EPA plans phase in of ethanol mandate

07 April 1994 00:00  [Source: ICB]

THE US Environmental Protection Agency was anticipated last week to phase in over two years a requirement that 30% of the oxygen content of reformulate gasoline must come from renewable oxygenates, meaning ethanol. US press reports and industry rumours suggested that the EPA had indeed opted for starting with a 15% 'ethanol mandate' for the first year starting 1 January 1995, coinciding with phase two of the US Clean Air Act which requires year-round use of reformulated gasoline in ozone non-attainment areas. The requirement would be for 30% ethanol from 1 January 1996.

Most observers agree the virtual doubling in ether requirements with CAA phase two means that the likely EPA ethanol ruling will limit the rate of future increases in mainly Middle East-sourced US MTBE imports. According to an analysis presented by DeWitt consultant William Ludlow at a conference in Singapore in May, US MTBE imports would still rise from around 500 000 tonne in 1993 to 2m tonne by 1996 in its most likely scenario of actual ethanol content in US reformulated gasoline rising to 13.6%. Nevertheless, the pro-methanol/MTBE groups were already obtaining legal advice last week in preparation for a lengthy legal battle with the EPA, alleging principally that an environmental regulation is being turned into an economic subsidy/energy one.

The NPRA, leading refiners and MTBE producers had gained sizeable Congressional opposition to the mandate idea as an 'intrusion into market-place dynamics', pointing out that ethanol producers already enjoy a 54 cent/gal federal tax subsidy. Top Mobil and Citgo executives had also argued before the Senate Energy Committee that refiners would find it impossible to obtain permits to install ethanol tankage in time for the 1 January 1995, deadline.

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