Washington, D.C. - The Environmental Protection Agency is expected to rule this week whether more ethanol can go into the gasoline used for everything from automobiles to boats and snowblowers.

But that doesn't mean higher-proof gasoline is headed for service stations any time soon. Even if the agency agrees to allow higher levels of ethanol in gas - and that is no given - it's not clear when the higher-proof fuel would reach the market.

Refiners are saying they won't put more ethanol into their gasoline unless Congress gives them protection from potential lawsuits from motorists or consumers who claim the ethanol hurt their engines.

Just because the agency can approve higher ethanol content, "that doesn't mean anybody is forced to sell it," said Charles Drevna, president of the National Petrochemical and Refiners Association.

The environmental agency is supposed to rule by Tuesday on a petition from Growth Energy, an ethanol industry trade group, to raise the limit on ethanol in gasoline from 10 to 15 percent. Although the agency has let deadlines slip in the past, the agency is committed to making an announcement that day, spokeswoman Deb Berlin said.

"We think we made the case," said Tom Buis, president of Growth Energy.

His group argued that the higher ethanol level is safe for cars and that the ethanol industry is being harmed economically by uncertainty about how much its product will be used in coming years. Investors in next-generation ethanol plants, which will use crop residue and other nonfood feedstocks, need to be assured there will be a market for increased volumes of ethanol, he said. Growth Energy's members include Poet LLC, which is proposing to produce ethanol from corncobs at Emmetsburg.

But Buis said refiners are going to be a hard sell. His group hasn't endorsed liability protections for refiners and gasoline distributors, but hasn't ruled it out, either.

"There are certain issues that still need to be addressed," he said, referring to the liability issue.

The key legal issue for the environmental agency is whether the higher ethanol content, which causes engines to run hotter, could damage emission controls and increase air pollution. The Energy Department has yet to finish studies on the impact that gasoline with 15 percent ethanol, or E15, could have on cars and outdoor power equipment.

Without more research being done, it's premature to increase the ethanol limit, according to the auto industry and groups representing manufacturers of boats, chainsaws, snowblowers and other gasoline-powered equipment.

EPA officials "ought to have enough data in the bank before they make that decision" to increase ethanol levels, said Kris Kiser, executive vice president of the Outdoor Power Equipment Institute.



The agency is looking at several options, including these:

- Approving E15 for all automobiles, boats and equipment.

- Allowing E15 only for automobiles made since 2004, which have more advanced engines and emission systems.

- Increasing the blend limit to 12 percent by ruling that E12 would be essentially the same as E10, the blend now in common use. The industry is split over this idea. The Renewable Fuels Association has argued for the E12 option as an interim step while the agency considers approving E15. Growth Energy counters that going to E12 doesn't do enough to help the industry.

Leaving the ethanol limit alone is an option, too, although that delays the day the agency has to address the issue. The agency has dueling legal responsibilities to protect auto emission systems and to allow for the ethanol market to grow to meet the biofuel usage mandates set by Congress in 2007.

By 2012, the law will mandate more ethanol usage than can be sold as E10, according to an analysis by the Renewable Fuels Association. That limit would likely be reached earlier than that, assuming ethanol isn't used in all gasoline.

Refiners face a potential problem, too. They may not want to use E15, but they still must comply with the federal usage mandates. Refiners could do that by purchasing credits, instead of buying the actual ethanol.

The liability issue isn't the only concern for refiners. They are operating under capacity because gasoline consumption is down and adding more ethanol to their fuel means gasoline usage could fall still more, said Mark Habib, a biofuel analyst with Standard and Poors.

Refiners historically haven't been the most lovable of companies, but they might not get a lot of guff from consumers if they refuse to sell E15. The ethanol industry is struggling with the public relations problems that followed the run-up in grain and food prices in 2008, said Rick Kment, an ethanol analyst with DTN.

He said he thinks the agency will announce that it will delay a decision "and look for more time and more information."

Right now, that seems to be an outcome that would please just about everyone but the ethanol industry.

source: desmoinesregister

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