EPA's ethanol revision won't please Texas refiners

The Obama administration cleared the way Wednesday for more ethanol to be used in cars, trucks and airplanes after government scientists ruled the fuel is greener than they previously thought.

A proposal by the Environmental Protection Agency in May found that some types of corn ethanol were in fact worse for the environment than gasoline, a finding that limited how much ethanol could be blended with gasoline.

But more studies showed that new corn ethanol plants could meet the greenhouse-gas reduction targets set by a 2007 law, the EPA said Wednesday.

"This really unlocks the door for advanced biofuel producers, including corn ethanol producers, to make investments and create jobs," EPA Administrator Lisa Jackson said.

The revised renewable fuel standard is certain to disappoint Texas-based refiners and their allies in Congress, who already complain that Washington has embraced renewable fuels at the expense of the oil industry. Gov. Rick Perry unsuccessfully challenged the so-called ethanol mandate in 2008, arguing that corn-based ethanol drove up food prices for consumers and feed prices for ranchers.

Congress has required that refiners blend an increased amount of biofuels with gasoline every year, but the amounts are annually revised by the EPA. Jackson said the steps announced Wednesday are all designed to reduce greenhouse gas emissions.

In addition to the EPA action, the U.S. Department of Agriculture finalized rules for a program that provides incentive payments to farmers and forest land owners who provide raw materials to biofuel plants.

The American Petroleum Institute, a lobbying arm of the oil and gas industry, said the EPA's latest revision could result in higher costs for consumers.

"While the U.S. oil and natural gas industry recognizes and appreciates the role of ethanol and other biofuels in the fuel marketplace, we are deeply concerned that the announcement today could result in higher consumer costs," the API said in a statement.

Prodded by farm-state interests and worries about energy independence, Congress required in 2007 that refiners blend 36 billion gallons of biofuels in transportation fuel by 2022. But the country isn't on schedule to meet that target, the President's Biofuel Interagency Working Group said Wednesday.

The recession was partly to blame, administration officials said. But the industry also hasn't produced the kind of advanced biofuels, from sources such as sorghum and switchgrass, that were envisioned when the law passed.

For 2010, the EPA set the mandate for advanced biofuels at 6.5 million gallons. The law envisioned that about 100 million gallons would be produced by 2010.

Corn-based ethanol and soy-based biodiesel have helped to displace some imported oil, but many environmentalists argue that their environmental impact isn't much better than oil. Corn that is used to produce ethanol isn't available for the food supply and must be replaced by corn grown somewhere else. That eats up more land – some of which was forest land – and requires more fertilizer and pesticide.

Ethanol advocates regularly bemoan the EPA's focus on "indirect" land use as part of the way it calculates the total greenhouse-gas emissions of ethanol. The industry and its backers pushed back in May when the EPA issued its initial rule.

The EPA's latest look at the subject found that more efficient ethanol plants can in fact reduce greenhouse gas emissions. That revision is likely to be met with criticism by biofuel critics who argue the agency tailored its findings to placate a powerful political constituency.

"We wanted to make sure that they really were renewable fuels – that we weren't dumbing down the standard in order to favor any particular industry or any particular outcome," Jackson said. "I feel certain that is exactly what happened here."

source: dallasnews