Lines Drawn in Fight on Increased Ethanol Sales Before Hearing

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By Brian Dabbs

The battle lines are drawn on the eve of a Senate hearing on transportation fuel with higher ethanol blends.

The legislation in play—which would allow summer sales of fuel containing 15 percent (E15) or higher biofuel—is a nearly non-partisan policy, a rarity in today’s political environment.

The forces now girding for a fight are largely industry members contesting market share.

Petroleum groups oppose the bill (S.517), and biofuel producers argue E15 gives consumers more choice at the pump. The year-round permission to retail E15 would be a huge boon to biofuel producers and representative groups, such as the American Coalition for Ethanol and Renewable Fuel Association (RFA).

The Senate Environment and Public Works Committee will consider the bill June 14.

Smog Restrictions

Summer sales are now restricted in most counties nationwide due to Clean Air Act smog regulations.

But biofuel groups, along with many lawmakers, say E15 is actually produces less ground-level ozone than fuel containing 10 percent ethanol, which is approved for year-round sales, as well as most gasoline.

“Due to an outdated EPA regulation, retail gas stations are essentially prohibited from selling E15 in more than two-thirds of the nation’s gasoline market,” RFA President Bob Dinneen said in a June 13 statement. The EPA uses the Reid vapor pressure metric to gauge emission rates.

Meanwhile, American Petroleum Institute (API) director Frank Macchiarola said June 13 his group hasn’t conducted analysis on E15 smog impacts. Rather, Macchiarola said the E15 legislation is “intrinsically” linked to a “broken” biofuel mandate, and therefore petroleum companies oppose it.

E15 Auto Compatibility

The renewable fuel standard—which became law in 2005 and was expanded in 2007—aimed to decrease hydrocarbon emissions and reduce dependence on foreign oil.

It sets annually increasing biofuel quotas through 2022. Nearly all transportation gasoline in the U.S. now contains 10 percent ethanol, mostly made from corn, and biofuel groups are regularly pushing higher blend fuels into the market.

Petroleum groups like API say the law overestimated the amount of U.S. fuel demand in the succeeding years, thereby forcing too much ethanol onto the market.

The ethanol blends continue to face compatibility struggles for auto engines, Macchiarola said on a conference call.

“The fuel E15 is simply not ready for prime time. We have both infrastructure issues that have not been solved and create a real, essential cost burden with E15, and we also have compatibility issues,” he said. “You can change the statute all you want, you can mandate the fuel all you want, but if it is simply not ready for the consumer, than we’re going to raise objections.”

Biofuel groups say E15 is cheaper at the pump than E10, but detractors highlight lower fuel economy as a drawback.

RFS Overhaul Afoot

A bipartisan group of House lawmakers is wading through a series of meetings with groups interested in biofuel, such as petroleum companies and associations, biofuel producers, convenience store owners, and auto makers.

An overhaul could include stopping the program altogether or providing relief—possibly in the form of tax credits—for advanced biofuel producers, as well as a range of other proposals. The E15 measure could provide an olive branch to the biofuel producers.

Sens. John Cornyn (R-Texas) and Mark Udall (D-N.M.) are leading the effort in the Senate.

The June 14 hearing features testimony from the Advanced Biofuels Business Council, the Clean Air Task Force, gas retailer Sheetz Inc., an engine manufacturer, and an environmental engineering contractor. No vote has been scheduled.

To contact the reporter on this story: Brian Dabbs in Washington at bdabbs@bna.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bna.com

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