WASHINGTON - The Environmental Protection Agency announced last week that biodiesel made from palm oil does not meet the requirements for inclusion of the federal renewable fuels program because the fuel??s greenhouse-gas emissions are too high.

In a regulatory filing on Friday, BusinessWeek reports that the EPA said that palm-oil biodiesel, produced in countries such as Malaysia and Indonesia, provides reductions of as much as 17% in greenhouse-gas emissions compared to traditional diesel fuel, falling short of a 20% reduction necessary to qualify.

Failure to meet the 20% threshold means that oil companies cannot use palm fuels to meet national renewable fuel standards. However, they can use fuels made from soybeans, animal fat, recycled cooking grease or similar materials.

"Our goal is to continue to diversify the already strong portfolio of biodiesel feed stocks in the future, but we respect the EPA??s review process and will move forward accordingly," Ben Evans, a spokesman for the National Biodiesel Board, told BusinessWeek.

Also on Friday the National Biodiesel Board announced that the U.S. biodiesel industry reached a key milestone by producing more than 1 billion gallons of fuel in 2011. The total volume of nearly 1.1 billion gallons is a record for the industry and exceeds the 800 million gallon target required under the EPA's Renewable Fuel Standard (RFS). The previous record for biodiesel production was about 690 million gallons in 2008.