U.S. Department of Agriculture Secretary Tom Vilsack said on Friday the agency will invest up to $100 million in grants for fuel pumps at gas stations to distribute higher ethanol blends known as E15 and E85.
Vilsack told reporters on a conference call that the agency will match state funds to install fuel pumps and tanks. The grants could be awarded by September, he said.
"The industry obviously wants to see an opportunity for us to access higher blends and we are looking forward to partnering with states," Vilsack said.
Most fuel stations in the United States sell basic unleaded gasoline containing about 10 percent ethanol, with additional pumps offering premium-grade gasoline. But few stations offer the higher-ethanol blends that can be used by the estimated 17 million "flex fuel" vehicles on U.S. roads.
The USDA announcement, which confirmed a Reuters story late on Thursday, came as the U.S. Environmental Protection Agency unveiled targets for blending of renewable fuels for 2014, 2015 and 2016.
The measures to promote corn-based ethanol were important for the agriculture economy as the avian influenza outbreak, in which 43 million birds have been culled so far, pressured prices for corn and other animal feeds, Vilsack said.
"Obviously that is going to reduce the need for feed for some time," he said, referring to the bird flu outbreak.