EPA Continues Ethanol Push

Source: By RYAN TRACY, Wall Street Journal • Posted: Friday, February 1, 2013

WASHINGTON—The Environmental Protection Agency on Thursday held its ground on the federal mandate for using renewable motor fuels, proposing to boost a requirement for next-generation fuel even after it lost a recent court case throwing out last year’s requirement.

The agency said it intended to require U.S. refiners and fuel importers to use a total of 16.55 billion gallons of renewable fuel during 2013, compared with 15.2 billion gallons last year.

As in previous years, the lion’s share of that mandate is expected to be met with ethanol made from Midwestern corn. But the agency is also proposing to boost the requirement for advanced renewable fuels, including diesel-motor fuel made from soybeans, sugar cane ethanol imported from Brazil, and “cellulosic” fuels made from inedible parts of plants, such as corn stalks and wood chips.

The EPA requirement for advanced fuel would be about 2.75 billion gallons in 2013, compared with two billion gallons last year. Of that requirement, 1.28 billion would have to come from plant-based diesel-motor fuels, and 14 million gallons must be cellulosic fuel.

The agency’s proposal was a win for cellulosic fuel producers, including KiOR Inc., which has a plant in Mississippi that the EPA expects will produce about eight million gallons of cellulosic fuel from wood chips.

Brooke Coleman, executive director of the Advanced Ethanol Council, a group of cellulosic fuel producers, said the EPA got “the right number” and provided “advanced biofuel investors and innovators with a predictable and durable path forward.”

The American Petroleum Institute, an oil industry trade group, won a lawsuit earlier this month throwing out last year’s cellulosic fuel requirement. The EPA in 2012 required refiners to buy 8 million gallons of cellulosic fuel, but the industry only produced about 20,000 gallons that could count toward the mandate.

The institute on Thursday criticized EPA’s proposal to require even more cellulosic fuel this year. “The promised production [of cellulosic fuel] hasn’t happened,” said Bob Greco, the institute’s downstream group director. “With today’s announcement, EPA has proved yet again that its renewable fuels program is unworkable and must be scrapped.”

Part of Thursday’s decision was a negative for U.S. corn ethanol producers.

They had asked the EPA to require fewer gallons of “advanced” fuel in order to limit imports of Brazilian sugar cane ethanol, which qualifies for the “advanced” category and takes market share from ethanol made domestically.

The EPA proposal issued Thursday didn’t heed those requests and could “open the door even wider to imports,” said the Renewable Fuels Association, a U.S. ethanol trade group.

The EPA will take public comments for 45 days before moving to complete the 2013 renewable fuel requirement.