OREANDA-NEWS. Federal regulators today increased mandatory US biofuel blending volumes from a spring proposal but maintained a "robust, achievable" target short of Congressionally-required levels.

Final US blending volumes under the Renewable Fuel Standard (RFS) slightly exceed the so-called blendwall — a term that describes a level of biofuel blending beyond which current infrastructure and auto fleet challenges make difficult to surpass. But the agency held final volumes below those sought by the biofuel industry, including an implied conventional ethanol demand 500mn USG below that sought by the ethanol industry.

The Environmental Protection Agency final rule increased overall requirements for the volumes of biofuels refiners, importers and other obligated companies must ensure entered the US transportation fuel supply in 2014, 2015 and 2016.

Total blending volumes in 2016 will increase to 18.11bn USG, including 3.61bn USG for advanced biofuels and an implied 14.5bn USG of blending to be filled by conventional ethanol. Volumes for 2014 and 2015 reflected actual biofuel use, higher from the proposal by 2pc and 4pc to 16.28bn USG and 16.93bn USG, respectively.

EPA in May proposed total volumes of 15.93bn USG for 2014, 16.3bn USG for 2015 and 17.4bn USG for 2016. Such volumes left space for 14bn USG of corn-based ethanol or other non-mandated fuels to meet requirements.

Biofuel groups swiftly condemned the proposal at the time, which increased volumes from previous years but also cited practical impediments to reaching Congressionally-mandated levels set in 2007. US fuel supply was to include a total 22.25bn USG of biofuels in 2016, including room for 15bn USG of conventional ethanol, under the mandates as passed by Congress. Opponents to the final rule may sue within 60 days of its publication in the federal register.

Setting the current volumes carried additional, lasting pressure for the future of the program. US biofuel mandates require the agency to in 2016 modify required blending volumes if the EPA waives at least 20pc of the advanced biofuel, cellulosic biofuel or biodiesel requirements for two consecutive years, or by 50pc in a single year. Production of cellulosic biofuel started to climb in 2015, but the slow development of this complex fuel has forced waivers in every preceding program year. The agency was expected to find a way to respond to cellulosic shortfalls without significantly affecting future total biofuel requirements.

The biofuel industry insists refiners, importers and other obligated parties must be held to the original Congressional levels if the US is to overcome legal and physical problems preventing many retailers from distributing higher-ethanol blends of gasoline. US Rep. Nancy Pelosi and three other Democratic Congressmen urged the White House in a letter ahead of the final rule publication to reject consideration of fuel distribution capacity, calling such consideration contrary to the intent of the law.

The industry also pushed hard for higher mandated minimums in the run up to the final rule. Corn producers have raised fears of sustained low prices, as they expect to add another massive crop to already considerable stockpiles and face increased competition as an ethanol feedstock from similarly suffering sorghum growers. Though the biofuel program does not mandate the use of corn-based ethanol, the blendstock is easily the largest source of biofuel by volume and remains necessary to meet total biofuel requirements.