Hugh Pickens DOT Com writes "Matthew Wald reports in the NYT the the Environmental Protection Agency has proposed reducing the amount of ethanol that is required to be mixed with the gasoline supply, the first time it has taken steps to slow down the drive to replace fossil fuels with renewable forms of energy. The move drew bitter complaints from advocates of ethanol, including some environmentalists, who see the corn-based fuel blend as a weapon to fight climate change and was also unwelcome news to farmers, coming at a time when a record corn crop is expected, and the price of a bushel has fallen almost to the cost of production. "Boy, my goodness, are the oil companies going to benefit from this," says Bob Dinneen, president of the Renewable Fuels Association. "We're all just sort of scratching our heads here wondering why this administration is telling us to produce less of a clean-burning American fuel." But the EPA says that a big part of the problem was that automobile fuel systems and service stations were not set up to absorb more than about 10 percent ethanol. Most cars on the road are limited to the current mixture, called E10, and there has been little demand by consumers for more. Reasons for the turnaround are many: The boom in domestic oil drilling has dimmed the urgency to find other alternatives to Mideast petroleum. Demand for gasoline has slumped. And criticism of the environmental impacts of corn ethanol has dimmed its luster nationally. The chill on ethanol will certainly affect the industry's powerhouse, corn ethanol. But the risk is far greater for smaller sectors of the industry still struggling to get out of the gate — those aimed at producing next-generation biofuels like "cellulosic" ethanol, made from ingredients like switchgrass and corn stalks. "I don't know if the EPA is aiming for uncertainty, but they may inadvertently create it," says Jan Koninckx, the global business director of biorefineries for DuPont. "The impact could be that another country will lead this rather than the U.S.""