Prepare for a big move in biofuel plays, possibly today.  Reuters reported yesterday that the EPA could issue new rules (or RFS2 – renewable fuels standard) as soon as today on measuring emissions from biofuels according to an anonymous source.

A 2007 proposal would require ethanol to emit less greenhouse gas than gasoline over the life cycle of the fuel while cellulosic fuels would be required to be even cleaner.  Of course, the industry opposes the use of indirect emissions measurements such as calculating the cost of clearing forests (particularly overseas).  It’s just too difficult to quantify they argue.  I have long considered ethanol a joke.. an expensive joke that politicians back to win votes.  The ruling should be very interesting.  Will the EPA align with the industry or will they do the right thing and recognize that ethanol comes with a price.  A price we can’t afford.

See more on the RFS2 decision for biofuels here

Stocks that could move when the announcement is made: Pacific Ethanol (PEIX), Biofuel Energy (BIOF), Green Plains Renewable Energy (GPRE), Cosan (CZZ), Archer Daniels (ADM) and Verenium (VRNM)