EPA’s new biofuel quotas not enough, ag industry says

The U.S. Environmental Protection Agency proposed Friday cutting quotas for using renewable fuels in gasoline, lowering the mandate for corn ethanol this year and next from the 15 billion gallons required by law.

The proposal brought quick condemnation from agriculture interests, biofuel producers and Midwestern politicians.

'It's Christmas in May for Big Oil,” said a statement from Republican U.S. Sen. Chuck Grassley of Iowa. 'President (Barack) Obama's EPA continues to buy into Big Oil's argument that the infrastructure isn't in place to handle the fuel volumes required by law. ... What happened to the President who claimed to support biofuels? He seems to have disappeared, to the detriment of consumers and our country's fuel needs.”

After delaying for more than a year the rules for using ethanol, biodiesel and cellulosic fuels, the EPA said Friday that corn ethanol levels should be set at 13.4 billion gallons this year and 14 billion gallons for 2016. The biodiesel quota would increase to 1.7 billion gallons this year and 1.8 billion gallons next.

While acknowledging the quotas are less than the law requires, the EPA said they were 'directionally” in keeping with what Congress ordered in 2007 as part of efforts to reduce reliance on Middle Eastern oil.

'We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels,” said Janet McCabe, the EPA official in charge of the program. 'But we must recognize real-world impediments to the growth of biofuels in the marketplace.”

Oil refiners like the Carlyle Group, Tesoro Corp and Marathon Petroleum Corp, fought for lower targets than those announced Friday. Biofuel producers such as Archer Daniels Midland, Abengoa SA and Poet LLC fought for higher quotas.

The EPA said it would issue the final standard by Nov. 30 after receiving public comment and holding a hearing June 25 in Kansas City, Kan.

The oil and corn industries have battled hard over whether targets in the 2007 Energy Independence and Security Act are obsolete because gasoline demand has grown more slowly than forecast.

The law required refiners to use 20.5 billion gallons of renewable fuels this year and 22.25 billion in 2016, based on 2007 forecasts. But the EPA asserted it has the legal authority to adjust those totals.

Separately on Friday, the U.S. Department of Agriculture pledged $100 million in matching funds to states to expand the use of special fuel pumps that allow drivers to blend more ethanol into their gasoline.

The agency has long championed these blender pumps, and the announcement on the same day as the renewable fuel proposal lets the Obama administration say it still supports the fuel, which in the U.S. is produced mostly from corn.

'They are committed to the industry,” Agriculture Secretary Tom Vilsack, a former Iowa governor, said of the EPA. 'They also have to work in the real world, relative to how much gas is being consumed.”

Most fuel stations in the nation sell basic unleaded gasoline containing about 10 percent ethanol, with additional pumps offering premium-grade gasoline. But few stations in the country offer the higher-ethanol blends called E15 and E85 that can be used by the estimated 17 million 'flex fuel” vehicles on U.S. roads.

In Iowa, 199 stations sell E85, the Iowa Corn Promotion Board said. About 28 Iowa stations offer E15, the Iowa Renewable Fuels Association said.

The state has 43 ethanol refineries, 12 biodiesel facilities and one cellulosic ethanol facility under construction, according to the Renewable Fuels Association, whose members include ADM, Plymouth Energy and Quad City Corn Processors.

The proposal 'turns its back on consumers, fuel choice, and the environment,” the association said in a statement Friday.

'The proposed ethanol level for 2016 is less than what we already produced in 2014,” it wrote. 'This proposal will not crack the petroleum monopoly and will not allow consumers to benefit from the choice of lower-cost E15 and E85.”

While saying he was 'disappointed” by the EPA's proposal, Republican Gov. Terry Branstad said he was 'encouraged” that the EPA has provided some stability for producers by finally releasing quotas that show a 'slight increase” over 2013.

But, he said in a statement, 'Iowa farmland has dropped by 15 percent. corn and soybean prices have dropped by 40-50 percent since 2012 and farm income is expected to decline 32 percent this year. Maintaining a robust Renewable Fuel Standard is extremely important for Iowans and families across the country.”

The announcements from the EPA and USDA came a day after Democratic presidential candidate Hillary Clinton, in a guest column appearing the The Gazette, chided her GOP rivals for not doing enough to support renewable energy.

'We have to get the (Renewable Fuel Standard) back on track in a way that provides investors with the certainty they need, protects consumers, improves access to E15, E85, and biodiesel blends, and effectively drives the development of cellulosic and other advanced biofuels,” she wrote.

The Bloomberg and Reuters news services contributed to this report.