criticism from ethanol and farm groups that have pushed to keep high volumes of ethanol in gasolene.

Democratic presidential candidate Hillary Rodham Clinton has called for a robust renewable fuels standard while campaigning in Iowa, host of the leadoff presidential caucuses next year.

 

POLITICAL ISSUE

 

Iowa produces more ethanol than any other state, and the renewable fuel has long been a powerful economic and political issue.

The 2007 renewable fuels law tried to address global warming, reduce dependence on foreign oil and bolster the rural economy by requiring a steady increase in the overall amount of renewable fuels such as ethanol-blended into gasolene over time.

The new proposal would reduce the amount required in the law by more than four billion gallons in 2015 and by more than three billion gallons next year.

The EPA said the standards set by the law cannot be achieved, due partly to limitations on the amount of renewable fuels other than ethanol that can be produced.

Next-generation biofuels, made from agricultural waste such as wood chips and corncobs, have not taken off as quickly as Congress required and the administration expected. Also, there has been less gasolene use than predicted, the EPA said.