U.S. hikes biofuel targets in victory for Big Corn

The U.S. government will require energy companies to use a record amount of biofuel next year, a victory for Midwest farmers that supply ethanol makers over oil firms that say using more biofuels in gasoline and diesel is costly and unachievable.

The Renewable Fuel Standard (RFS) program, signed into law by President George W. Bush in 2005, was designed to curb greenhouse gas emissions, promote energy independence and boost rural economies by raising demand for biofuels.

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The Environmental Protection Agency (EPA) in a statement on Wednesday set the target for total renewable fuel use at 19.28 billion gallons for 2017, higher than the 18.8 billion gallons it had initially proposed in May. The EPA bumped up the volumes after the U.S. government revised its 2017 gasoline demand forecast upwards.

The total requirement marked a six per cent rise from this yeaand was larger than some in the industry had expected.

The EPA is required to set annual targets for how much ethanol and biodiesel needs to be blended with gasoline and diesel.

Hitting target set out in 2007 law

The requirements include 15 billion gallons for conventional biofuel, which is mainly corn-based ethanol. That marked the first time the EPA has hit a target laid out by Congress in 2007.

EPA set the mandate for advanced biofuels, a variety of fuels considered more environmentally friendly than ethanol,at 4.28 billion gallons.

Wednesday's plan marked the final renewable fuels mandate to be set underthe Obama administration, which biofuels advocates previously said had fallen short of targets to promote their fuels.

Biofuelsproduce less greenhouse gases than petroleum-based fuels and result in cleaner air.

Pushback from petroleum industry

Currently, gasoline sold in the U.S. has an average of10 per cent ethanol. The petroleum industry had opposed an increase in the mandate to use more biofuels, arguing conventional vehicles are not meant to burn more ethanol and might have maintenance problems.

In Canada, Canada's Renewable Fuels Regulations require an average renewable fuel content of five per cent in gasoline. Nationally, Canada averages more than five per cent ethanol blended into gasoline and two per cent biodiesel blended into petroleum diesel, according to Renewables Industry Canada, which promotes the use of biofuels.

"The EPA's new volume obligations will put the U.S. at 10 per centethanol and between two per centand three per centbiodiesel," according to RICanada president Andrea Kent

"The increased U.S. volumes show it's an opportune time to expand Canadian biofuel requirements. Any effective climate policy needs biofuels, with renewable fuel mandates being the single largest guaranteed source of transportation fuel emission reductions," she said in an email statement.