US Restaurants Join Anti-Ethanol Mandate Rally

The ethanol industry, already reeling from a draft plan for cuts in the ethanol mandate for this year, will now face more pressure as everyone from conservatives and environmental activists to restaurant chains pool their resources to lobby for more cuts.

In November, the Environmental Protection Agency (EPA) issued a proposal to reduce the ethanol and biofuels mandate for 2014 and now a new coalition of the unlikely, which includes industry groups, the Clean Air Task Force and even the National Council of Chain Restaurants (NCCR) are pushing lawmakers to ensure more cuts.

For restaurant chains such as Pizza Hut and KFC, the ethanol mandate has led to higher food prices due to the artificial demand for corn, which hinders the performance of other food commodities such as wheat and potatoes.

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Earlier this week, over 30 advocacy groups and industry interests penned a letter to lawmakers in Washington calls on the government to take more drastic action to restrict the "unworkable" ethanol mandate.

The letter, sent to the House Energy and Commerce Committee's bipartisan leadership, notes that "the proposed reduction is small in percentage terms and would do little to decrease pressure on corn demand or lower ethanol's share of U.S. annual corn production."

"If the EPA promulgates a final rule in line with what was proposed, some 13.01 billion gallons of corn ethanol will still be required, which is less than a 6% reduction from this year's 13.8 billion gallon mandate. At these volumes corn ethanol will continue to provide perverse incentives to overplant corn, distort commodity and energy markets and wreak economic and environmental havoc," the letter reads.

According NCCR Executive Director Rob Green, 'In recent years, food commodity costs for chain restaurants and their small business franchises have increased dramatically. This increase has happened to coincide with the enactment and implementation of the RFS [renewable fuel standard].'

The ethanol industry and its supporters are likewise lobbying to reverse the EPA's proposed mandate reductions. In a 22 January letter, they argue that "the proposed waiver places at risk both the environmental benefits from ongoing development of advanced biofuels and rural America's economic future."

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They hold that if the proposal is adopted, it will "replace domestic biofuels production with fossil fuels, contributing to a greater dependence on foreign sources of oil and reduce our energy security," among other consequences.

The US ushered in legislation in 2007 mandating that increasing amounts of renewable biofuels be mixed with gasoline. This figure was 9 billion gallons in 2008 with a target of 36 billion gallons by 2022. In 2013, the EPA demanded fuel companies mix in 14 billion gallons of corn-based ethanol and 2.75 billion gallons of advanced biofuels.

By. Joao Peixe of Oilprice.com