NEW YORK, May 29 (Reuters) – U.S. regulators on Friday unveiled much-anticipated targets for the blending of renewable fuels into motor fuel for the three years to 2016, proposing some 17.4 billion gallons of renewable fuels must be used in gasoline or diesel next year.
Ending years-long uncertainty about the U.S. renewable fuels policy, the Environmental Protection Agency (EPA) on Friday announced a proposed target that 16.3 billion gallons of renewable fuels should be mixed into the country’s fuel supply this year.
That would rise to over 17 billion gallons in 2016.
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Friday’s targets mark a retreat from the EPA’s prior proposal in 2013 to sharply lower use requirements and will be seen as a loss for oil refiners like Carlyle Group, Tesoro Corp and Marathon Petroleum Corp who have fought for lower targets.
The hike in biomass-based diesel targets was welcomed by the biodiesel industry, which said the increase in targets for advanced fuels was a “step in the right direction.” Soy oil futures were up more than four percent in morning trade.
The proposals mark a loss for ethanol producers including Archer Daniels Midland, Abengoa SA and Poet LLC.
Growth Energy, which represents ethanol producers, said the proposals need “significant improvement.”
The federal requirements under the scheme were still below levels set in law in 2007 under the Renewable Fuels Standards. They were also lower than many in the oil and ethanol industries expected, after years of hard lobbying over the nation’s controversial biofuels policy.
An EPA official said the regulator must recognize “real world limitations” to biofuel use, adding that Friday’s proposal will “establish a path for ambitious, responsible growth.”
The EPA reaffirmed the so-called “blend wall” in the proposal, citing “practical constraints on the supply of higher ethanol blends to the vehicles that can use them” in a statement.
