The US Environmental Protection Agency raised its renewable fuel blending requirement for this year to 16.55 billion gallons, up 1.35 billion gallons from its 2012 mandate, sparking immediate condemnation from the oil industry and cheers from biofuels groups, reports Herman Wang of Platts, a McGraw Hill financial information service.

In finalizing its long-overdue 2013 Renewable Fuel Standard, the EPA said on Aug. 6 that it would also extend the deadline to comply with this year’s mandate by four months to June 30, 2014, to provide “greater lead time and flexibility.”

And in projecting that the E10 blend wall would be breached in 2014, the agency said it would “use flexibilities in the RFS statute to reduce both the advanced biofuel and total renewable volumes” in its forthcoming 2014 RFS proposal.

The EPA, which offered no timeline on when it will propose its 2014 RFS volumes, has the authority to waive or reduce the ethanol blending requirements if they were to cause “severe” economic harm.

The 16.55 billion gallons of renewable fuels required for 2013 will represent 9.74% of the US transportation fuel supply, the agency said.

Among those gallons of renewable fuel, the EPA is requiring 1.28 billion gallons of biodiesel, 2.75 billion gallons of advanced biofuels and 6 million gallons of cellulosic biofuels.

“These standards reflect EPA’s updated production projections, which are informed by extensive engagement with industry and a thorough assessment of the biofuels market,” the agency said in a statement.

The cellulosic biofuels volume is a severe cut from last year’s 10.45 million gallons, as well as a major reduction from the 14 million gallons that the EPA proposed in January for 2013.

The agency said it set the cellulosic biofuels mandate according to a January ruling by the US Court of Appeals that ordered the EPA to accurately consider the prevailing market conditions for the fuel.

Biofuels firm Ineos Bio announced last week it has begun producing the first commercial volumes of cellulosic ethanol, though it declined to say how much that was.

In 2012, the EPA required blending 15.2 billion ethanol-equivalent gallons of renewable fuels into the US gasoline pool, including 2 billion gallons of advanced biofuel, 1 billion gallons of biodiesel and 10.45 million ethanol-equivalent gallons of cellulosic fuel.

Tuesday’s announcement prompted the oil industry to renew its call for Congress to repeal the RFS, which requires annually increasing blends of biofuels in US transportation fuel supplies, up to 36 billion gallons by 2022. The industry has said the RFS will cause gasoline prices to rise and ruin vehicle engines not designed to run on higher ethanol blends.

“It’s up to Congress to exercise leadership and move quickly to end this dangerous mandate before it hurts consumers, damages vehicles and harms our economy,” American Petroleum Institute President Jack Gerard said in a statement.

The biofuels industry, on the other hand, said the EPA demonstrated the flexibility of the RFS in cutting the cellulosic ethanol mandate. Advocates have said the law protects the US against volatile oil prices and said changing the RFS would cause investment in next-generation biofuels to dry up.

“Our industry continues to transform the liquid fuel marketplace by making motor fuel cheaper, creating new jobs for Americans and reducing our dependence on foreign oil,” said Brooks Coleman, president of the Advanced Ethanol Council.

The RFS was created by Congress in 2005 and expanded in 2007, at a time when US gasoline demand seemed on an inexorably upward trend. But demand has slumped along with the economy, and more stringent fuel economy standards have also dented consumption, leading to concerns that the so-called E10 blend wall might soon be breached.

The blend wall refers to the situation in which rising ethanol blending mandates exceed 10% of the US gasoline supply, and RIN prices appear to have risen sharply in response to fears that the blend wall has been or will soon be breached. Most automakers will not honor warranties if car owners use fuel with a greater than 10% blend of ethanol.

Charles Drevna, president of American Fuel & Petrochemical Manufacturers, said the EPA could provide immediate relief for refiners by using its waiver authority to cut the biofuels blending requirements for 2014.

“EPA now has an opportunity to act decisively to bring long-term stability to the market,” he said.