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UPDATE 2-U.S. EPA to propose boost in biofuel blending volumes, EV program -sources

(Adds details on EV program)

By Stephanie Kelly and Jarrett Renshaw

NEW YORK, Nov 30 (Reuters) - The U.S. Environmental Protection Agency will propose increases in the amount of ethanol and other biofuels that oil refiners must blend into their fuel over the next three years, two sources familiar with the matter said. The EPA will also seek for the first time to make the use of biofuels to charge electric vehicles part of the renewable fuel program, giving car makers like Tesla Inc the ability to generate tradable credits, the sources said. The EV proposal will add up to 1.4 billion new credits by 2025, they added.

The agency's long-awaited proposal, expected later this week, will call for overall blending mandates of 20.82 billion gallons in 2023, 21.87 billion gallons in 2024 and 22.68 billion gallons in 2025, the sources said.

In each of those years, volumes of conventional biofuels like corn-based ethanol will be set at 15 billion gallons or higher, the sources said - specifically 15 billion in 2023 and 15.25 billion each in 2024 and 2025, the sources said.

So-called D3 credit volumes will grow from 720 million in 2023 to 2.13 billion by 2025, with overwhelming majority of the growth coming from credits generated by electric vehicles, or E-RINs. The electricity to power the cars must come from renewable sources of biogas, such as methane from landfills.

The EPA's biofuel mandate for the current year is 20.88 billion gallons, which includes the annual volume requirement plus a supplemental 250 million gallons added to compensate for volumes that were not blended in previous years.

The EPA did not respond to requests for comment.

Under the Renewable Fuel Standard (RFS), oil refiners are required to blend billions of gallons of biofuels into the nation's fuel mix, or buy tradeable credits from those that do.

While Congress set out specific goals through 2022, the law expands the EPA's authority for 2023 and beyond to change the way the RFS is administered. Starting next year, the agency has leeway to set multi-year mandates and make other changes.

Advanced biofuel blending volume mandates in the EPA proposal will be set at 5.82 billion gallons in 2023, 6.62 billion gallons in 2024 and 7.43 billion gallons in 2025, the sources said. (Reporting by Stephanie Kelly in New York and Jarrett Renshaw in Philadelphia; Editing by Richard Valdmanis, Matthew Lewis and Edwina Gibbs)

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