EPA Approves Increased Ethanol Blend

Today the EPA gave initial approval of E15 blends for use in vehicles made in or after 2001, an extension of an initial ruling in October of 2010 that granted approval of E15 in vehicles model year 2007-2011. Predictable cheer-leading erupted from Growth Energy:

The EPA’s long awaited decision came in response to Growth Energy’s Green Jobs Waiver, a petition we filed in March of 2009 to raise the “blend wall”—the artificial limit on the ethanol market—and create new market opportunity for the industry.

Let us never forget the delicious irony of an ethanol trade association whining about the unfair government regulations that impede the development of their industry, when the majority of ethanol production in the United States is due solely to the ethanol mandates in the Renewable Fuel Standard.

All is not finished in the battle to force consumers to buy E15. The EPA has yet to finalize a number of regulatory decisions regarding potential mis-fueling of E15, and there are numerous state-level regulatory issues:

On January 21, 2011, EPA granted a partial waiver for E15 for use in MY2001-2006 light-duty motor vehicles. These decisions were based on test results provided by the U.S. Department of Energy (DOE) and other information regarding the potential effect of E15 on vehicle emissions. Taken together, the two actions allow, but do not require, E15 to be introduced into commerce for use in MY2001 and newer light-duty motor vehicles if conditions for mitigating misfueling and ensuring fuel quality are met. EPA is in the process of completing work on regulations that would provide a more practical means of meeting the conditions.

The partial waiver will introduce a number of complicated problems in 2011/2012 as refiners struggle to meet ethanol mandates while fueling stations are not legally compelled to sell E15. Given the price of ethanol isn’t sufficiently lower than gasoline (once you consider that it only provides ?66% of the fuel economy of gasoline), demand for E15 will be minimal outside of the mandate.

And as the American Petroleum Institute has noted, the mandate effectively gives EPA the ability to levy taxes on the oil industry in the form of non-compliance fines if oil refiners are unable to meet required mandates. The case linked to deals with cellulosic ethanol, but the same would apply if refiners were unable to sell sufficient E15 to meet the mandate.

Here is an interview (.mp3) with Bob Dineen, chief cheerleader lobbyist for Growth Energy.