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EPA Proposes Cellulosic Ethanol Short of U.S. Goals

July 12 (Bloomberg) -- The Environmental Protection Agency proposed requiring less cellulosic ethanol to be blended into gasoline next year than sought under U.S. law because production of the alternative fuel hasn’t reached commercial scale.

The decision is part of the EPA’s proposed standard for renewable fuels of about 14 billion gallons, or 7.95 percent of transportation fuels used in the U.S., the agency said today in a news release. The goal for cellulosic biofuels, based on an analysis of market availability, is 5 million to 17.1 million gallons, or as much as 0.015 percent, according to the agency.

“While this may be prudent for EPA based on market conditions, it does send a chilling effect through the investment community with respect to cellulosic ethanol technologies,” Matt Hartwig, a spokesman for the Renewable Fuels Association, wrote on the industry group’s website.

Cellulosic ethanol, made from switchgrass, wood chips and agricultural waste such as corn cobs, has been promoted as having a smaller carbon footprint than fuel made from corn because it provides less incentive to cut down trees or plow up prairies to create cropland.

The Obama administration said it will continue to evaluate the market as it works to make the cellulosic standard final in coming months. The EPA “remains optimistic” that the commercial availability of cellulosic biofuel will continue to rise over the next few years, the agency said.

In February, the EPA slashed the cellulosic ethanol mandate for this year by 94 percent, reducing the goal to 6.5 million gallons from the 100 million required under a 2007 energy law. The agency said corn-based ethanol produces less greenhouse-gas emissions than previously anticipated, clearing the way for more use of the fuel.

Congress passed a renewable-fuels standard in 2007 that quadrupled the requirement for blending ethanol and other biofuels into gasoline supplies, to 36 billion gallons by 2022. The law also set interim goals.

To contact the reporters on this story: Kim Chipman in Washington at kchipman@bloomberg.net; Mario Parker in Chicago at mparker22@bloomberg.net.

To contact the editor responsible for this story: Larry Liebert at Dan Stets at dstets@bloomberg.net.

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