ICE CEO questions U.S. ethanol import tax
NEW YORK (Reuters) - The United States may need to get more of its ethanol from Brazil in order to boost the country's energy security and cut pressure on food prices, the chief executive of energy and commodity exchange IntercontinentalExchange Inc (ICE.N) said on Wednesday.
"Right now (the U.S. has) a high tax on ethanol coming in from Brazil, which is hard to explain," CEO Jeffrey Sprecher told the Reuters Exchanges and Trading Summit in New York.
The United States places a 54-cents-per-gallon tariff on ethanol from Brazil to protect its farmers that make the alternative fuel mostly from corn. The tariff is set to expire at the end of the year, but could be renewed.
Sprecher said U.S. corn-based ethanol has helped produce a spike in corn prices to record levels, and the price pressure has also spread to other grain prices as farmers have tried to plant as much corn as they can.
"So it means you've got to grow it in land that maybe is not used right now for the food supply," said Sprecher. "That would also suggest to me that maybe it's not in the United States."
The United States and Brazil are the world's top two ethanol producers.
Last year the U.S. imported about 3 percent of its ethanol from Brazil, according to the Renewable Fuels Association, an industry group.
With sugar supplies glutted, prices for the sweetener are at historic lows, so Brazil's sugarcane-based ethanol has less of an impact on food prices. From field to tailpipe, it is also a more efficient fuel than corn-based ethanol and lower in greenhouse gas emissions.
Sprecher said greater reliance on Brazilian ethanol could help diversify the U.S. supply of the alternative fuel. U.S. corn farmers, for instance, are vulnerable to poor weather.
U.S. ethanol capacity has jumped about 50 percent over the last year amid government mandates and generous incentives. Late last year the country mandated a fivefold increase in biofuels like corn-based ethanol to be blended into gasoline by 2022.
Sprecher said unfortunate results from U.S. corn-based ethanol have been a result of a heavy government hand. "This is what happens unfortunately when government tries to fix markets,"
(For summit blog: summitnotebook.reuters.com/ )
(Reporting by Timothy Gardner, editing by Jeffrey Benkoe)
