Purdue study questions impact of RFS2 waiver

We have an audio report from RFD Radio's Matt Kaye.

Martin Ross

Published: Aug 20, 2012

A new Purdue University report suggests a reduction in federal ethanol targets might not have as great an impact on corn supply and price as livestock interests have believed.

Purdue economists analyzed potential impacts of a current request to waive all or part of 2013 corn ethanol fuel use requirements under the federal Renewable Fuels Standard (RFS2). Currently, the RFS2 calls for 15.3 billion gallons of domestic ethanol use in 2013.

The study considered existing ethanol stocks, drought conditions, market reactions, and “unintended consequences” of an RFS2 waiver. It evaluated various corn and crude oil price and RFS2 scenarios that might affect ethanol demand in the year ahead.

Arkansas Gov. Mike Beebe and North Carolina Gov. Beverly Perdue have joined livestock interests in petitioning for an RFS2 adjustment by the U.S. Environmental Protection Agency (EPA). EPA must respond to a gubernatorial request within 90 days.

But in a Thursday webinar, Purdue study co-author Wally Tyner argued "the economic harm has been done by the drought.”

EPA’s decision will determine “who bears the costs of the drought,” the study concluded. Corn prices are substantially higher, and “EPA can't change that,” Tyner said. “(It) can only distribute that (the cost) among the affected parties,” the energy policy specialist said.

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