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Biofuel groups press White House on more than just 2014 targets

By Ayesha Rascoe

WASHINGTON (Reuters) - The U.S. biofuel industry is urging the Obama administration to go beyond simply raising proposed targets for use of the fuels, making the case instead for fundamental changes to the government's approach to the renewable fuel program.

There has been a flurry of meetings between biofuel backers and White House officials in advance of the release of the long-delayed targets for the use of renewable fuels this year, which are expected to reach the Office of Management and Budget for review within weeks.

The Renewable Fuel Standard requires increasing amounts of biofuels to be blended into gasoline and diesel supplies each year through 2022.

The targets for this year have been plagued by repeated delays amid outcry from biofuel producers, such as Abengoa Bioenergy, Green Plains Inc and Pacific Ethanol Inc, who say a draft plan slashing the 2014 standards could significantly harm the industry.

Biofuel industry sources said in May the Environmental Protection Agency would likely raise proposed levels.

Based on rising gasoline demand, the corn ethanol portion of the mandate is widely expected to be increased to about 13.6 billion gallons (49 billion liters) from 13 billion announced in November.

But the key message biofuel groups have delivered to the administration has been that their industry's future viability hinges on more than just tweaking volume requirements for the current year.

Meeting with senior White House adviser John Podesta last week, the Advanced Biofuels Association pressed the White House to speed up approvals of new fuels that can qualify as advanced and cellulosic fuels, known as pathways.

"We really tried to focus on how important it was to get pathways approved in a more expeditious way so we can actually bring more gallons to market," ABFA President Michael McAdams told Reuters. Seven top executives of companies waiting on approvals also attended the meeting.

More than 35 applications for new biofuel sources are pending at the EPA, with an average wait time of two years. The delays keep fuels off the market because would-be buyers cannot get credit under the biofuel mandate to purchase them.

BETTER CORN ETHANOL EMISSIONS?

While advanced biofuel producers seek the inclusion of new fuels, some corn growers have lobbied to protect the grain's position in the renewable fuel program.

Earlier this month, Congressman Bill Foster, Democrat of Illinois, and a group of lawmakers and scientists from the state met with White House officials including top energy and climate adviser Dan Utech.

They argued the White House should reconsider its estimates of the lifecycle greenhouse gas emissions for corn ethanol as it weighs both the final targets for 2014 and the fuel's role in the administration's broader climate policy.

Corn-based ethanol is currently classified as a "conventional biofuel" that delivers only a 20-percent emissions improvement over gasoline. Some environmental groups have blasted the fuel as not much better than fossil fuels and critics have proposed stripping corn ethanol out of the mandate.

As the Obama administration focuses on its climate legacy, changing the EPA's findings on potential emission reductions from corn ethanol could shore up support in the administration and help fend off future attacks on the fuel.

"The carbon footprint and economics of corn-based ethanol are vastly improved from a decade ago," Foster said, noting less-energy intensive farming practices and more complete use of corn by-products.

The White House asked the scientists for additional information about their research on corn ethanol emissions, said David Beaudreau, a consultant representing the Illinois Corn Growers Association.

"They were intrigued and wanted to know more," Beaudreau told Reuters.

BLOCKING BLEND WALL ARGUMENT

For the Renewable Fuels Association, it is not the final levels for this year so much as the justification behind them that is most concerning.

The group has urged the EPA to not use the shortage of gasoline stations currently able to sell fuel with higher levels of ethanol as a reason to cut biofuel targets, arguing that it would set a precedent that could permanently limit the program's targets.

The EPA has justified lowering the 2014 target as necessary because U.S. fuel markets cannot absorb the amounts of ethanol called for by federal law, a problem known as the "blend wall."

That argument would embolden oil companies to prevent growth in biofuel use simply by not investing in new fuel pumps, said RFA president Bob Dinneen.

"We are going to sell a heck of a lot of ethanol this year no matter what," he said. "If EPA guts the program by turning it over to Exxon Mobil, you will never see that again."

(Additional reporting by Robert Gibbons, Editing by Ros Krasny and Marguerita Choy)

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