US introduces biofuels quotas

THE US Environmental Protection Agency said this week it expected the country’s oil industry would meet the authority’s new standard that requires 2.78% of gasoline sold next year to be renewable fuel, such as ethanol and biodiesel.
US introduces biofuels quotas US introduces biofuels quotas US introduces biofuels quotas US introduces biofuels quotas US introduces biofuels quotas

The new standard is the first step in the agency’s Renewable Fuels Standard Program, which is designed to reduce vehicle emissions and strengthen US energy security by almost doubling the use of fuels produced from US crops by 2012 to reach 7.5 billion gallons a year, according to EPA administrator Stephen L. Johnson.

"This investment in renewable fuels made from domestic crops will support American agriculture and replace fossil fuels with an increasing amount of cleaner-burning alternatives such as ethanol or biodiesel illustrating that environmental progress and economic development can, in fact, go hand-in-hand," Johnson said.

The EPA said if the 2.78% quota standard was not met next year, any shortfall would be carried forward and made up with higher required renewable gasoline sales in 2007.

The EPA said it expects the renewable fuel standard for 2006 to be met collectively by the oil industry with the pool of gasoline sold to consumers.

Under this method, the agency will not hold an individual oil refinery, blender or importer responsible for meeting the 2.78 percent standard for the specific gasoline it produces.

The Energy Department forecasts that 141.6 billion gallons of gasoline will be sold next year in the US market, requiring 3.94 billion gallons of renewable fuel to be consumed to meet the 2.78%, according to the EPA.

The Energy Department projects total production of ethanol to be above 4 billion gallons next year. In North America, ethanol is made mostly from corn, but it can also be made from other grains and from sugar.

The Renewable Fuels Association, the trade group for ethanol producers, has said ethanol production capacity already exceeds 4 billion gallons a year and another 1.2 billion gallons in output capacity is under construction.

"It's clear that capacity in 2006 will be adequate to produce the renewable fuel needed to meet the 2.78% default standard," the EPA said.

With increasing ethanol imports and growing biodiesel production, the EPA said actual renewable fuel consumption in 2006 could be as high as 4.4 billion gallons.

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