Understanding Government

Republican presidential candidate Tim Pawlenty raised some eyebrows earlier this week when he called for a possible end to U.S. Dept. of Agriculture ethanol subsidies. “You can’t do that!” pundits exclaimed. “You need to win the Iowa caucus, and everyone in Iowa loves ethanol!” But Jason Clayworth of the Des Moines Register points out that the politics of ethanol are changing. Industry trade groups have called for a subsidy phaseout and even Iowa U.S. Senator Charles Grassley wants to gradually reduce the federal money for ethanol.

An environmental legal battle is brewing, though environmentalists will find it hard to root for either side. Tom Schoenberg of Bloomberg News reports that three oil industry groups, including the National Petrochemical & Refiners Association, want a federal appeals court in Washington, D.C. to overturn an Environmental Protection Agency ruling that allowed the sale of gasoline containing up to 15 percent ethanol. The previous limit was 10 percent, but ethanol producers like Archer Daniels Midland of Decatur, Illinois successfully lobbied EPA for a higher concentration of the corn-based fuel.

Charles Drevna, the president of the petrochemical association, tells Bloomberg that the lawsuit is about consumer satisfaction and he may have a point. (more…)

Sometimes a federal agency decides that it can’t implement a law passed by Congress, but the case of cellulosic ethanol is extreme. In 2007, Congress passed, and George W. Bush signed, an energy law that said by 2011 the U.S. fuel supply would contain 250 million gallons of cellulosic ethanol, an advanced biofuel that is not made from food crops but instead comes from switch grass, corn cobs, and wood waste. Now, reports the Wall Street Journal’s Siobhan Hughes, the Environmental Protection Agency has decided that the 250-million-gallon target is unrealistic. Instead the goal is 6.6 million gallons, a 94 percent reduction. (more…)

EPA permitting a higher level of ethanol in car fuel may or may not be great for the world. But it’s fantastic news for Decatur, Illinois-based ag giant Archer Daniels Midland. Kim Chipman and Mario Parker of Bloomberg News report that EPA will announce today that the maximum allowable level of ethanol in car fuel will jump from 10 percent to 12-15 percent. This comes after a year of caution by EPA Administration Lisa Jackson — and strenuous lobbying from ADM, whose stock price has already jumped in wake of the decision.

Just because an EPA ruling helps a big ag company in Illinois (as well as other ethanol producers in Iowa and South Dakota) doesn’t mean that it’s terrible for the environment. (more…)

The Environmental Protection Agency will not take action until this fall on new regulations for the amount of ethanol allowed in motor fuel, report the AP’s Mary Clare Jalonick and Matthew Daly. The decision will impact Decatur, Illinois-based Archer Daniels Midland (ADM), which has lobbied EPA to temporarily increase ethanol levels in U.S. fuel blends. (more…)