White House clears EPA renewable fuels standard

WASHINGTON Tue Nov 23, 2010 4:49pm EST

WASHINGTON (Reuters) - The White House cleared the way for the Environmental Protection Agency to issue a final rule on how much ethanol and other renewable automobile fuels will be sold next year.

The EPA proposed in July that biofuels fuels would account for 7.95 percent of total gasoline sales next year to meet a congressional mandate that at least 13.95 billion gallons of renewable fuels be produced in 2011.

The final number, which the agency plans to issue next week, could still be changed.

The White House Office of Management and Budget posted a notice on its website that it approved the rule on Monday, but did not provide details on what the final regulation looked like.

EPA officials declined to comment on whether the final rule differs from its July proposal.

The proposed 2011 rule is less than the 8.25 percent renewable fuels standard set for this year.

That is because gasoline demand was weak this year due to the recession, which meant renewable fuels had to account for a big share of gasoline sales compared with next year, when the economy is expected to be in better shape and fuel demand is higher. With more gasoline being sold next year, renewables make could make up a smaller share pump sales, enough actual biofuels production is set to increase.

The amount of renewable fuels is mandated by Congress to rise to 13.95 billion gallons next year from 12.95 billion gallons this year. The target slowly increases to 36 billion a year gallons by 2022.

Most U.S. ethanol is made from corn, but gradually cellulosic fuels -- using wood chips or switchgrass -- are expected to play a bigger role.

However, cellulosic production has been slow to develop and the EPA proposed lower cellulosic volumes for next year than what Congress wanted.

To help the market absorb corn ethanol supplies, the EPA is expected to decide in January on a separate proposal to boost the amount of ethanol blended into gasoline to 15 percent from the current 10 percent for cars and trucks built during the 2001 to 2006 model years. The agency already approved so-called E15 gasoline for vehicles made since the 2007.

(Reporting by Tom Doggett; Editing by Lisa Shumaker)