US Ethanol and biodiesel policies are set to collide this year – with each other and with reality – Bloomberg New Energy Finance finds in new "What to Watch for" biofuels white paper

New York, 25 February 2013 – Policies that govern the use of US corn-based ethanol – one which calls for a minimum amount of consumption, and another which limits how much can go into automobile tanks – are set to collide in 2013, market research firm Bloomberg New Energy Finance finds in a new report. Another policy, which stipulated a minimum amount of ‘cellulosic’, biofuel production, has already had to be relaxed this year, as policymakers recognized that the original targets are simply unrealistic.

Sponsors

Sponsors

Sponsors

The US biofuels industry could provide up to 13.4bn gallons of corn-based ethanol this year. This would be practically equal to the minimum amount of corn ethanol required under a mandate known as the US Renewable Fuel Standard. It is also equal to the maximum amount of ethanol that may be legally and practically blended with gasoline, a limit known in the industry as the ‘blend wall.’

The clashing of these conflicting policies, and the challenge of meeting the original target for cellulosic biofuels, is one of eight US biofuels stories to follow in 2013, which are described in a white paper published by the research firm Bloomberg New Energy Finance, entitled “The US Biofuels 2013: The Stories to Watch”.

The relaxation of the cellulosic biofuels target was only the first of several critical choices that policymakers and industry players are facing this year. Blenders may choose to comply with a biofuels mandate by making use of ‘credits’ in lieu of actual physical corn ethanol; farmers have to choose whether to plant corn or soybeans; and policymakers may choose to renegotiate the Renewable Fuels Standard, currently the most important policy for the industry.

The main story of 2012 was the worst US drought in 50 years, which lifted corn prices and put pressure on food and biofuels producers alike. This year, explains the Bloomberg New Energy Finance white paper, the US biofuels market will be defined by eight stories, touching on subjects ranging from US weather conditions to export flows of Brazilian ethanol, from US politics to the planting choices facing US farmers. The stories are explained in detail in the white paper, which can be downloaded here.

“From Iowa, to Brazil, to Washington, the biofuels sector faces difficult choices”, said Alejandro Zamorano Cadavid, US analyst for biofuels at Bloomberg New Energy Finance. “Corn ethanol use has expanded rapidly in the US as an oxygenate in gasoline. But this year biofuels must – by law – play a significantly bigger role in the US transport sector and that is raising significant challenges.”

ABOUT BLOOMBERG NEW ENERGY FINANCE

Bloomberg New Energy Finance (BNEF) is the definitive source of insight, data and news on the transformation of the energy sector. BNEF has staff of more than 200, based in London, New York, Beijing, Cape Town, Hong Kong, Munich, New Delhi, San Francisco, São Paulo, Singapore, Sydney, Tokyo, Washington D.C., and Zurich.

BNEF Insight Services provide economic analysis in the following industries and markets: wind, solar, bioenergy, geothermal, hydro & marine, gas, nuclear, carbon capture and storage, energy efficiency, digital energy, energy storage, advanced transportation, carbon markets, REC markets, power markets and water. BNEF’s Industry Intelligence Service provides access to the world’s most comprehensive database of assets, investments, companies and equipment in the same sectors. The BNEF News Service is the leading global news service focusing on finance, policy and economics for the same sectors. The group also undertakes custom research on behalf of clients and runs senior-level networking events, including the annual BNEF Summit, the premier event on the future of the energy industry.

New Energy Finance Limited was acquired by Bloomberg L.P. in December 2009, and its services and products are now owned and distributed by Bloomberg Finance L.P., except that Bloomberg L.P. and its subsidiaries (BLP) distribute these products in Argentina, Bermuda, China, India, Japan, and Korea. For more information on Bloomberg New Energy Finance: http://about.bnef.com.

ABOUT BLOOMBERG

Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength—delivering data, news and analytics through innovative technology, quickly and accurately—is at the core of the Bloomberg Professional service, which provides real time financial information to more than 300,000 subscribers globally. Bloomberg’s enterprise solutions build on the company’s core strength, leveraging technology to allow customers to access, integrate, distribute and manage data and information across organizations more efficiently and effectively. Through Bloomberg Law, Bloomberg Government and Bloomberg New Energy Finance, the company provides data, news and analytics to decision makers in industries beyond finance. And Bloomberg News, delivered through the Bloomberg Professional service, television, radio, mobile, the Internet and two magazines, Bloomberg Businessweek and Bloomberg Markets, covers the world with more than 2,300 news and multimedia professionals at 146 bureaus in 72 countries. Headquartered in New York, Bloomberg employs more than 13,000 people in 185 locations around the world.