Good News for Ethanol in OECD Report

Cindy Zimmerman

OECDThe Organization for Economic Cooperation and Development (OECD) report on biofuels policies out this week claims that that biofuel production “has a limited impact on reducing greenhouse gases and improving energy security, and has a significant impact on world crop prices.” However, an analysis of the findings indicates the opposite.

RFAAccording to a review of the report by the Renewable Fuels Association, the “OECD data does not support the conclusions of the report or a call by OECD officials for a moratorium on biofuels.”

For instance, OECD credits ethanol produced from corn starch with a 30% reduction in greenhouse gas
(GHG) emissions if using natural gas, and a 50% reduction in GHG if the facility is powered by biomass.
Based on this finding, a moratorium is not warranted.

In addition, the modeling included in the report suggests that a 28% drop in world oil prices would cause a 12% reduction in world coarse grain prices ($0.75 per bushel in the case of corn today), underscoring the fact that skyrocketing oil prices are the largest driver behind increasing grain prices. By contrast, removing biofuel mandates like the Renewable Fuels Standard (RFS) would reduce coarse grain prices by just 1% ($0.06 per bushel of corn). Even abandoning all biofuels policies would only yield an average coarse grain price reduction of 7% ($0.45 per bushel).

Read the RFA review here.

corn, Ethanol, Food prices, News, RFA