EPA proposes more ethanol in U.S. fuel supply, but less than biofuel industry wants

WASHINGTON – The U.S. Environmental Protection Agency on Friday proposed increases in the use of renewable fuels — a mandate that is crucial to Minnesota's corn-to-ethanol industry.

The long-awaited, much debated Renewable Fuels Standard, known as RFS, would rise in 2016 to 17.4 billion gallons of renewable fuels, compared with 15.9 billion gallons in 2014. This year's level would be 16.3 billion ­gallons under the proposal.

Those are the amounts of ethanol and other biofuels that petroleum companies must blend annually into motor fuel sold at the nation's gas pumps. To sell more ethanol, the biofuel industry is hoping motorists will embrace E-15, the blend of 15 percent ethanol and 85 percent gasoline. Most fuel now is a 10 percent ethanol blend.

The largest percentage growth would come in cellulosic biofuel, which can be made from corn stalks, cobs and grasses and other plant material. But most of the nation's ethanol still would come from corn kernels.

"We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels," said Janet McCabe, acting assistant administrator for EPA's Office of Air.

The proposed levels are still short of those set in a 2007 federal law. The EPA has authority to adjust the mandated blending levels, and the agency said it plans to issue final numbers in November. It will take comments on the new rules until July 27 and is sure to get an earful.

A debate over the program's future divides Congress. Outside ­Washington, the new standards drew mixed reviews from both supporters and detractors.

Members of an unlikely coalition of environmental and fossil fuel groups that want the RFS repealed were furious about any increases in production.

"So far, the federal corn ethanol mandate has resulted in a massive influx of dirty corn ethanol, which is bad for the climate and bad for consumers," the Environmental Working Group said in a blog posting. "The only interest it benefits is the ethanol ­industry."

The fossil fuel industry prefers to make and sell petroleum-based products.

"EPA's proposal is overly ambitious, misses the mark and clearly demonstrates why Congress must act to repeal the Renewable Fuel Standard," Chet Thompson, president of the American Fuel & Petrochemical Manufacturers, said in a statement. "Corn ethanol's gain would come at the expense of consumers and the environment."

In Minnesota's corn country, neither farmers nor their advocates saw enough of a gain to celebrate.

"The rural economy has remained strong in part due to the jobs provided by biofuels production," said U.S. Rep. Collin Peterson, who represents Minnesota's Seventh, a rural district with strong farming interests. "This announcement puts those jobs and rural economic growth in danger."

Kevin Paap, president of the Minnesota Farm Bureau, said prior reductions in biofuels blending have taken a financial toll on farmers.

"We've already cut corn ethanol," Paap told the Star Tribune. The EPA proposal "could depress corn prices even lower."

U.S. Sens. Al Franken and Amy Klobuchar and Rep. Tim Walz, all from Minnesota, wanted more from EPA, too.

"In order to help break big oil's monopoly on our nation's transportation fuels, we still need more action," Franken said in a statement.

Klobuchar believes the EPA proposal "undercuts our vital biofuels industry, " so she "will be pushing the EPA to revise this rule for 2015 and future years."

In 2014, Minnesota's 21 ethanol plants purchased 393 million bushels of corn, or 36 percent of the state's crop, and produced 1.1 billion gallons of ethanol, 3.3 million tons of animal feed and 184 million pounds of corn oil with a total value of $2.9 billion, according to the Minnesota Biofuels Association.

Anything that threatens this market amounts to a red alert for the state's corn ­farmers.

"The only good news is that this is simply a proposal," Walz said of the EPA numbers. "We have time to make our voices heard and to let EPA know they've taken the wrong approach."

Jim Spencer • 202-383-6123