UPDATE 1-White House finishes review of ethanol draft rule

Thu Apr 30, 2009 10:23pm BST

(Adds details about land use, comment from industry)

NEW YORK, April 30 (Reuters) - The White House has finished a review of a rule that aims to cut emissions from alternative motor fuels like ethanol, federal environmental regulators said on Thursday.

The Office of Management and Budget has completed the review of the Environmental Protection Agency's rule and "we will determine what further action to take," the EPA said in a prepared statement.

The action occurred on Wednesday, a government Web site showed.

The EPA would not reveal details of the rule and would not say when it would be made public.

The agency has proposed refinements of the 2007 U.S. Renewable Fuels Standard which mandated the blending into gasoline of 36 billion gallons per year of fuels like ethanol from corn, biodiesel and second-generation biofuels like cellulosic ethanol by 2022.

The proposed rule, known as RFS2, aims to cut emissions from renewable fuels by ranking biofuels by the amount of pollution they emit over their lifetime -- from being produced on land to being burned in engines.

The agency has considered whether emissions should be counted from "indirect" changes in land use, such as carbon dioxide released when rain forests are cleared to make biofuels. Environmentalists and many scientists say that is a problem in Brazil, the world's second largest producer of biofuel and an exporter of the fuel to the United States.

Last week the California Air Resource Board adopted its own low-carbon fuels standard, the world's first-ever regulations aimed at slashing emissions of planet-warming carbon dioxide from vehicle fuels.

That rule gave biofuels like first-generation ethanol low marks for indirect land use, but it gave some time for the industry to shift to greater production of next-generation fuels, which were expected to be cleaner over their life-cycle.

Paul Winters, a spokesman for the Biotechnology Industry Organization, said his group expected the EPA rule would show that advanced biofuels and traditional biofuels made with modern processes including biotechnology will meet standards. (Reporting by Timothy Gardner; Editing by Christian Wiessner)