Energy Independence and Security Act of 2007
Reproduced Work (Original Article by the USDA can be Viewed Here) The Energy Independence and Security Act of 2007 was enacted on December 19, 2007, after projections in this report were completed. Although the projections do not reflect the new energy act, major features of the legislation that relate to the Renewable Fuel Standard are illustrated in the following charts. Also, general qualitative effects are highlighted below.
The first chart shows the new Renewable Fuel Standard (RFS) from the 2007 Energy Act. The overall standard calls for total renewable fuel "sold or introduced into commerce in the United States" to reach 36 billion gallons by 2022. Within this standard, ethanol derived from corn starch is to reach 15 billion gallons. The remainder is to consist of "advanced biofuel" with specific volumes designated for cellulosic biofuel and biomass-based diesel.
The second and third charts compare the corn-based ethanol and biodiesel projections in this report with those designated in the RFS of the 2007 Energy Act. Ethanol derived from corn starch in the RFS reaches 15 billion gallons in 2015, about 2 billion gallons higher than projected for 2015 in this report. With the RFS for ethanol derived from corn starch holding at that level beyond 2015, the gap between it and the 2008 long-term projections narrows to about 1.5 billion gallons by 2018. The RFS for biomass-based diesel reaches 1 billion gallons in 2012 and "shall not be less than" that amount in later years. This compares with soybean-oil based biodiesel production of about 600 million gallons in the 2008 long-term projections.
Although a complete quantitative analysis of the effects of the 2007 Energy Act’s RFS for ethanol derived from corn starch and biomass-based diesel is not presented here, general qualitative effects would include:
- Increased demand for corn and soybean oil raises prices for those commodities. Soybean prices would be higher as well.
- Higher commodity prices raise overall acreage planted to crops, with a greater combined share of the total going to corn and soybeans. Acreage planted to competing crops, such as cotton and wheat, would be expected to be lower, raising their prices.
- With a greater share of output going to biofuels, higher crop prices would lower other uses of crops, including exports and domestic feed use of feed grains. In contrast, soybean meal would be more plentiful as increased soybean crush for biodiesel production would raise soybean meal production as well.
- Higher feed prices would lead to further adjustments in the livestock sector than those presented and discussed in the Livestock chapter.
