Leading Democrat says US may not be able to meet biofuel targets

Fri Apr 12, 2013 2:07pm EDT

* Wyden says committee will explore ethanol mandate

* Energy committee to look at gasoline prices this Spring

* Lawmakers introduced bill ending corn ethanol targets

By Ayesha Rascoe

WASHINGTON, April 12 (Reuters) - The chairman of the Senate Energy and Natural Resources Committee on Friday questioned whether the United States would be able to meet federal biofuel targets and pledged to take a closer look at the mandate's link to gasoline prices.

Democrat Ron Wyden of Oregon said the panel plans to spend "a lot of time" examining the nation's renewable fuel mandate, especially as it relates to the gasoline costs Americans pay at the pump.

"I'm not convinced that the current requirements are achievable," Wyden said at a policy event sponsored by the law firm Arent Fox and the Georgetown Public Policy Institute.

Wyden's comments came as lawmakers spar over the future of the once widely popular ethanol mandate, which was enacted with bipartisan support during the George W. Bush administration to help wean the United States off foreign oil.

The Renewable Fuel Standard requires the increased use of ethanol and biodiesel in the U.S. fuel supply, hitting 36 billion gallons of biofuels in 2022 from a base of 9 billion gallons in 2008.

It has helped create of a large ethanol industry, located mostly in major corn producing states.

But with U.S. oil output booming in recent years and gasoline demand falling on increasing vehicle efficiency, the biofuel targets have come under fire from lawmakers who say they are an unnecessary intervention in the free market and are pushing up food prices.

The focus on the mandate has intensified in recent weeks after a spike in the costs of ethanol credits, which refiners acquire to comply with the mandate.

Refiners, who have called for the elimination of the biofuel targets, have warned that gasoline prices could climb because the law currently calls for more ethanol to be used than can be physically blended into gasoline at the 10 percent level that the oil industry prefers.

Last month Wyden asked the U.S. Environmental Protection Agency for market data related to the volatility in ethanol credit prices.

Wyden, a supporter of the ethanol mandate, declined to elaborate on which aspects of the biofuel targets might not be attainable or whether the law needs a significant overhaul.

He said he would explore the topic at a hearing he plans to hold this spring on gasoline prices.

On Wednesday lawmakers in the House of Representatives introduced a bill, H.R. 1462, that would end the mandate for corn-based ethanol, which accounts for the vast majority of the biofuel program.

Ethanol supporters argue the mandate has helped to lower gasoline prices and that the volatility in ethanol credit markets has been caused by refiners' refusal to support blending more than 10 percent ethanol into a gallon of gasoline. (Reporting by Ayesha Rascoe; editing by Ros Krasny and Bob Burgdorfer)

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