The Senate Committee on the Environmental and Public Works held a hearing that focused on the potential economic effects of increased ethanol production, the status of current renewable fuels programs in the Department of Energy and on the potential environmental benefits of renewable fuels.

In testimony, USDA chief economist Keith Collins told the committee that ethanol production is exceeding most analysts’ expectations, including USDA projections, and corn prices could set new record highs over the next five to six years. According to Collins, ethanol plants likely will continue to operate even if corn prices rise above past highs and will be able to bid corn away from a variety of other uses.

Collins explained that the United States will need substantial increases in corn acreage to prevent exports from declining and livestock profitability from falling. Gasoline and ethanol prices are likely to stay high over the next several years to maintain ethanol expansion, says Collins.

Alexander Karsner, DOE assistant secretary for Energy Efficiency and Renewable Energy, says that the DOE plans to fund two bio-refinery research centers. He also says that the agency is committed to the advancement of renewable energy and will continue to fund new programs that promote renewable fuels.

In a related matter, the Environmental Protection Agency released rules for implementing the federal renewable fuels standard in 2007, which calls for the U.S. to use 4.7 billion gallons of ethanol or other cleaner-burning biofuels. That number is up from the 2006 mandate of 4 billion gallons; the mandated production target rises to 7.5 billion gallons in 2012.

The National Pork Producers Council is concerned about an increase in feed costs for pork producers and a decrease in the availability of feed corn due to the expansion of ethanol production and use.

Source: NPPC Capitol Update