Catchlight Energy is theorizing that there is no way to hit the advanced biofuels standard set by the Congress in the next few years and that instead of paying the “tax penalty” for not hitting the goal, oil companies will simply buy ethanol from Brazil because it is cheaper than paying the tax. Brazilian ethanol qualifies as an advanced biofuel.
Brazilian producers register with EPA as advanced biofuels producers
We note that, from Brazil, Cargill, Della Coletta Bioenergia, Asucar Guarani, LDC Bioenergia and four mills that are part of the Copersucar association registered in the past week with the EPA as advanced renewable fuel producers. Ethanol from Brazil is still subject to a tariff, but the tariff was devised originally as an offset to the ethanol tax credit – thereby ensuring that US taxpayer dollars were not subsidizing Brazilian ethanol production. With the ethanol tax credit in danger of a substantial cut – and we have heard figures as low as thirty cents per gallon – there may be pressure to lower the Brazilian ethanol tariff. That may clear the way for the entry of low-cost Brazilian ethanol to supply the growing volumes of advanced biofuel under the Renewable Fuel Standard.
