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US ethanol market unfazed by Mexican court ruling

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US ethanol market unfazed by Mexican court ruling

  • Author
  • Wesley Swift
  • Editor
  • Aastha Agnihotri
  • Commodity
  • Agriculture

The US ethanol market shrugged off the Mexican Supreme Court's rejection of the government's rule that would allow gasoline with up to 10 percent ethanol to be sold in some areas.

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"We aren't doing enough to Mexico to matter in the grand scheme of things," the source said. "Production being 1,070 million b/d is a bigger issue than the Mexico headline."

The court gave producers, who produce or sell 10% ethanol blends, 180 days to sell their products before the ruling comes into effect.

US ethanol producers saw Mexico as a potential new market for their products.

After the ruling, a trio of ethanol trade groups said they will continue to work with their Mexican counterparts to make the ethanol regulation pass court muster.

"The NOM was struck down not because of the merits of ethanol, but because of arguments against the process to modify the fuel specification," a statement from the US Grains Council, Growth Energy and the Renewable Fuels Association read. "If there is a silver lining to this decision it would be that the Supreme Court of Justice will allow for the 180-day grace period during which the NOM will remain in place. That still allows the CRE time to rework the specification and permits stakeholders to have a say in the process for enabling 10 percent blends."

The Mexican Supreme Court Wednesday said Mexico's energy agency didn't have the authority to unilaterally change the law. The court also said the agency must take into account more scientific information as possible before making such a regulatory change.


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"The purely economic benefits that, where appropriate, can generate the increase in the percentage of ethanol in gasoline, ... must be weighted and confronted against the potential rise that this could bear to the environment and state obligations to reduce the so-called 'greenhouse gas' emissions and therefore combat the phenomenon of climate change," the court said in a statement.

In 2016, the Mexican Energy Regulatory Commission, or CRE, said it would allow ethanol blending to increase to 5.8% from zero, as part of NOM-016, a broader measure to update its gasoline specifications. Then, in June of 2017, the CRE announced it would be allowed at 10%.

But environmentalists sued the agency, arguing that increasing the amount of ethanol in gasoline would harm air quality. A federal judge then granted an injunction against the regulation, which would allow blending to increase in all areas except Mexico City, Guadalajara and Monterrey.