by Katie Micik, DTN Markets Editor
OMAHA (DTN) — EPA expects to send its final Renewable Fuel Standard targets for 2014 to the Office of Management and Budget next week, possibly as early as Tuesday, in a step toward finalization, an EPA official said.
“The agency is continuing to prepare the final standard for interagency review and is expected to send the RFS package to OMB on Tuesday. The OMB website will note when that process has begun,” EPA spokesperson Carissa Cyran told DTN in an email. “The agency still expects the rule to be released in June.”
Last fall, EPA released its proposal to cut roughly 3 billion gallons from the 2014 RFS, including more than 1 billion gallons of corn-based ethanol. EPA said lagging production of advanced biofuels and lack of infrastructure supporting higher blends of corn-based ethanol influenced the decision.
The industry pushed back, arguing the cut would damage corn demand, injure rural economies and delay or destroy the development of second generation biofuels, like cellulosic ethanol made from corn stover.
More than 343,000 comments were filed for and against the proposed rule when the comment period ended in January. Officials from Iowa, South Dakota and Minnesota held a hearing on the RFS in the Midwest after EPA and USDA officials declined to do it. NASCAR team owner Richard Childress defended higher ethanol blends at an April hearing. Ad campaigns took to the airwaves.
EPA Administrator Gina McCarthy told ag reporters at a meeting in April she understands concerns about the RFS.
She said the “overarching goal” of EPA's rule is to “put the RFS on a manageable path forward,” and ensure “realistic growth in renewable fuels,” adding the final RFS rule will reflect updated gasoline consumption figures.
DTN Senior Analyst Darin Newsom said the corn market's reaction to the news will depend on where the final RFS settles on the spectrum of possibilities.
“If EPA sticks with its plan from late 2013 and reduces the mandate, investors in the corn market could take this as a bearish sign and bail out of the corn market. Would it really have a fundamental impact? Probably not, but that isn't always important to investment traders,” he said.
“If EPA has really changed its mind and is now thinking of advancing an increase in the mandate, investment traders could be pulled back into the corn market and push prices higher. Again, will it change anything fundamentally? Probably not, given USDA continues to forecast relatively high demand for corn (5.05 bb) in both 2013-2014.
“The bottom line is what is in the secret envelope expected to be opened in June,” Newsom said.
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Posted with DTN Permission by Haylie Shipp