Campaigners for renewable fuels have condemned as a threat to the future of biofuels a decision by US regulators to delay a ruling on raising ethanol limits.

The Environmental Protection Agency's decision, which will hold back until the middle of next year consent for higher blends of ethanol in filling station petrol, was viewed by Chicago traders as a setback for the price of corn, a major feedstock for the biofuel.

The Renewable Fuels Association said the delay, which the EPA said reflected extra time needed to check the impact of higher ethanol blends in fuel on vehicle engines,"threatens to paralyse the continued evolution of America's ethanol industry".

"This delay will chill investment in advanced biofuel technologies at a critical time in their development and commercialisation," RFA chief executive Bob Dinneen said.

The delay by the EPA, which had been considering blend levels of up to 15% in petrol, risked causing "paralysis by analysis", Mr Dinneen added, urging the upper limit for ethanol blends to be raised to 12% from the current 10% while the official tests are ongoing.

'Silence critics' 

However, the decision - which could have a large impact on demand for corn, a major bioethanol feedstock � received a warmer response from ethanol industry group Growth Energy which said the EPA's announcement showed its willingness to raise the ethanol ceiling.

Gina McCarthy, EPA assistant administrator, said in a letter explaining the agency's decision that should the results of the government tests prove "supportive� we would be in a position to approve [15% ethanol] for 2001 and newer vehicles in the mid-year timeframe".

The tests were needed to evaluate the impact on engine components of petrol containing 15% ethanol  when it "is used over many thousands of miles", she added.

Longer than expected

In Chicago, the delay was viewed as a negative factor for the price of corn, of which Washington estimates 4.2bn bushels being used by ethanol plants in 2009-10.

"The decision put some modest pressure on corn," Vic Lespinasse, Chicago marketwatcher for GrainAnalyst.com, said.

"A delay in the EPA decision was expected but it had been hoped it wouldn't be that long."

Corn for March delivery stood 4.5 cents lower at $4.13 in late deals.