The U.S. government on Wednesday proposed to
reduce the volume of biofuel required to be used
in gasoline and diesel fuel next year as it
signaled the first step toward a potential
broader overhaul of its biofuels program.
The U.S. Environmental Protection Agency's
proposed total volume marked a slight decline
from current levels and was more than 20 percent
below targets laid out in a 2007 law. The U.S.
Renewable Fuel Standard, or RFS, requires
increased volumes of renewable fuels each year,
but the proposal would keep targets for use of
conventional biofuels at current levels.
The agency has begun preparations to reset
future biofuel targets, said EPA Administrator
Scott Pruitt. His proposal was met with praise
and calls for broader reform from the petroleum
industry and mixed response from biofuels
producers.
Environmentalists, who have been critical of
ethanol, called for Congress to reform the
program.
The RFS has become a battlefield between corn
and oil interests. The law has been a boon to
agriculture, supporting economies across the
Midwest's Corn Belt.
The EPA's proposed cuts to advanced and
cellulosic biofuels "will have a chilling effect
on the push toward next generation biofuels,"
said Iowa Senator Chuck Grassley.
Petroleum companies say the biofuel targets
are impossible to meet and add billions of
dollars in costs. The plan would require
companies to blend a total of 19.24 billion
gallons of renewable fuels in the country's fuel
supply next year.
The proposal is "consistent with market
realities focused on actual production and
consumer demand while being cognizant of the
challenges that exist in bringing advanced
biofuels into the marketplace," Pruitt said in a
statement.
The agency would keep the 2018 target for
conventional ethanol at 15 billion gallons,
unchanged from 2017, and set the requirement for
advanced biofuels, including cellulosic ethanol,
at 4.24 billion gallons.
These latest volumes confirmed an earlier
Reuters report for volumes well below the 26
billion gallons of renewable fuels outlined by
Congress in 2007. The law was aimed at cutting
U.S. oil imports and boosting the use of
renewable fuels.
The EPA also requested comments related to
concerns that the biofuels requirements
increasingly are being met by supplies from
Brazil, Argentina and Indonesia.
The agency proposed setting the requirements
for cellulosic below the current year's levels
at 238 million gallons and kept biomass-based
diesel requirements at 2.1 billion gallons for
2019, unchanged from the levels set for 2018
under former President Barack Obama.
Development of cellulosic biofuels has been
slower than expected by lawmakers when they set
up the program, stymied by regulatory delays and
the economic downturn.
The American Petroleum Institute, which
represents oil companies, including BP America
and Chevron Corp (CVX.N),
praised the move to lower the overall
requirements but said the proposal did not go
far enough.
Ethanol groups praised the agency for
maintaining the target for conventional ethanol,
which is mostly produced from corn in the United
States, but were critical of the move to lower
the advanced targets.
"We are concerned that by reducing the
cellulosic (requirement), this proposal may
weaken the signal to the marketplace," said Bob
Dinneen, head of the Renewable Fuels
Association.
“Today’s proposal underscores the need for
the U.S. Congress to take the bull by the horns
and reform the Renewable Fuel Standard to
protect our clean water, our public health, and
our wildlife," said National Wildlife Federation
President and CEO Collin O’Mara.
Prices of U.S. renewable fuel credits rose 4
cents to trade at 75 cents apiece. Biodiesel
credits were up 3 cents at $1.145 each, traders
said.
(Reporting by Chris Prentice, Jarrett
Renshaw, David Shepardson; Additional reporting
by Valerie Volcovici in Washington; Editing by
Andrew Hay and Dan Grebler)
© Thomson Reuters 2017 All rights reserved
http://www.reuters.com/article/us-usa-biofuels-idUSKBN19Q27M