A new study from Iowa State University says a compromise said to be on the table in biofuel conversations would lead to a dip in the price of corn and less use of conventional corn ethanol.
The study examined trading a cap on the price of Renewable Identification Numbers (RINs) for a regulatory fix that would allow for the sale of E15 year round. In its examination, three authors look at a RIN price cap between 10 and 20 cents per RIN and say such a cap would lead to reduced consumption of higher blends of ethanol. Unless ethanol exports were to increase, the authors surmise the proposal would lead to decreased corn prices.
“A lower effective corn ethanol mandate would decrease the demand for corn which would lower the price of corn,” the study reads. However, the authors note that lower domestic ethanol demand “would increase exports which would offset some part of the impacts.”