Proposal would lower amount of ethanol and other biofuels required by law for first time

  • Article by: DINA CAPPIELLO , Associated Press
  • Updated: November 15, 2013 - 4:08 PM

For the first time since requiring gasoline refiners to include ethanol in 2005, the government is lowering the mandated amount for 2014. File photo from 2012 of an ethanol plant in North Dakota.

Photo: Daniel Acker, Bloomberg

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WASHINGTON — The Obama administration on Friday proposed to reduce the amount of ethanol in the nation's fuel supply for the first time, acknowledging that the biofuel law championed by both parties in 2007 is not working as well as expected.

While the proposal highlights the government's struggle to ramp up production of homegrown biofuels that are cleaner-burning than gasoline, it is unlikely to mean much for consumers at the pump.

The change would reduce by almost 3 billion gallons the amounts of ethanol and other biofuels blended into gasoline in 2014 than the law requires.

The 2007 law tried to address global warming, reduce dependence on foreign oil and prop up the rural economy by requiring oil companies to blend billions of gallons of biofuels into their gasoline each year. But politicians who wrote the law didn't anticipate fuel economy to improve as much as it has in recent years, which reduced demand for gasoline.

Meanwhile, 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.

In Minnesota, the lowered target, if approved, potentially threatens the future of some ethanol plants, said Tim Rudnicki, executive director of the Minnesota Biofuels Association. Two of the state’s 21 ethanol plants, in Fairmont and Buffalo Lake, currently area closed, although new operators have said they are intending to reopen them.

Minnesota ranked fifth in the nation in ethanol production in 2011, with 1.1 billion gallons produced and 79 percent of it exported outside the state, according to Minnesota Agriculture Department data. The state also has three biodiesel plants.

Minnesota Corn Growers Association President Ryan Buck said the proposed reduction of the mandate is happening as corn prices are falling and farmers are harvesting the largest projected crop in U.S. history. He said in a statement that it would have “serious repercussions throughout the entire economy – especially in rural areas that rely on agriculture.”

President Barack Obama has championed biofuels since his days representing Illinois in the Senate, and his administration has resisted previous calls to lower biofuel volumes or repeal the law.

EPA officials said they were still committed to alternative fuels as part of a comprehensive energy strategy. If the EPA stuck to the volumes mandated by law, the amount of biofuel required would generate more ethanol than many engines can safely handle, officials said.

"We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use," EPA Administrator Gina McCarthy, referring to the 2007 law called the Renewable Fuel Standard.

Biofuel supporters, however, said the proposal marked a departure for the Obama administration.

"This is the first time that the Obama administration has shown any sign of wavering," said Brooke Coleman, executive director of the Advanced Ethanol Council.

Bob Dinneen, the head of the Renewable Fuels Association, the Washington group that lobbies on behalf of the ethanol industry, said the announcement is ill-timed as the country is currently harvesting a record corn crop. He said the industry may sue if the proposal is not altered.

"This is exactly the wrong time to be reducing the required volumes of renewable fuels," Dinneen said.

The ethanol mandate created an unusual alliance between oil companies, which have seen ethanol cut into their share of the gasoline market, and environmental groups that oppose planting more corn for fuel. A recent AP investigation found that corn-based ethanol's effect on the environment is far worse than the government predicted or admits.

The oil industry lobbied hard for a reduction and is pleading with Congress to completely repeal the law.

Jack Gerard, president and CEO of the American Petroleum Institute, said the EPA's move is a step in the right direction, but "ultimately, Congress must protect consumers by repealing this outdated and unworkable program once and for all."

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