WASHINGTON, D.C. (Reuters) — The nascent U.S. cellulosic ethanol industry is urging the White House to change course on targets for biofuel use.
It warned in a recent letter to president Barack Obama that current policy risks losing investments to China and Brazil.
Federally set mandates for the use of fuel such as corn ethanol and cellulosic ethanol, which is made from plant waste such as grass and wood, must be based on the industry’s ability to produce the fuel rather than on infrastructure restraints, executives of several biofuel companies wrote.
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The Environmental Protection Agency released a plan that slashed requirements for blending renewable fuels into U.S. gasoline and diesel this year.
Biofuel companies told Obama that investments in innovative fuel technology could be lost if the EPA does not reconsider.
Following a backlash to the initial proposal, the companies said they expect the administration to raise the targets from the proposed rule to those set out in the final rule.
However, the companies said an increase in targets will not be enough to support new investment, as long as the EPA continues to limit targets based on the number of fuelling pumps available to dispense higher blends of ethanol in gasoline, which is a variable mostly controlled by big oil companies.
The Renewable Fuel Standard requires increasing amounts of ethanol and biodiesel to be mixed into U.S. fuel supplies each year until 2022.
The EPA said it lowered the targets for this year because the United States had reached a point where the law would require ethanol to be blended into gasoline at levels higher than the 10 percent per gallon mixture that dominates retail fuel stations.
The companies said capping ethanol at 10 percent of the fuel supply will not give oil companies any incentive to invest in new fuelling equipment, and the biofuel program will “cease to be effective.”
Makers of cellulosic biofuel are starting to gain momentum after years of falling far short of the targets set by Congress,.
While 2014 production will come nowhere near the 1.75 billion gallon target originally set by Congress, Poet LLC and Dutch food and chemicals group DSM recently opened a plant in Iowa with an initial production target of 20 million gallons a year using corn cobs, stalks and other crop waste as its feedstock.
As well, Quad County Corn Processors recently opened a plant that should produce two million gallons of cellulosic ethanol a year.
It is unclear how much cellulosic ethanol will be produced this year. EPA’s draft proposal set the target at 17 million gallons.
