Impact Analysis of Electric Vehicle Bill on Biofuels And Agriculture Market
Posted On November 04, 2020
A new study report released by the Agricultural Retailers Association (ARA), who is known to be a member of the prestigious Transportation Fairness Alliance, analyzes the effects of risen electric vehicle invasion on the U.S. economy, agriculture, and biofuels. The economic models for this research study are based on the proposals to put a ban on internal combustion engine vehicles by the year 2035 and 2050, along with a base case offered by the U.S. Energy Information Administration’s Annual Energy Outlook.
The study revealed that U.S. freight and light-duty vehicle consumption of biodiesel and ethanol could reduce up to 61 percent to 0.8 billion gallons and up to 90 percent to 1.1 billion gallons, respectively. Corn and soybean consumption could reduce by up to 2.0 billion bushels and up to 470 million bushels, respectively. Soybean prices are estimated to fall up by 44 percent to $4.92 per bushel, while corn prices are estimated to fall up to 50 percent to $1.74 per bushel. Overall, the proposed ban is likely to decrease the U.S. net farm income by up to $27 billion.
The agriculture community could be devastated due to the ban on internal combustion engine vehicles. Proposals intending to rush this prohibition to 2035 carry the most drastic impacts. The ban would result in a massive decrease in biodiesel, soybean, ethanol, corn prices, and demand for agricultural products such as fertilizer. These burdens are carried disproportionately by the whole agriculture industry.
The study revealed a significant impact on fertilizer, with an estimated acreage cut of 5 to 7 million acres of corn. In addition to that, the effect on nitrogen demand is approx 800,000 to 1 million tons of UAN and urea, each with the direct application of the volume of ammonia assumed to remain constant. This represents almost 7 percent of the UAN market and 15 percent of the urea market in the U.S., which in turn, will have a drastic impact on the prices of fertilizer.