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The US is the world’s largest producer of ethanol at 25 million cbms (cubic meters) in 2007, followed by Brazil with 20 million cbms. About 80 percent of the US production and imports is used as a fuel additive.
The move toward increasing the use of ethanol was mooted during the Bush administration. President Bush signed an agreement with Brazil to step up imports, consequent on which that country has increased its production capacity.
In May 2009, President Obama has also signed a Presidential Directive toward advancing biofuels research, and improvement in its commercial utilization. A working group comprising the EPA and Departments of Agriculture and Energy has been formed. The group is mandated to shape a plan toward promoting the use of flexible fuel vehicles and in improvement of retail marketing efforts. The group will evolve policy ideas to increase investment in next-generation fuels that includes corn-based ethanol.
Ethanol is produced by fermenting and distilling grains such as corn, barley and wheat. Another form of ethanol, called bioethanol, can be made from many types of trees and grasses, although the process is more difficult. The best quality ethanol in the US is produced from corn. However, using corn for ethanol production has resulted in rising corn prices as a foodstuff, despite the government subsidy being given to corn farmers.
The working group formed by the President will look into alternative sources of raw material. Sugar beet is one such possibility. On the face of it sugar beet can be produced at a lesser cost and yet not have an implication on rising food prices.
One of the means of reducing the price of imported ethanol, as suggested by the Brazilian Sugarcane Industry Association, is for Congress to reduce the tariff on imported ethanol. They believe this is the element that increases the cost of gasoline to American drivers. The tariff imposed in 1980, was intended to be protectionist, to encourage and protect home production.
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