The U.S. Environmental Protection Agency has established the nation’s first renewable fuels standard that creates a minimum percentage of gas sold that must be mixed with renewable fuels. The EPA minimum of four-point-two percent would total around four-point-seven-billion gallons nationwide. Iowa Renewable Fuels Association executive director Monte Shaw says there won’t be an immediate impact on the renewable fuels industry.
Shaw says the minimum will ramp up to seven-point-five billion gallons by 2012, which he says brings a sense of stability and confidence to the industry. But Shaw says renewable fuel use has already been above the floor set by the EPA. Shaw says the EPA minimum could help farmers with planting decisions and could encourage investors in renewable fuels.
Shaw says it gives a confidence that there’s at least going to be a minimum market for renewable fuels and people can plan investments, or farmers might make different planting decisions to switch to seed varieties that work better for renewable fuels. Shaw says the EPA number is a floor and the market usage could increase much faster.
Shaw says users beat that number last year, using over five billion gallons of renewable fuels, and Shaw says they always hoped the EPA number would be a floor for the worst case scenario, rather than something that would drive the sales forward. Shaw says Iowa has been a leader in producing renewable fuels, and the floor will likely create more competition.
Shaw says the ethanol will come from the places where it can be most economically produced, so he says Iowa should maintain its lead as long as the state continues providing incentives for the ethanol investments. Shaw says about half the gas purchased in Iowa is an ethanol blend.