Washington (Platts)--13Jul2009

A Senate leader on energy policy said Monday that the US Environmental
Protection Agency's proposed rule for an expanded renewable fuel standard
demonstrated the need for "fine-tuning," either through enactment of further
legislation or through regulation.

New Mexico Senator Jeff Bingaman, who heads the Senate Energy and Natural
Resources committee, published an opinion piece in Politico Monday voicing
concerns about three aspects of the proposed rule for renewable fuel standard
offered by EPA in May -- the definition of biomass which excludes wood from
federal lands; consideration of the mandate's effects on land-use decisions in
foreign countries and carbon emissions associated with converting land to
agriculture; and the sub-mandates the rule would establish, which Bingaman has
long argued are too prescriptive.

Bingaman acknowledged that in drafting the proposed rule, the EPA tried
to adhere to the 2007 standard, signed into law by the then-president, George
Bush.

"I believe that EPA is doing an admirable job of sorting through a
complicated piece of legislation, and it is making every effort to both follow
the law as enacted and to design a program that will actually work," said
Bingaman. "Having said that, the proposed rule does suggest some areas where
there is room for improvement -- either on the legislative side or in the
interpretation of the legislation."

As part of the Energy Independence and Security Act of 2007, Congress
produced and signed into law a standard that required the use of 36 billion
gallons of renewable fuel by 2022, including 21 billion gal of advanced
biofuels comprising 16 billion gal of cellulosic biofuel, 4 billion gal of
other advanced biofuels and a minimum of 1 billion gal of biomass-based
diesel.

Bingaman's committee had proposed a similar standard, but one which did
not require the sub-mandates for cellulosic, advanced biofuels and biodiesel.

"I believe that Congress generally creates problems for the industry it
aims to support -- not to mention for itself -- when it picks winners,"
Bingaman said, noting that promising technologies including algae-based fuels
were not included in 2007.

The definition of biomass and the use of indirect land-use change data
in determining edibility under the renewable fuel standard were both addressed
during negotiations over a major climate change bill passed in the House of
Representatives last month. Before supporting the bill, Democrats from
agricultural states eased restrictions on biomass from public lands and
required the EPA to study the effects of indirect changes in land use for five
years before determining their CO2 implications.

Senators from agricultural states are likely to lobby for similar
concessions before a climate bill passes the Senate.

"While I do not expect the Senate to take up the House language verbatim,
I think something like the approach that has been taken in the House makes
good sense," Bingaman said.

David Marks, a Bingaman spokesman, said that the chairman had not yet
made a final decision on whether to introduce legislation that would adjust
the standard.

"This is the first move to say 'this is something he's interested in
doing'," Marks said.

--Jean Chemnick, jean_chemnick@platts.com