EPA may boost level of ethanol in gasoline to 15%

The U.S. Environmental Protection Agency has signaled it may be willing to raise limits on how much ethanol can be blended into gasoline, a possible boon to struggling manufacturers like Pacific Ethanol Inc

In March, a group of ethanol producers known as Growth Energy asked the EPA to raise its cap on gasoline blends to allow up to 15 percent ethanol, up from the current 10 percent.

The federal agency hasn’t decided yet whether to grant the request. But in a Nov. 30 letter to Growth Energy co-chairmen Gen. Wesley Clark and Jeff Broin, Gina McCarthy, assistant administrator of the EPA, wrote that studies so far indicate that vehicles made since 2001 will likely be able to handle a higher ethanol blend. The government is still evaluating the long-term effects on engine components over thousands of miles of use, she cautioned.

Testing is being carried out by the U.S. Department of Energy, she wrote, and will eventually cover 19 different vehicles.

Only two have been completely tested so far, but 12 more should be completed by the end of May.

Should the test results remain favorable, McCarthy wrote, the EPA could approve the 15 percent blend by mid-2010.

“Of course, if the data highlight potential problems, then the decision may need to be delayed until all testing is received and reviewed,” she added.

While critics have argued the waiver would simply help prop up the subsidized industry, ethanol producers have pitched it as a way to build jobs, benefit the environment and work toward a federal target of 36 billion gallons of ethanol used each year in a little more than a decade — far more than is used now.

From a business perspective, approval would certainly be good news for companies such as Pacific Ethanol, which announced last week it intends to start up its plant in Burley again in January after production was suspended last February.

That plan still has to be reviewed this month in bankruptcy court.

Vice President Paul Koehler said his company is not an official member of Growth Energy, but has worked to support the issue. An expanded ethanol market — as much as seven billion more gallons of potential, according to a Growth Energy estimate — would be a great thing as Pacific Ethanol’s subsidiaries recover from the bankruptcy, he said.

“It’s good for the environment, good for the economy, good for the industry,” Koehler said.

Not all of that industry is happy with how the EPA’s approaching the waiver. The Renewable Fuels Association called this week for immediate approval of at least 12 percent blends to provide “breathing room” until the federal agency gets around to a final decision.

“This delay threatens to paralyze the continued evolution of America’s ethanol industry,” stated Bob Dinneen, the group’s president and CEO.

SOURCE: magicvalley