The Environmental Protection Agency recommended a Renewable Fuels Standard of 13.01 billion gallons, which is down from 14.4 billion gallons required this year.
The agency said the step back was in line with an overall dip in gasoline consumption in the United States and a "blend wall" indicating the gasoline market had all of the ethanol it needed to meet so-called E10 standards in which gasoline at the pump contains 10 percent ethanol.
"We have made great progress in recent years, and EPA continues to support the RFS goal of increasing biofuel production and use," EPA Administrator Gina McCarthy said in a statement. "We look forward to working with all stakeholders to develop a final rule that maintains the strength and promise of the RFS program."
The proposal will be open to public comment for 60 days, but the ethanol and oil industries were quick to express their views on the controversial mandate. The ethanol producers were unhappy with the EPA's proposal, while the oil lobby said the agency and Congress should scrap the RFA altogether.
"For the first time, EPA has acknowledged that the blend wall is a dangerous reality that must be addressed to avoid serious impacts on America's fuel supply and would be harmful for American consumers," said Jack Gerard, president and CEO of the American Petroleum Institute. "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."
The Renewable Fuels Association, however, said rolling back alternative fuels would lead to increased oil consumption and leave motorists at the mercy of volatile prices. "Cutting ethanol consumption by 1.39 billion gallons will increase demand for gasoline by 948 million gallons," the association said in a written statement. "According to Louisiana State University, that bump in demand for gasoline will increase gasoline prices by 5.7 cents per gallon across the board. As a result, American drivers will spend $7.6 billion more on gasoline purchases in 2014."