| NEW YORK
NEW YORK May 15 Nearly three dozen advanced
biofuel companies including DuPont and Spain's Abengoa
appealed to President Barack Obama on Thursday to rethink the
methodology for setting U.S. biofuel blending quotas.
In their letter, a copy of which was seen by Reuters, 33
suppliers of "advanced" biofuels such as lower-carbon ethanol
made from corn stovers, said the proposed cuts "are too
aggressive" and said the final rule should increase the volumes.
The groups also urged the administration to rethink the way
it arrives at the figures. This added a new wrinkle in the
months-long debate over the biofuel rules, as the agricultural
industry makes a last-ditch effort to fight the proposed cuts.
Within weeks, the Environmental Protection Agency is
expected to make a final decision on 2014 quotas for blending
biofuels into U.S. gasoline and diesel fuel. In November, the
EPA proposed reducing the quotas. That unprecedented decision
was a historic win for oil refiners, who oppose the quotas, but
a blow for farm and biofuel groups.
At 15.21 billion gallons, the EPA's 2014 proposal is nearly
3 billion gallons below the 18.15 billion required under the
Renewable Fuel Standard (RFS), a 2007 law mandating steadily
growing use of biofuels like advanced and corn-based ethanol.
The EPA is widely expected to make some changes in its final
rule, including an upward revision in quotas.
While much attention has been paid to the where the quotas
may ultimately fall, the advanced biofuel industry urged the
administration to focus attention on how the EPA arrives at
"It is not clear that the Administration yet recognizes that
its proposal changes how the RFS works at a fundamental level,
and that this methodological shift would effectively undercut
advanced biofuel projects under development," the companies
In proposing the cuts, the EPA used a provision of the
Renewable Fuel Standard which allows it to adjust the blending
requirements in case of "inadequate domestic supply".
But the law does not specify what "inadequate domestic
supply" means, an ambiguity which allowed the EPA to view supply
constraints in terms of distribution and consumption.
Gasoline is limited to 10 percent ethanol content for cars
manufactured before 2001, and the vast majority of gasoline
stations do not supply higher blends - a limitation called the
"blend wall" which the EPA explicitly cited in its proposed
To address the issue, the EPA scaled down the mandates such
that ethanol would not comprise more than 10 percent of gasoline
demand, and then added its estimates of advanced biofuel
production to come up with the overall biofuel quota.
The advanced biofuel producers warned that this method gives
the oil industry the upper hand in deciding how much biofuel is
"This interpretation has the practical effect of handing the
future trajectory of the RFS to the oil industry by virtue of
the fact that the oil industry itself controls the distribution
of fuel to consumers," the firms wrote.
(Reporting by Cezary Podkul; Editing by David Gregorio)