Reuters reports that yesterday the U.S. Environmental Protection Agency proposed a "renewable fuels standard" in order to comply with a 2005 law mandating refiners and marketers to raise biofuel production to 7.5 billion gallons in 2012. As reference, production for 2006 is projected at 4 billion gallons. Renewable fuels currently make up 2.78 percent of the nation's gas sales. The EPA's proposed standard would raise that to 3.71 percent next year.

The plan does, however, outline a market-style credit system which would allow a more flexible way for fuel suppliers to comply with the rules by selling biofuels mainly where it's most economical to do so.

The EPA projects that the renewable fuels standard would reduce U.S. petroleum consumption by 3.9 billion gallons per year equating to about 14 million tons in greenhouse gas emissions saved.

As an opponent of the pending rules, Bob Slaughter, president of the National Petrochemical and Refiners Association, said, "Consumers will be better served if the market, rather than politics, determines future use of fuel-blending components, including renewables."

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[Source: Reuters]