EPA delays decision on biofuel blending mandate

U.S. ethanol makers won a small victory Friday in the long battle between the biofuel and oil industries over how much renewable fuel should be blended into the nation’s fuel supply.

The Environmental Protection Agency said it would further delay and reconsider its proposal to scale back mandated levels of renewable motor fuels for 2014. The agency, which is required by law to set blending levels annually, said it would issue the 2014 target next year at the same time it sets 2015 numbers.

Unlike state blending laws, like Minnesota’s 10 percent-at-the-pump requirement, a 2007 federal law sets annual targets in gallons for every fuel blender, which typically are refiners and fuel marketers. The law aimed to increase renewable fuels as the nation’s fuel consumption grew. But fuel demand isn’t growing as fast as once forecast, and sales of higher-ethanol blends like E-15 remain modest because few stations offer them.

Ethanol producers, especially those pioneering new ways to make fuel from corn cobs and stalks, have fought EPA’s proposal to set the 2014 blending mandate below targets established in the 2007 law. They say it would stifle the emergence of new ways to produce biofuel from cellulosic, or nonfood, plant material.

In a nod to that concern, Janet McCabe, an acting EPA assistant commissioner, said in the announcement Friday that the agency “has been evaluating these issues in light of the purpose of the statute and the administation’s commitment … to increase the use of renewable fuels, particularly cellulosic biofuels” that emit lower greenhouse gases than fossil fuels.

“We are pleased the administration did not finalize the flawed proposed rule and thank them for their deliberate and careful approach to this important rule-making,” said Jeff Lautt, CEO of ethanol producer Poet Inc., which operates four plants in Minnesota and recently began operating the nation’s first commercial-scale ethanol plant fed by corn cobs and stalks in Iowa.

But Lautt, in a statement, said the EPA delay still leaves the industry with uncertainty because it “remains unclear is if this action suggests that in future rulemakings they will avoid the same fatal flaws that would have stifled consumer choice, fuel diversity and advanced biofuel development.”

Growth Energy, a biofuels industry trade group, praised the EPA’s retreat. “The decision to withdraw the rule is a win for the renewable fuels industry,” said CEO Tom Buis in a statement.

The oil industry was sharply critical, and the American Fuel & Petrochemical Manufacturers said it would sue the agency, saying the renewable fuel target for 2014 should have been issued in November 2013. The group’s president, Charles Drevna, called further delay “a gross dereliction of responsibility that leaves fuel refiners and the biofuels industry alike to navigate a course of ambiguity.”

The American Petroleum Institute called for repeal of the 2007 law. “The only real solution is for Congress to scrap the program and let consumers, not the federal government, choose the best fuel to put in their tanks,” the trade group’s CEO Jack Gerard said in a statement.