New federal mandate a victory for Minnesota's ethanol producers

The Obama administration has mandated a record amount of biofuel use in 2017 — a victory for the ethanol industry, which counts Minnesota as one of its top producers.

The U.S. Environmental Protection Agency Wednesday finalized an annual rule that sets volume requirements for biofuel in the nation's motor fuel supply. The agency set the total renewable fuel requirement for 2017 at 19.28 billion gallons, up 6.4 percent over 2016 and higher than the EPA's original proposals this spring.

For 2017, the EPA is mandating the use of 15 billion gallons of conventional biofuel, which is primarily corn-based ethanol. It marks the first time the agency has mandated the 15 billion-gallon statutory maximum for conventional biofuels, which was established by Congress a decade ago.

"We were very pleased today," said Minnesota Sen. Amy Klobuchar, a member of the Senate Committee on Agriculture who has worked with farm groups to help push for greater biofuel usage. "It's kind of a Thanksgiving surprise."

The EPA is required to set targets by the Renewable Fuel Standard, with annual mandates for how much ethanol and biodiesel need to be blended with gasoline and diesel.

The program, signed into law by President George W. Bush, was designed to curb greenhouse gas emissions, promote energy independence and boost rural economies.

The EPA on Wednesday also increased its usage mandates for biomass-based diesel fuel, advanced biofuel and cellulosic biofuel — all three of which are far smaller sources of biofuel than ethanol.

The Renewable Fuel Standard regularly sparks battles between the oil industry and the ethanol industry. Reactions to Wednesday's decision were no different.

Chet Thompson, president of the American Fuel and Petrochemical Manufacturers, told Bloomberg News that the 2017 targets are "completely detached from market realities."

The ethanol industry is a big market for corn growers, and Minnesota is the nation's fourth largest corn growing state.

"This certainly helps," Harold Wolle, president of the Minnesota Corn Growers Association, said of the 2017 mandate. "We have been fighting to get the renewable obligations up to the statutory limits for a number of years."

Minnesota has about 20 ethanol plants, mostly in the state's southern half. The state is the nation's fourth largest ethanol producer, churning out 1.16 billion gallons of biofuel per year, according to the Minnesota Bio-Fuels Association.

Most U.S. gasoline mixed with ethanol is E10, which contains 10 percent of the biofuel.

Reuters contributed to this story.

Mike Hughlett • 612-673-7003