EPA expected to nudge higher biofuels mandates: sources

Source: BY CHRIS PRENTICE, Reuters • Posted: Wednesday, November 25, 2015

A biodiesel vehicle is seen at Dogpatch Biofuels filling station in San Francisco, California January 8, 2015. REUTERS/Robert Galbraith

The U.S. Environmental Protection Agency (EPA) is widely expected to increase requirements for biofuels use through 2016 due to higher total fuel demand, when it publishes a final Renewable Fuel Standard (RFS) rule in the coming days, sources said.

The environmental regulator is expected to announce requirements on its plan for the program, on or by Monday, Nov. 30, when global climate change discussions are set to start in Paris. Some said they expect news ahead of the U.S. Thanksgiving holiday. The policy has been in place for two administrations.

The EPA is broadly expected to raise the mandates for quantity of biofuels that fuel companies must blend into motor fuels some 400 million to 500 million gallons for 2016, bringing the total renewable fuels required to nearly 18 billion gallons, four sources said this week.

The RFS is meant to reduce U.S. dependence on foreign oil and utilize cleaner, domestic energy sources. Criticism of the policy has mounted amid lagging development of advanced fuels, worry over infrastructure changes and regulatory delays.

The EPA in late May proposed requiring 17.4 billion gallons of renewable fuels to be blended into motor fuels next year, up from 16.3 billion gallons this year. The proposal pleased few, drawing ire from both Big Oil and Big Corn alike.

“They have no choice but to raise the numbers,” said one source.

The expectations of an increase stemmed in part from a jump in miles driven in the United States as fuel prices tumbled. The U.S. government has raised its forecasts for fuel demand in recent months. Also, sources cited a recalculation in the EPA’s export estimates for 2014 that could translate to higher numbers.

The EPA has vowed to get the program “on track” after years of delays that have drawn criticism and lawsuits.

Oil companies, biofuels makers and environmentalists have ratcheted up lobbying and advertising spending, heightening focus on questions over ethanol’s environmental impact in the weeks and days ahead of the announcement and the start of Climate Change talks in Paris.

Oil companies and some environmental groups like the Environmental Working Group say corn-based ethanol, which represents the bulk of U.S. biofuels output, increases dangerous emissions. Biofuels groups disagree.

The announcement is expected to prompt lawsuits from biofuels and oil companies, which have criticized the EPA for delays and for targets that do not go far enough to address concerns.