In Washington, the U.S. Environmental Protection Agency (EPA) waived a limitation on selling fuel that is more than 10 percent ethanol for model year 2007 and newer cars and light trucks. The waiver applies to fuel that contains up to 15 percent ethanol – known as E15 – and only to model year 2007 and newer cars and light trucks. This represents the first of a number of actions that are needed from federal, state and industry towards commercialization of E15 gasoline blends.
EPA Administrator Lisa P. Jackson made the decision after a review of the Department of Energy’s (DOE’s) extensive testing and other available data on E15’s impact on engine durability and emissions. “Thorough testing has now shown that E15 does not harm emissions control equipment in newer cars and light trucks,” said EPA Administrator Lisa P. Jackson. “Wherever sound science and the law support steps to allow more home-grown fuels in America’s vehicles, this administration takes those steps.”
Impact of the ruling
Initial impact of the ruling is expected to be minimal, as retailers consider the logistic and legal implications of offering 15 percent blends to some customers, and 10 percent to others. But over the next 12 years covered by the Renewable Fuel Standard the ruling will open up the market for ethanol to more than 19 billion gallons, without the use of higher ethanol blender pumps for flex-fuel cars, as more and more post-2007 cars arrive in the marketplace.
2001 through 2006 model data
A decision on the use of E15 in model year 2001 to 2006 vehicles will be made after EPA receives the results of additional DOE testing, which is expected to be completed in November. However, no waiver is being granted this year for E15 use in model year 2000 and older cars and light trucks – or in any motorcycles, heavy-duty vehicles, or non-road engines – because currently there is not testing data to support such a waiver.
Since 1979, up to 10 percent ethanol or E10 has been used for all conventional cars and light trucks, and non-road vehicles. Additionally, several steps are being taken to help consumers easily identify the correct fuel for their vehicles and equipment. First, EPA is proposing E15 pump labeling requirements, including a requirement that the fuel industry specify the ethanol content of gasoline sold to retailers. There would also be a quarterly survey of retail stations to help ensure their gas pumps are properly labeled.
Industry reaction: pro
Agriculture Secretary Tom Vilsack:
“Today’s announcement from EPA is an important step toward making America more energy independent and creating much-needed jobs in rural America. The announcement will help get existing ethanol capacity into the market.
Increasing the use of ethanol in automobiles and light trucks not only provides biomass and biofuel producers with additional revenue enhancing opportunities, it will help us reach the Obama Administration’s goal of increasing renewable fuels usage in the U.S. marketplace to 36 billion gallons by 2022.
Today’s action by Administrator Jackson and the EPA provides assurance to farmers, ranchers and the renewable fuels industry that the government backs the use of home grown energy in our cars and trucks. At the same time, more work is needed and we hope EPA and the Department of Energy complete an evaluation of 2001-2006 models soon.”
National 25×25 Steering Committee:
“The National 25x’25 Steering Committee today commended the EPA for approving fuel blends of up to 15 percent ethanol (E15) for model year 2007 and newer cars and light trucks. Based on extensive testing conducted by the Department of Energy and other available data, the EPA has used sound science to determine that fuels containing up to 15 percent ethanol do not harm emissions control equipment in newer cars and light trucks.
“Today’s EPA announcement represents an important interim step in the continuing development of a U.S. biofuels industry that creates thousands of jobs, boosts the economy and reduces our dependence on foreign oil. However, the DOE continues to test the use of E15 in 2001 model vehicles and later, and the Steering Committee urges EPA to finalize its analysis and reach a quick decision on the use of E15 for those vehicles as well. Policy makers in Washington are also urged to address and adopt those incentives that can boost the ethanol market through the installation of more blender pumps and the addition of more flex-fuel vehicles to our nation’s automotive fleet.
Poul Ruben Andersen, Novozymes’ global marketing director:
“Novozymes is encouraged by the EPA’s approval of a higher ethanol blend for 2007 and newer model cars, as this is necessary to meet the federal mandate for renewable fuels. This sends a strong signal to the market and further drives development and commercialization of advanced biofuels. Increasing the blend wall from E10 to E15 is estimated to create more than 136,000 new green jobs in the biofuel industry and related industries in the U.S.”
Glenn Nedwin, EVP of Genencor:
“We applaud the action taken today by the EPA and hope that they will quickly move to approve E15 for all vehicles. The adoption of sound, tested policies for cleaner fuels is critical to reducing our dependence on foreign oil, supporting our agricultural sector and cutting greenhouse gas emissions.”
Tom Buis, CEO, Growth Energy:
“Today’s approval of E15 for newer vehicles is the first crack in the blend wall in more than 30 years, and proves what was laid out in Growth Energy’s Green Jobs Waiver – that E15 is a good fuel for American motorists. And while this is an important first step, there are many more steps we can take toward strengthening our national security by reducing our dependence on foreign oil, creating jobs here in the United States and improving our environment,” Tom Buis, CEO of Growth Energy, said.
Jeff Broin, CEO, POET:
“Approval of E15 in 2007 and newer vehicles is a positive first step toward opening the market for more ethanol to compete with gasoline. However, the EPA must move quickly to take the next step: approval of E15 for use in older vehicles.
“The arguments being made right now against E15 are the same as those made about E10 back in the late 1980s, when I entered the ethanol industry. Seventy billion gallons later, we have proven those arguments false, just as research on E15 is proving critics wrong today.
“Greater market access will help give investors the needed confidence to commit to bringing cellulosic ethanol to commercial scale. Many projects, POET’s Project LIBERTY among them, are ready for commercialization but hindered by unnecessary limits on ethanol content in fuel.”
Industry reaction: mixed
Bob Dinneen, CEO, Renewable Fuels Association:
The U.S. Environmental Protection Agency (EPA) is missing an opportunity to reduce America’s dependence on foreign oil and create new economic opportunity by limiting its decision on E15 (15% ethanol/85% gasoline) to only model year (MY) 2007 and newer vehicles, the Renewable Fuels Association (RFA) said today.
“EPA’s scientifically unjustified bifurcation of the U.S. car market will do little to move the needle and expand ethanol use today,” said RFA President and CEO Bob Dinneen. “Limiting E15 use to 2007 and newer vehicles only creates confusion for retailers and consumers alike. America’s ethanol producers are hitting an artificial blend wall today. The goals of Congress to reduce our addiction to oil captured in the Renewable Fuels Standard cannot be met with this decision.”
Dinneen highlighted the importance of an expanded market to next generation technologies, saying, “This decision continues to leave the market artificially constrained and further limits market opportunities for next generation biofuels very close to commercialization. While we appreciate the work put into this waiver request, especially the 2-plus years of testing by the Department of Energy, it is clear EPA is missing an opportunity to meaningfully increase America’s use of renewable fuels and reduce our dependence on imported oil.”
Dinneen also pointed out the apparent legal and scientific disconnect inherent in EPA’s outright denial for MY2000 and older vehicles. “EPA is providing no scientific justification for its decision to bifurcate the market. It’s almost as though they pulled the number out of a hat. As test after test has demonstrated, E15 is safe and effective in all light duty vehicles. ”
Dinneen noted that on January 1, 2011, vehicles MY2000 and older will all be out of warranty coverage and beyond their useful lives, thus putting them beyond the regulation of EPA. “EPA’s overreach to deny E15 for use in vehicles over which they no longer have jurisdiction is beyond puzzling.”
To this point, RFA notes that EPA is ignoring well-documented evidence that E15 is safe for all light duty vehicles. RFA recently released a report from Ricardo, Inc. that used EPA’s own engineering assessment methodology to determine the efficacy of E15 in vehicles MY2000 and older. The report concluded, “…that the adoption and use of E15 in the motor vehicle fleet from the studied model years should not adversely affect the vehicles or cause them to perform in a sub-optimal manner when compared with their performance when using the E10 blend that is currently available.”
Wholesale adoption of E15 based upon EPA’s bifurcated approach is unlikely, according to gasoline marketers and retailers. In its weekly newsletter from September 17, 2010, the Petroleum Marketers’ Association of America stated, “Limiting the waiver to a specific class of vehicles based on date of manufacture means retailers would be forced by market conditions to carry both E-10 and E-15 product, thus increasing the risk of consumer misfueling. The good news is that the waiver will likely not require E-15 but only allow its use. Refiners are not expected to supply E-15 as a result of the waiver approval alone.”
Dinneen scoffed at EPA’s implicit denial of other blends, including E12, which could be used in all vehicles and pumps immediately. “I find it hard to believe that there is not a level between E10 and E15 at which EPA could approve for use in all vehicles. An interim step to anything above E10 for all vehicles would have a more immediate impact on the market than today’s announcement.”
Joel Velasco, UNICA’s chief representative in North America:
Many U.S. ethanol groups have argued recently that after 30 years of tax credits and trade protection they are ready to compete without subsidies provided the government grants them greater access to America’s fuel pumps. With the EPA’s decision to increase ethanol limits by 50% for newer vehicles, that day has arrived.
The attention now shifts to the U.S. Congress where lawmakers are debating what to do with the 30-year-old ethanol tax credit and import tariff that cost $6 billion annually. Allowing these subsidies to expire as scheduled at the end of the year will help lower gas prices, save taxpayers money and provide Americans with greater access to advanced renewable fuels like sugarcane ethanol.
As we indicated in our comments during the agency’s rulemaking, Brazil has decades of successful experience blending ethanol with gasoline at 25% concentrations. Brazilian ethanol is primarily sugarcane ethanol – a renewable fuel that is typically less expensive and cuts greenhouse gases much more sharply than other ethanol options. Allowing other alternative fuels like sugarcane ethanol to compete fairly in the U.S. would save American consumers money at the pump, cut dependence on Middle East oil and improve the environment.
Brazil took an important first step to build an open and global biofuels marketplace by eliminating its tariff on imported ethanol through the end of 2011. UNICA is asking the Brazilian government to make the tariff elimination permanent if the U.S. Congress will do the same and drop the tax on imported ethanol. As the world’s top producers of ethanol, the United States and Brazil should lead by example in creating a free market for clean, renewable fuel.
Industry reaction: against
Nathanael Greene, Natural Resources Defense Council:
The new ethanol blends, known as E15, come with serious risks for our engines, wildlife, water, and the air we all breathe.
A broad coalition of environmentalists, public health advocates, livestock ranchers, and automakers have long opposed EPA’s move, calling on Congress and the administration to follow the science and conduct more thorough testing of the impacts of higher ethanol blends on air pollution before approving E15 gasoline.
These groups have pointed to serious environmental and public health concerns around the tailpipe emissions of vehicles that run on gasoline blended with ethanol. Burning ethanol can cause toxic air pollutants to be emitted from vehicle tailpipes, especially at higher blend levels like E15. The chemistry is fairly straightforward: ethanol burns hotter than gasoline, causing catalytic converters to break down faster. Cars with broken tailpipe controls are disproportionally responsible for air pollution from vehicles.
Newer vehicles have oxygen sensors which allow them to adjust combustion and protect the catalysts, but there has been a lack of sufficient testing of E15 blends in older vehicles. Supporters of EPA’s decision will argue that by allowing E15 blends only in newer vehicles made after 2007, EPA is mitigating these air pollution concerns. But this “pump first, ask questions later” attitude is unlikely to work in the real world. Even well-intentioned safeguards have to be implemented well in order to actually protect public health.
With millions of individual drivers filling their cars each day, it seems unlikely that EPA—or fuel retailers—will be able to prevent a whole lot of misfueling at the pump. Fueling older cars with the new blend could result in serious damage to those engines, potentially voiding warranties and raising the specter of consumer lawsuits. Corn ethanol advocates clearly agree, since they’ve been pushing hard for a liability waiver for oil companies and retailers that would protect them from ethanol-related lawsuits when drivers inevitably fill their tanks with the wrong fuel.
American Meat Institute President and CEO J. Patrick Boyle:
“USDA’s recent estimate that corn production for this year was going to be 3.4 percent less than 2009 has sent corn prices higher. This will put pressure on the meat and poultry supply which will lead to higher food prices for consumers. For those consumers worried about climbing food prices, this decision will increase the amount of corn being diverted to our gas tanks and away from meat and poultry production. It’s unfortunate that EPA acted hastily and approved the use of E15, and now the American consumer will pay for it at the grocery store.”
Grocery Manufacturers Association Vice President for Federal Affairs Scott Faber:
“We are disappointed in the Administration’s decision to allow more ethanol in gasoline before truly sustainable advanced biofuels are commercially available. Not only will this decision adversely affect millions of consumers who don’t drive brand new cars, but also countless Americans who are struggling to feed their families in a slowly recovering economy. Recent spikes in corn prices due to supply concerns will only be exacerbated by this decision.”
National Council of Chain Restaurants Vice President Scott Vinson:
“Economists were already forecasting higher food prices over the coming year, and today’s decision by the EPA is sure to make the situation even worse. The restaurant industry’s small business franchisees are already struggling to make it as the economy tries to recover, and more piling on by the federal government is the last thing they need.”
National Chicken Council President George Watts:
“Rising grain prices driven by the voracious demand for feedstock from the heavily subsidized ethanol industry caused an increase of six percent in the retail price of fresh whole broiler chickens from 2008 to 2010. Channeling even more corn into ethanol will, in time, only drive up the cost of chicken even more. Consumers will end up paying for the ethanol industry’s demands. It is time to put an end to government mandates and interference in the market that raise the price of corn.”
American Bakers Association President and CEO Robb MacKie:
“EPA’s decision to increase the ethanol blend to E15 will further increase volatility in the grain markets. Other grains, including wheat, may increasingly be in shorter supply; potentially this may impact food prices in the future as the nation continues to lose wheat acreage. ABA strongly opposes this ill advised decision and calls on EPA to consult with relevant government agencies to carefully study how this would impact market volatility, to review the science behind the decision and analyze the economic impact on the already weakened economy.”
National Meat Association CEO Barry Carpenter:
“EPA’s action regarding the E15 waiver barely puts a band-aid on the oil dependency it is intended to alleviate, yet negatively impacts food security by further raising food and feed prices. Higher feed prices will eventually be passed on to consumers in higher meat and poultry prices. This is not a good decision for either consumers or U.S. agriculture.”
National Turkey Federation President Joel Brandenberger:
“Feed accounts for 70 percent of the total cost of raising a turkey, and corn is the single-largest ingredient in turkey feed. The spike in corn prices caused by the expansion of corn-based ethanol could be crippling at a time when the turkey industry is just starting to recover. This dramatic increase in feed prices has led most turkey processors to cut production. Increasing the ethanol blend to 15 percent would destroy any chance our industry has of recovery in the near future.”
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