NEW YORK - U.S. President Barack Obama's administration issued a draft rule on Tuesday aiming to cut greenhouse gasses emitted by biofuels but confirming his predecessor's target for production of corn-based ethanol.

The rule seeks to make production of U.S. corn-based ethanol more efficient and increase production of advanced biofuels. Corn ethanol has been criticized for contributing to higher food prices and indirectly causing greenhouse gas emissions by forcing forests and other lands to be burned abroad to create farmland.

Obama also called on the heads of the Environmental Protection Agency, the Department of Energy and the Department of Agriculture to chair a group to identify policies to develop advanced biofuels and increase use of flex fuel cars that can run on gasoline or fuel that is mostly ethanol.

Obama said in a release that the country must invest in clean energy for new jobs and to reduce dependence on foreign oil. Through American ingenuity and determination, we can and will succeed, he said.

The new rule, issued by the EPA, confirms the schedule of the 2007 Renewable Fuels Standard, signed by former President George W. Bush, which calls for the blending of 36 billion gallons (136 billion liters) per year of biofuels into gasoline by 2022.

It calls for a maximum blending of 15 billion gallons of corn and grain-based ethanol annually into gasoline by 2015.

It also confirms the target of blending 16 billion gallons per year by 2022 of cellulosic ethanol made from substances such as switchgrass and agricultural waste. Cellulosic ethanol has shown promise as a fuel lower in carbon emissions and one that will not raise food prices, but is not yet made in commercial amounts.

Corn-based ethanol is a bridge to the next generation of biofuels, EPA Administrator Lisa Jackson said in a teleconference about the draft rule.

The rule aims to spur traditional bio-refineries that make corn ethanol to run on cleaner fuels like biomass instead of fossil fuels. That is expected to lower life-cycle emissions from corn-based ethanol.

The 1,004-page Regulation of Fuels and Fuel Additives: Changes to Renewable Fuel Standard Program will be published in the Federal Register and open for public comments.

Jackson said the comments would help the government find the best way to measure global warming pollution from biofuels before issuing final rules.


The interagency group will seek to ease transportation of identify policies to develop advanced biofuels and transport them to market.

Obama said that nearly $790 million from the stimulus bill will accelerate advanced biofuels research and development. He asked Agriculture Secretary Tom Vilsack to speed up financing opportunities, including loan guarantees and funding, under the 2008 Farm Law to develop bio-refineries and demonstration-scale plants.

The draft rule mandates greenhouse gas cuts for alternative fuels. It measures any carbon dioxide emissions from indirect land use change. Those include any global warming pollution given off when U.S. production of crops like corn for biofuels displaces other crops, pushing farmers around the world to burn down forests and grasslands to grow them.

Many corn ethanol producers oppose such measurements saying advances in seeds and fertilizers cut the need for more land to grow corn for more ethanol.

Some environmentalists applauded the issuing of the rule.

The release of the rule is an important first step in understanding greenhouse gas emissions from biofuels, Britt Lundgren, an agricultural policy specialist with the Environmental Defense Fund, said by telephone.

But Frank O'Donnell, president of Clean Air Watch, said the draft did not go far enough and risked forming rules based on far-off future projections.

(Additional reporting by Tom Doggett and Ayesha Rascoe in Washington; Editing by Marguerita Choy)