The US Environmental Protection Agency (EPA) released its proposal for mandated levels of renewable fuels blended into gasoline and diesel on Friday. The proposal aims to find a balance between encouraging the continued growth of the biofuels sector and avoiding blending more ethanol into the motor fuel pool than some engines can safely handle.

Production of biofuels has grown rapidly, but gasoline demand has underperformed expectations when the Renewable Fuel Standard was passed in 2007, said that EPA in a statement. “We are now at the ‘E10 blend wall,’ the point at which the E10 fuel pool is saturated with ethanol. If gasoline demand continues to decline, as currently forecast, continuing growth in the use of ethanol will require greater use of higher ethanol blends such as E15 and E85.”

The 2014 proposal’s targets for both advanced biofuels and total renewable fuel are substantially lower than volumes laid out in the Clean Air Act.

Refiners are viewing this proposal as a conditional victory, saying that it doesn’t go far enough. Biofuels and environmental groups see it as a step back in efforts to meet US energy security and emissions goals.

American Petroleum Institute president and chief executive Jack Gerard:

“EPA has acknowledged that the blend wall is a dangerous reality and that breaching it would serious impacts on America’s fuel supply and would be harmful for American consumers.

“While the agency took a step in the right direction, more must be done to ensure Americans have the choice of ethanol-free gasoline for boats and small engines, and to bring their mandates closer to reality on cellulosic biofuels, which do not exist in commercial quantities.

“Congress must protect consumers by repealing this outdated and unworkable program once and for all.”

Leticia Phillips,  North American Representative of the Brazilian Sugarcane Industry Association

“Slashing the 2014 target for advanced biofuels would be a huge step backwards from the Obama administration’s goal of decreasing greenhouse gases and improving energy security.”

“We are surprised and disappointed that EPA’s proposal minimizes the 650-800 million gallons of sugarcane ethanol Brazil is poised to supply to the United States in 2014.”

Fuels America:

“We are astounded by the proposal released by the Administration today. It reflects an ‘all of the above, except biofuels’ energy strategy. If implemented, would cost American drivers more than $7 billion in higher gas prices, and hand the oil companies a windfall of $10.3 billion.”

Novozymes President, Americas Adam Monroe

“The Renewable Fuel Standard was signed into law to break OPEC’s effects on the nation: high oil and gasoline prices, American dollars going offshore and environmental consequences our grandchildren will endure.”

“We cannot put oil’s interests before the nation’s needs. Blending more renewable fuel means more savings for consumers at the pump.”

American Fuel & Petrochemical Manufacturers (AFPM):

“EPA’s recognition of the blendwall and the potential adverse effects on consumers is a welcome step, however greater reductions in the biofuel mandate are necessary if consumers are to avoid all the detrimental impacts of the statute.”

“EPA’s actions can only be short-term in nature and point to the need for Congress to work quickly in addressing the severely flawed and totally outdated Renewable Fuel Standard (RFS).

The Natural Resources Defense Council is of two minds on biofuels. “There is no denying that the bulk of today’s conventional corn ethanol carries grave risks to the climate, wildlife, waterways, and food security,” said NRDC’s Franz Matzner in a recent blog post. “It is equally true that as a nation we need low carbon, sustainable biofuels to combat climate change and break our addiction to oil.”

The National Council of Chain Restaurants also has a stake in the outcome of the RFS debate, arguing that existing standards raise the price of food products substantially – corn products in particular, by 26%.