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The Renewable Fuel Standard (RFS), which was recently amended to address numerous criticisms, is again under fire, this time for its potential effect on food prices. The RFS program requires an increasing volume of renewable fuel to be blended into transportation fuel each year and since its implementation in 2005, the US has become the world’s largest producer of ethanol fuel, a corn-based renewable fuel. Yet many RFS critics argue that the mandate is responsible for driving up food prices. The authors of this UC Davis study concluded that “Corn prices were about 30 percent greater between 2006 and 2011… [more]View Insight
The Energy Independence and Security Act of 2007 includes a renewable fuels standard requiring fuel refiners to blend an increasing amount of advanced biofuels into their gasoline and diesel fuel stocks. In 2011, the Act mandated the blending of 6.6 million gallons of cellulosic biofuels. However, sufficient cellulosic fuels were not available to refiners for purchase and use. Refiners are now being fined for failing to meet the quota. [New York Times] The Times characterized this situation as an example of “what happens when the federal government really, really wants something that technology is not ready to provide.” Through loan… [more]View Insight
On December 31, 2011 Congress allowed a decades-old corn ethanol subsidy to sunset. It also sunsetted an import tariff on foreign cellulosic ethanol. The dissolution of these policies has prompted some concern about impacts on gasoline prices and the future of the U.S. ethanol industry. Nearly all gasoline blended and sold in the U.S. contains at least 10% corn ethanol. USA Today is reporting that the end of the subsidy could raise gasoline prices by as much as $0.045/gallon as early as next week. In an interview on NPR, Bruce Babcock, a professor of energy economics at Iowa State University,… [more]View Insight