US biofuels sector awaits key federal ruling on E-15

30 November 2009 22:36  [Source: ICIS news]

WASHINGTON (ICIS news)--The US ethanol industry urged the federal government on Monday to approve a higher blend of the biofuel in the nation’s gasoline, as the current level is too low to absorb production.

The Environmental Protection Agency (EPA) is scheduled to announce on Tuesday whether it will grant a biofuels industry request to boost the federal mandate for ethanol blending in retail gasoline from its current 10% level - known as E-10 fuel - to a 15% level or E-15.

In a March 2009 petition to the EPA, Growth Energy and 52 other biofuel producers said that the current E-10 mandate - known as the blend wall - does not create enough demand to absorb existing domestic corn-ethanol production.

The agency has earlier indicated that it will rule on the Growth Energy petition on or before 1 December.

US corn-based ethanol producers have been troubled by low prices and bankruptcies, and sector leaders have said that the requested blend cap increase is critical to survival of the domestic biofuels industry.

Matt Hartwig, spokesman for the ethanol trade group Renewable Fuels Association (RFA) said that President Barack Obama has indicated his support for an EPA ruling in favour of E-15 and urged the agency to follow the president’s lead.

In a letter to a biofuels convention earlier this year, Obama said that the hoped-for transition to non-food, cellulosic biofuels production - using grass, wood chips or agricultural wastes rather than corn - could fail if the corn-ethanol industry flounders.

“This transition to next generation biofuel technologies will be successful only if the first-generation biofuels industry remains viable in the near-term,” Obama told the Governors’ Biofuel Coalition.

Obama said that next-generation biofuels can be reached “if we remove long-standing artificial barriers to market expansion necessary for large volumes of advance renewable fuels”. His mention of "artificial barriers" was thought to be a reference to the E-10 limit.

However, a broad US coalition of refiners, engine manufacturers, agricultural and environmental interests have argued against an expansion of the ethanol fuels mandate to 15% or E-15.

In testimony earlier this year, the National Petrochemical & Refiners Association (NPRA) and other members of the coalition argued that there is insufficient scientific study on the possible impact of E-15 fuels - also known as mid-level ethanol blends - on automotive engines, safety and the environment.

The coalition contends that mid-level ethanol blends could damage automotive catalytic converters and degrade auto engine performance, raising safety concerns.

The group also argued that preliminary tests by the US Department of Energy (DOE) indicate that emissions of some pollutants increase when conventional vehicles use mid-level ethanol blends.

NPRA said that the EPA lacks authority under the Clean Air Act to grant the ethanol blend increase without conducting wide-ranging scientific analyses.

Granting the blend increase, the refiners said, also would cause consumer confusion, potential misfueling and significant disruption in the nation’s fuel distribution infrastructure.

It also could create potential liability for engine and fuel manufacturers for damage caused to gasoline engines incompatible with E-15 blends, NPRA said.

Sources close to the agency’s deliberations on the E-15 petition said that the EPA might not approve or reject the Growth Energy request and instead could delay its decision on grounds that further testing of engine and environmental consequences is needed.

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