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US scales back ethanol quotas for gasoline

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Hydrocarbon Engineering,

The Environmental Protection Agency (EPA) has issued final regulations designed that will ease the amount of ethanol to be blended with gasoline through 2016. The decision comes after the falling motor fuel demand is preventing the ability of ethanol suppliers, and the Obama Administration, to meet the original goals of the government's alternative fuel requirements laid out in 2007 under the renewable fuels law (RFL).

The EPA initially proposed in May, that fuel companies should blend 17.4 billion gal. of corn ethanol in gasoline next year but have now revised that figure to 18.11 billion gal. of corn ethanol. While higher than the figure in May this is still well below the initial levels set under the Renewable Fuel Standards (RFS).

The EPA was placed in charge of mandating the quotas annually, however the agency is two years behind, meaning the EPA has been issuing the rules for 2014 and 2015 retroactively, as well as establishing the future mandate for 2016. For 2014, the agency retroactively set the total amount of ethanol to be blended at 16.28 billion gal., which is what was roughly produced. For 2015, EPA set the total level at 16.93 billion gal., which is close to the estimated production for this year. For next year, the agency set a level of 18.11 billion gal., a significant step up.

However, ethanol critics say the levels are too high. Oil companies have spent years fighting the 2007 RFL, claiming the market should not be dictated by the government, it should determine how much ethanol is blended into gas. Environmentalist groups claim the enforced RFS are leading farmers to destroy huge portions of land by growing corn for ethanol.

The RFL was intended to address global warming, reduce dependence on foreign oil and improve the rural economy through a steady incline in the total amount of ethanol blended into gasoline over time. While next generation biofuels, made from agricultural waste such as wood chips and corncobs, have not been adopted as quickly as Congress or the Obama Administration had hoped.

Sources: CBS, International Business Times, Market Watch

Edited from various sources by Francesca Brindle

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