Deep cut proposed for U.S. 2014 biofuel requirement

U.S. President Barack Obama’s administration proposed on Friday to slash a federal target for U.S. biofuel use in 2014 to 15.21 billion gallons, attempting to prevent a projected fuel crunch next year.

The planned cut of more than 16 per cent by the U.S. Environmental Protection Agency (EPA) matches figures in a draft that was leaked and circulated in October. The 2007 renewable fuels law had proposed a target of 18.15 billion gallons.

The EPA’S proposal to reduce the renewable fuels targets is a partial win for the petroleum industry but a loss for biofuel producers that follows a prolonged lobbying blitz on both sides.

The plan follows the agency’s warnings that the country was approaching a point when the so-called Renewable Fuel Standard would require the use of more ethanol than can be blended into gasoline at the 10 per cent level that dominates the U.S. fueling infrastructure.

Refiners have said this impending “blend wall,” if left in place, would force them to export more fuel or produce less gasoline, leading to shortages and higher prices at the pump.

The EPA’s proposal falls short of a request from two major oil and gas trade groups to lower the 2014 renewable fuel use target to 14.8 billion gallons from the target of 18.15 billion gallons.

The plan cuts the 2014 advanced biofuel use target to a range of two billion to 2.51 billion gallons.

The agency didn’t propose a specific 2014 volume for ethanol made from corn. But the proposed change in advanced biofuels implies a cut in the corn ethanol mandate to 12.7 billion to 13.2 billion gallons, from the previous mandate of 14.4 billion gallons.

— Reporting for Reuters by Timothy Gardner in Washington, D.C.

Related stories:
U.S. EPA expects to reduce biofuels volumes for 2014, Aug. 6, 2013
Congress eyes change to U.S. biofuels mandate, July 30, 2013

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