WASHINGTON – Iowa’s ethanol industry is on edge as the U.S. government decides the future of the ethanol mandate, the Des Moines Register reports.

Iowa is the country’s largest ethanol-producing state, contributing roughly 28% of the nation’s production this year, a similar level to those of 2011 and 2012, according to the Iowa Renewable Fuels Association. The group said the recent startup of a new wet mill and three cellulosic ethanol projects that are scheduled to begin production nests year “provide hope for growth” next year.

“Iowa ethanol production was up in 2013, but not enough to round the decimal point. With the record U.S. corn harvest in the bin and new production facilities coming on line, there is hope that Iowa can once again expand ethanol production,” said Monte Shaw, executive director of the Iowa Renewable Fuels Association. “But hanging over that potential like a gray cloud is the EPA proposal to cut the RFS (Renewal Fuel Standard).”

Last month, the Environmental Protection Agency (EPA) proposed reducing the RFS in 2014 to 15.2 billion gallons of ethanol and other biofuels, 3 billion gallons below what Congress had required as part of a 2007 law. Traditional biofuels would be reduced to 13 billion gallons from 14.4 billion.

Shaw said that if the mandate is reduced, the industry would need to look elsewhere to grow. “Without a strong RFS, we’ll be looking for export opportunities to drive production,” he said.

Bob Greco, downstream director with the American Petroleum Institute, said the proposal to reduce the ethanol mandate “was a step in the right direction” but didn’t go far enough. “We will continue our call for Congress to repeal the RFS to protect consumers from this outdated and unworkable program once and for all,” he said.

The EPA could either finalize its November proposal or change it. The agency is expected to make a decision this spring.