The US continues its hesitant dance with ethanol. After firmly grabbing the corn-based biofuel for a spin around the dance floor during the Bush Administration, the Federal Government and some consumers have grown less fond of ethanol. Today, the Obama administration proposed a reduction in the overall amount of ethanol blended in the nation's gasoline in coming years, a blow to renewable-fuel companies that have pushed to keep high volumes of their product flowing into drivers' gas tanks.

This proposal for changes to the Renewable Fuel Standard (RFS) program is late, but falls within a new deadline the Environmental Protection Agency (EPA) set for itself in April. The Obama administration did set higher biofuel totals for the future. The US Department of Agriculture also announced today it would spend 100 million on a Biofuels Infrastructure Partnership that will be used for matching grants to bring higher blends of renewable fuel, things like E15 and E85, to market. One way this will happen is more blender pumps.

The new RFS level is unlikely to mean much for consumers or prices at the pump, but the ethanol policy has been popular in farm states that have profited over the years from higher corn prices linked to the use of corn-based ethanol. Campaigning in Iowa, Democratic presidential candidate Hillary Clinton has called for a robust renewable fuels standard.

The 2007 renewable fuels law tried to address global warming, reduce dependence on foreign oil and bolster the rural economy. It required a steady increase in the amount of renewable fuels like corn-based ethanol blended into gasoline over time. The new proposal would reduce the amount required by more than 4 billion gallons in 2015 and by more than 3 billion gallons the following year.

The agency said the standards set by the law cannot be achieved, partly due to limitations on the amount of non-ethanol renewable fuels that can be produced. Next-generation biofuels, made from agricultural waste such as wood chips and corncobs, have not taken off as quickly as Congress required and the administration expected. There has also been less gasoline use than predicted, the EPA said.

Still, the targets would represent an overall increase in the use of renewable fuels over time. EPA officials said the new requirements would drive growth at an "ambitious but responsible" rate.

"We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels," said EPA's Janet McCabe.

The lower targets are better news for the oil industry, which has fought the existing policy. Oil companies say they would prefer that the market determine how much ethanol is blended into their gas.

Tom Buis of the ethanol industry group Growth Energy accused the EPA of siding with the oil companies.

"It is unfortunate that EPA chose to side with the obligated parties who have deliberately refused to live up to their obligation to provide consumers with a choice of fossil fuels or lower cost, higher performing, homegrown renewable energy at the pump," Buis said.

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EPA Proposes Increases in Renewable Fuel Levels

Washington — Today the EPA announced proposed volume requirements under the Renewable Fuel Standard (RFS) program for the years 2014, 2015 and 2016, and also proposed volume requirements for biomass-based diesel for 2017. The proposal would boost renewable fuel production and provide for ambitious yet responsible growth over multiple years, supporting future expansion of the biofuels industry.

"This proposal marks an important step forward in making sure the Renewable Fuel Standard program delivers on the Congressional intent to increase biofuel use, lower greenhouse gas emissions and improve energy security," said Janet McCabe, the acting assistant administrator for EPA's Office of Air. "We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels."

After extensive outreach and dialogue with the agricultural community, biofuel producers and the oil and gas industry, EPA is proposing to establish 2014 standards at levels that reflect the actual amount of domestic biofuel use in that year, and standards for 2015 and 2016 (and 2017 for biodiesel) that increase steadily over time.

Proposed Renewable Fuels Volumes

2014

2015

2016

2017

Cellulosic biofuel

33 mill gal

106 mill gal

206 mill gal

n/a

Biomass-based diesel

1.63 bill gal

1.70 bill gal

1.80 bill gal

1.90 bill gal

Advanced biofuel

2.68 bill gal

2.90 bill gal

3.40 bill gal

n/a

Total renewable fuel

15.93 bill gal

16.30 bill gal

17.40 bill gal

n/a


Note: Units for all volumes are ethanol-equivalent, except for biomass-based diesel volumes which are expressed as physical gallons.

The proposed volumes represent substantial growth over historic levels. For example:

The proposed 2016 standard for cellulosic biofuel – those fuels with the lowest GHG emissions profile – is more than 170 million gallons higher than the actual 2014 volumes. That's six times higher than actual 2014 volumes.

The proposed 2016 standard for total renewable fuel is nearly 1.5 billion gallons more, or about 9 percent higher, than the actual 2014 volumes.

The proposed 2016 standard for advanced biofuel is more than 700 million gallons – 27 percent – higher than the actual 2014 volumes.

Biodiesel standards grow steadily over the next several years, increasing every year to reach 1.9 billion gallons by 2017. That's 17 percent higher than the actual 2014 volumes.

EPA is proposing to use the tools provided by Congress to adjust the standards below the statutory targets, but the steadily increasing volumes in the proposal indicate that biofuels remain an important part of the nation's overall strategy to enhance energy security and address climate change.

The Clean Air Act requires EPA to set annual RFS volume requirements for four categories of biofuels. By displacing fossil fuels, biofuels help reduce greenhouse gas emissions and help strengthen energy security.

EPA will hold a public hearing on this proposal on June 25, 2015, in Kansas City, Kansas. The period for public input and comment will be open until July 27. EPA will finalize the volume standards in this rule by Nov. 30.

For more information on today's announcement, go to www.epa.gov/otaq/fuels/renewablefuels/regulations.htm

USDA to Invest Up to $100 Million to Boost Infrastructure for Renewable Fuel Use, Seeking to Double Number of Higher Blend Renewable Fuel Pumps

WASHINGTON, May 29, 2015 - Agriculture Secretary Tom Vilsack today announced that the U.S. Department of Agriculture (USDA) will invest up to $100 million in a Biofuels Infrastructure Partnership to support the infrastructure needed to make more renewable fuel options available to American consumers. Specifically, USDA will administer competitive grants to match funding for state-led efforts to test and evaluate innovative and comprehensive approaches to market higher blends of renewable fuel, such as E15 and E85. States that are able to provide greater than a one-to-one ratio in funding will receive higher consideration.

"American-made, clean energy sources support the environment, reduce our dependence on foreign oil, create jobs and sustain the economy in rural communities across the country. We are fortunate that our farmers are producing record amounts of feedstock for these fuels," Vilsack said. "However, a combination of factors, including lower commodity prices and reduced demand for feed as the poultry industry recovers from highly pathogenic avian influenza, are creating uncertainty for America's corn and soybean producers. With this partnership, USDA is helping to ensure the infrastructure is in place for consumers to access more renewable fuels, expand marketing opportunities for farmers, and grow America's rural economies."

Higher blends of renewable fuel offer significant potential for increasing the use of renewable fuels in the U.S. gasoline pool, but currently, the typical gas pump can deliver fuel containing a maximum of 10 percent ethanol, limiting the amount of renewable energy consumers can use to fuel their cars. This new USDA partnership will help support the installation of fuel pumps capable of supplying higher blends of renewable fuel by partnering with states to fund innovative, public-private partnerships to test more comprehensive approaches to marketing such blends. This new investment seeks to double the number of fuel pumps capable of supplying higher blends of renewable fuel to consumers, such as E15 and E85.

The United States exported more than $2 billion dollars of ethanol last year, making the United States the world's largest exporter of ethanol. Additionally, the United States has become a market leader in the export of high-quality distiller's dried grains (DDG), a byproduct of ethanol production used as a high-protein feed for livestock and poultry. Other countries are investing in clean energy technologies because they realize the tremendous economic potential of these energy sources, and the United States must do the same to remain competitive. The projects funded by these competitive grants will expand markets for farmers and help them diversify their rural energy portfolios, support rural economic growth and the jobs that come with it, and ultimately give consumers more affordable options at the pump.

Today's announcement marks USDA's latest effort to increase renewable fuel use in the United States. To formally launch this infrastructure partnership, USDA will post a Notice of Solicitation of Applications in June.

Secretary Vilsack has recognized the biobased economy as one of the four pillars of rural economic growth, in addition to production agriculture, local and regional food systems, and conservation and natural resources. Biofuels lower greenhouse gas emissions, reduce dependence on foreign oil, give businesses and consumers more energy options and create well-paying American jobs.

USDA has also helped jumpstart efforts to provide a reliable supply of advanced plant materials for biofuels. Through its Biomass Crop Assistance Program (BCAP), for example, USDA is incentivizing more than 850 growers and landowners farming nearly 48,000 acres to establish and produce dedicated, non-food energy crops for delivery to energy conversion facilities.

To ensure those feedstocks are put to use, USDA has invested in the work needed to create advanced biofuels refineries. USDA has supported efforts to build six new biorefineries to produce advanced biofuels in Louisiana, Georgia, Oregon, Nevada, North Carolina, and Iowa, in addition to two existing facilities in New Mexico and Florida previously supported by the program.

USDA has also worked with agencies to strengthen markets for biobased products. Approximately 2,000 products now carry USDA's BioPreferred label, and approximately 150 applications for the BioPreferred label are in process. Companies in over 40 countries on six continents are now participating in USDA's BioPreferred program.

USDA has partnered with the U.S. Navy and Department of Energy to accelerate the development of domestic, competitively-priced "drop-in" diesel and jet fuel substitutes. Awards under the Defense Production Act were announced in 2014 for three companies (Fulcrum Sierra Biofuels, LLC; Emerald Biofuels, LLC; and Red Rock Biofuels, LLC) to scale up production capacity to supply the U.S. Navy with over 100 million gallons per year of advanced drop-in biofuel beginning in 2016 and 2017 at a price competitive with their petroleum counterparts.

USDA has invested $332 million over the past six years to accelerate research on renewable energy ranging from genomic research on bioenergy feedstock crops, to development of biofuel conversion processes and costs/benefit estimates of renewable energy production.

President Obama's plan for rural America has brought about historic investment and resulted in stronger rural communities. Under the President's leadership, investments in housing, community facilities, businesses, infrastructure and renewable energy have empowered rural America to continue leading the way—strengthening America's economy, small towns and rural communities. To create jobs in rural communities, drive economic growth, and help reduce our dependence on foreign oil, USDA will continue to aggressively pursue investments in renewable energy.

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USDA is an equal opportunity provider and employer. To file a complaint of discrimination, write: USDA, Office of the Assistant Secretary for Civil Rights, Office of Adjudication, 1400 Independence Ave., SW, Washington, DC 20250-9410 or call (866) 632-9992 (Toll-free Customer Service), (800) 877-8339 (Local or Federal relay), (866) 377-8642 (Relay voice users).


The AP contributed to this report.


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