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The challenges facing the U.S. ethanol industry have been presented in a new study from Informa Economics, "Renewable Ethanol: Navigating the Rapids, 2011-2015," which focuses on the 10% "blend wall" U.S. ethanol production is approaching, as well as other economic effects on ethanol's market.
According to the report, the adoption of higher E15 blends is likely to occur slowly. The main federal incentive for ethanol expires at the end of the year, along with the tariff on foreign ethanol, and extensions of both are likely to be at far lower rates than the government provided in the past. California has implemented a statewide Low Carbon Fuel Standard, which will be progressively harderfor U.S. corn-based ethanol to meet. Additionally, said the report, supplies of advanced biofuels are likely to remain constrained, calling into question whether this component of the U.S. Renewable Fuel Standard can be met. Added to these overarching issues is the fact that crude oil and agricultural feedstock prices remain high and are volatile.
Other findings of the study include:
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