Washington, D.C. - Rules expected out of the Bush administration soon could shape the growth of the biofuels industry for years to come.
Under the 2007 energy bill, new ethanol projects will have to meet standards for reducing greenhouse gas emissions, or else the fuel the plants produce won't qualify for meeting the nation's annual biofuels targets.
It was left up to the Environmental Protection Agency to decide how the emissions of projects would be measured, and the agency is close to issuing its proposed rules.
Industry officials say the rules could chill investment in new projects because the agency's formula will consider the impact new biofuel production will have on global land use. That's based on the theory that when crops are used for fuel production rather than food, then land somewhere else in the world must be cleared and broken for production of food crops. Converting forests to cropland releases heat-trapping carbon dioxide into the atmosphere, and those emissions would be attributed to the biofuels project.
Even projects that would make fuel from nonfood crops such as switchgrass could be affected by the EPA rules, if the land that the grass will be grown on is now planted to corn, wheat or other food crops.
The energy bill required the EPA to consider land-use changes in writing the emission standards, but the biofuels industry argues that the land issue isn't understood well enough.
"We expect it will dampen enthusiasm among investors, particularly if it's uncertain whether new technologies can meet the standards," said Paul Winters, a spokesman for the Biotechnology Industry Organization, which represents companies working on making biofuels from switchgrass and other nonfood feedstocks.
Under the energy bill, fuel from new corn ethanol plants must result in 20 percent lower greenhouse gas emissions than gasoline. For fuels made from switchgrass, crop residue or other sources of plant cellulose, emissions must be 60 percent lower.
Coal-fired corn ethanol plants almost certainly would fail the standard because of the carbon emissions from the coal itself, Winters said. But facilities operating on natural gas and cellulosic ethanol projects could have trouble as well, depending on how the EPA rules come out, he said.
But environmentalists who are following the EPA's work on the rules fear they will be too weak.
Agency officials won't talk about what they are likely to propose, but groups who have been briefed on the proposals say the EPA plans to weigh emissions from newly broken land use over a 100-year time frame.
That's important because most of the emissions from breaking land occur in the first few years after the trees are cut and ground is plowed.
Environmental groups would prefer using a much shorter period, say 30 years, which would likely result in biofuel projects showing higher emissions. These groups say that's important to make sure that biofuels don't increase global warming by causing deforestation in places such as Brazil.
A study published in the journal Science estimated that ethanol would create nearly twice the greenhouse gas emissions that gasoline does when the impact of land conversion is taken into account over a 30-year period.
The EPA appears to have picked the 100-year time frame in part to ensure that corn ethanol can meet the emissions standard, which in turn will make it easier for other projects to qualify, said Jonathan Banks, climate policy coordinator for the Boston-based Clean Air Task Force.
"I don't think that's necessarily positive for the climate," he said.
Nathanael Greene, who follows biofuels issues for the Natural Resources Defense Council, said the ethanol industry risks tarnishing its image by trying to weaken the rules.
"The big thing that's going to chill investment is if people lose faith that biofuels can be a green technology," he said.
Whatever rules are proposed almost certainly won't be finalized until President Bush leaves office Jan. 20. That means the rules could be strengthened or weakened by an Obama or McCain administration.
McCain has never supported the ethanol mandate, but Obama does and even wants to increase it. He also has worked hard to win support from corn and agribusiness interests and has ethanol enthusiasts such as former Sen. Tom Daschle as advisers.