The U.S. Environmental Protection Agency (EPA) is proposing cutting the Renewable Fuel Standard (RFS) from a requirement for 2014 of 18.15 billion gallons to 15.21 billion gallons, and corn ethanol requirements from 14.4 billion gallons to just over 13 billion gallons – less than the required blending amount for 2013. These proposed changes are currently in a 60 day comment period scheduled to end on January 28th. The uncertainty and evidence of a lack of support for the RFS by the U.S. government has caused companies in the sector such as Abengoa Bioenergy which has invested $1 billion over the past ten years in the industry, and Iogen Corp. which is building its first commercial ethanol plant in Brazil, to hold off or redirect investments away from the U.S. Behind its proposal for changes to the RFS the EPA states that demand for gasoline in the U.S. has decreased to a point where there is not enough gasoline with which to blend to reach the current requirements. However, Bob Dineen, CEO of the Renewable Fuels Association (RFA) states that the U.S. government proposed the changes because of the belief that gasoline prices were being driven up by higher prices for Renewable Identification Numbers (RINs) which oil companies must buy as an alternative to blending ethanol.
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