* Overall biofuel target up 9 pct, corn ethanol up 4.5 pct
* Mandate due to rise to 36 billion gallons in 2022
* Foes lost bid last summer to cancel ethanol mandate
WASHINGTON, Jan 31 Corn ethanol would get a
larger share of the U.S. gasoline market under a government
proposal on Thursday while ranchers, environmentalists and the
oil industry aim to kill the renewable fuels mandate altogether.
The Obama administration proposed a 9 percent increase in
the so-called renewable fuels standard from 2012, in line with a
2007 law. Half of the 1.35 billion-gallon increase would go to
corn ethanol and half to "advanced" biofuels that produce half
the greenhouse gases of first-generation ethanol.
Overall, biofuels would be allotted 16.5 billion gallons of
the fuel market for cars and light trucks. The mandate reaches
36 billion gallons in 2022, with half of the mandate going to
Last fall, the administration denied a request from several
governors from livestock and oil-producing states for a partial
or total waiver of the requirement to use ethanol. Corn prices
soared during the drought as ethanol makers, livestock
producers, and grain exporters competed for a smaller supply.
"We're girding for a fight," said Bob Dinneen of the
ethanol trade group Renewable Fuels Association. He said a
campaign against the biofuel mandate already was under way.
There will be a 45-day comment period on the latest
proposal after which the Environmental Protection Agency will
issue a final ruling.
EPA SAYS CELLULOSIC TARGET IS REASONABLE
As part of its proposal, the EPA put the mandate for
advanced biofuels at 2.75 billion gallons, including 14 million
gallons of cellulosic biofuels, made from grass, shrub and
The cellulosic target "is a reasonable representation of
expected production," EPA said was in line with an appellate
court decision last week that ruled against an unrealistically
high production target.
EPA set its biodiesel target for this year at 1.28 billion
gallons in an earlier, separate action.
Traders said Brazilian ethanol, made from sugar cane, and
domestic biodiesel would compete to fill the advanced biofuels
mandate. Biodiesel counts as an advanced biofuel.
In addition, EPA proposed a new voluntary program to assure
the validity of Renewable Identification Numbers, known as RINs.
Fuel companies can use RINs, each representing a gallon of
biofuel, to meet the renewable fuel mandate.
Fraudulent RINs have been a problem in the biodiesel
industry. EPA said it worked with the biofuels industry in
developing its RINs proposal.
ETHANOL PRODUCTION FALLS DURING TOUGH YEAR
U.S. ethanol production fell during the second half of 2012
in the face of high corn prices, the drought-shortened crop and
weaker demand for gasoline, the Energy Department said on
Thursday. And ethanol prices in 2012 were down 8 percent from
The slump continued into this year. Ethanol production in
the week ending on Jan. 25 was the lowest in two years and the
four-week average pointed to ethanol production of 12.2 billion
gallons this year, far below the mandate of 13.6 billion
"There's not a market. We're trying to build demand," said
Dinneen of the RFA.
Three dozen ethanol plants, with 15 percent of industry
capacity, were closed as of Tuesday. Analysts said comparatively
low demand for gasoline meant limited demand for ethanol too.
Ethanol is a farm-state favorite, where it is embraced as a
home-grown antidote for oil imports and a job-creating industry
for rural America. About 40 percent of the corn crop is used in
Foes ranging from environmentalists to livestock producers
and the oil industry want to end the mandate. They say it
encourages soil erosion and pesticide runoff from farms and, by
driving up the cost of livestock feed, affects beef, pork and
chicken meat prices in grocery stores.