Farm groups have welcomed fresh US biofuels guidelines which could drive large increases in the production of biofuels made from corn and soyoil, and raise farm incomes by $13bn.

The US Environmental Protection Agency late on Wednesday revealed that it had reversed its scepticism over the green credentials of corn-baed bioethanol, ruling that emissions from its manufacture did, after all, beat a 20% reduction hurdle compared with petrol.

"EPA has found that it is indeed 20% less greenhouse gas emitting than gasoline," agency administrator Lisa Jackson said.

"Based on what we know now… there is no basis to exclude these fuels."

'Encouraging' decision

The ruling, which will allow corn-based ethanol to account for a huge chunk of the 36bn gallons lawmakers have mandated by 2022, was welcomed as "encouraging" by the American Farm Bureau.

"We will be analysing the rule in its entirety, but we are optimistic about the overall direction of support it offers renewable fuels," the bureau said.

The National Corn Growers Association said the EPA ruling provided "further evidence of corn ethanol's superiority over conventional gasoline" in meeting environmental targets.

"We're pleased the agency recognizes that corn ethanol provides a distinct advantage over conventional gasoline when it comes to greenhouse gas emissions," Darrin Ihnen, the association's president, said.

'Updated numbers, new result'

Indeed, the decision, which government officials reportedly believe will add $13bn to US farm incomes by 2022, was criticised by some members of the environmental and oil lobbies as pandering to farmers' interests.

The National Petrochemical & Refiners Association said that "politics may have trumped science", aiming its fire in particular at the soyoil-based biodiesel, whose prospects were also enhanced by the EPA ruling.

However, Ms Jackson said she was "confident" that the agency was not "dumbing down the standard to favour any particular industry or… outcome".

The numbers used in last year's proposals, which found that some types of corn-based ethanol caused more emissions than petrol once all inputs were factored in, "were not right", she added.

"When we used updated numbers, we got a new result."

Chicago prices rise 

The decision helped a revival in crop prices, which have been on a steep decline since the US Department of Agriculture three weeks ago raised estimates for global supplies of major agricultural commodities.

"The EPA conference did sound friendly long term for corn and soybean oil," Mike Mawdsley, at broker Market 1, said.

At GrainAnalyst.com, Vic Lespinasse said: "The EPA ruling could increase the use of soybean oil to make biodiesel fuel sharply this year and even more over coming years."

Chicago corn for March delivery added 2.75 cents to $3.55 ¾ a bushel in overnight electronic trading, with  March soybeans up 5.5 cents at $9.13 ½ a bushel.