EPA proposes lowering requirements for ethanol in gasoline

The nation’s gasoline supply will have more ethanol in coming years — but not as much as required by federal law.

The Environmental Protection Agency, which can adjust mandates set out in the 2007 renewable fuels law, on Friday proposed easing the annual requirements for ethanol in gasoline.

For 2014, the agency retroactively set the amount blended into gasoline at 15.93 billion gallons. That’s about what was produced last year and a bit more than the amount it had proposed late in 2013.

For 2015, the EPA proposes to increase that number to 16.3 billion gallons, about 4 billion less than what the law requires. That rises to 17.4 billion gallons for 2016, compared with the law’s goal of 22.25 billion gallons.

The administration’s proposed renewable fuel standard won’t have much of an impact on gas prices, but it could become an issue in the 2016 presidential election, especially in farm states that have profited over the years from higher corn prices linked to the use of corn-based ethanol. Campaigning in Iowa, Democratic presidential candidate Hillary Clinton has called for a robust renewable fuel standard.

The proposed standards also represent a blow to renewable fuel companies, which have pushed to keep high volumes of their product flowing into drivers’ gas tanks.

The 2007 renewable fuel law tried to address global warming, reduce dependence on foreign oil and bolster the rural economy. It required a steady increase in the amount of renewable fuels such as corn-based ethanol blended into gasoline over time. But it also allowed the EPA to adjust the levels set out.

The EPA said the standards set by the law cannot be achieved, in part because of limits on the amount of non-ethanol renewable fuels that can be produced. Next-generation biofuels, made from agricultural waste such as wood chips and corncobs, have not taken off as quickly as Congress required and the administration expected. There has also been less gasoline use than predicted, the EPA said.

Still, the administration targets would represent an overall increase in the use of renewable fuels over time — just not as much as originally envisioned. EPA officials said the new requirements would drive growth at an “ambitious but responsible” rate.

“We believe these proposed volume requirements will provide a strong incentive for continued investment and growth in biofuels,” said Janet McCabe, who heads the EPA’s renewable fuel program.

The lower targets are better news for the oil industry, which has fought the existing law. Oil companies say they would prefer that the market determine how much ethanol is blended into their gas.

Tom Buis of the ethanol industry group Growth Energy accused the EPA of siding with the oil companies.

“It is unfortunate that EPA chose to side with the obligated parties, who have deliberately refused to live up to their obligation to provide consumers with a choice of fossil fuels or lower-cost, higher-performing, homegrown renewable energy at the pump,” Buis said.

In a bid to ethanol producers, the administration also announced Friday that the Agriculture Department will invest up to $100 million to help improve infrastructure for delivering ethanol to cars, such as fuel pumps capable of supplying higher blends of renewable fuel.