California rule could end ethanol's honeymoon

NEW YORK (Reuters) – California’s newly adopted low-carbon fuel standard may mark the beginning of the end of ethanol’s coveted status as the sole U.S. alternative motor fuel.

The U.S. state with the most cars late on Thursday approved the world’s first-ever regulations to slash emissions of planet-warming carbon dioxide from vehicle fuels.

The ruling, which will be subject to further studies, will not kill the ethanol industry. But it sets the bar higher for cleaner development of corn ethanol, which enjoyed an investment boost over the last few years thanks to generous federal incentives and mandates calling for increasing amounts of the fuel to be blended into gasoline.

The measure also sets the stage for emerging alternative fuels — such as cars that run on compressed natural gas and electric vehicles like plug-in hybrids that run on both gasoline and rechargeable batteries — to compete with second-generation ethanol.

That fuel, known as cellulosic ethanol, is expected to be made in commercial amounts from non-food feedstocks like switchgrass and fast-growing trees.

Reuters