The government should delay new rules that expand U.S. use of biofuels until 2011, the oil industry said on Tuesday, because there is too much work to do on the ground-breaking rules to start sooner.

The Environmental Protection Agency has a January 1 target to apply the rules that also require advanced biofuels to have greenhouse gas emissions that are 40 percent lower than petroleum from creation through consumption.

Al Mannato, a manager at the American Petroleum Institute, said the industry would prefer a year's delay as it is unlikely EPA can complete work in time for a smooth January 1 start.

It appears the only option possible is a 2011 start date, said Mannato during an all-day EPA hearing on its May 5 proposal to update the so-called renewable fuels standard.

EPA proposed changes to the Renewable Identification Numbers that flow with each gallon of ethanol as it passes through ownership chain from makers to refiners. Mannato said the new rules would result in four types of RINs to be tracked, instead of the current one.

The new standard also requires advanced biofuels to have greenhouse gas emissions that are 40 percent lower than petroleum, from creation through consumption.

Farm and ethanol groups say the life-cycle measurements for biofuels veer into speculation by including crop land changes overseas. They want the international estimates dropped.

Environmentalists defend the formula as cutting-edge work that gives a full account of biofuel's impact.

Besides the hearing, EPA plans two workshops on issues that include indirect land-use change. It will accept comments on the RFS proposal until July 27.

The 2007 energy law guarantees use of 36 billion gallons (136 billion liters) a year of biofuels by 2022, 15 billion gallons from conventional biofuels, such as corn-based ethanol, and 21 billion gallons from advanced fuels such as cellulosic ethanol derived from grass.

This year's target is 11.1 billion gallons of biofuels.

Nathaneal Greene of the Natural Resources Defense Council, an environmental group, said 21 billion gallons of advanced biofuels would require 15.5 billion cubic feet of feedstock, equal to the average annual U.S. timber harvest.

Only your regulation can keep this new demand from having a harmful impact, said Greene. He said EPA was correct to gauge how other nations boost crop output to offset U.S. land devoted to renewable fuels.

Steve Ruh of the National Corn Growers Association said EPA under estimated future U.S. corn output, which would reduce the amount of additional land needed for biofuels. Ruh said yield increases of 3 to 4 bushels an acre each year were probable.

That would be an annual gain of more than 2 percent, compared to EPA's projection of 1.6 percent a year.

(Reporting by Charles Abbott; Editing by Lisa Shumaker)

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