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EPA Delays Decision on Increased Ethanol Blend

posted on June 24, 2010

Hello, I'm Mark Pearson. The federal government amended a key report this week on the strength of the U.S. economy.

In a revision of previous data, the Commerce Department reported Gross Domestic Product, the broadest measure of economic vitality, rose at a 2.7 percent annual pace in the first quarter, rather than the 3 percent it previously estimated.

Earlier in the week the government reported sales of new homes collapsed in May, sinking 33 percent to the lowest level on record once potential buyers could no longer receive government tax credits.

Sales of previously occupied homes also dipped last month, falling more than 2 percent from April.

The decline in new home sales is cause for concern since the National Association of Builders estimates each new dwelling creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes paid to local and federal coffers. But the beleaguered housing sector is not alone.

For several years, America's ethanol producers have warned their industry was approaching a tipping point, commonly known as the "Blend Wall." Currently, the Environmental Protection Agency limits the amount of ethanol mixed with gasoline to 10 percent.

But producers say if their industry is to survive and grow, EPA needs to increase the blend rate to 15 percent. The government had already delayed its decision on the matter once, and last week, EPA "kicked the ethanol can down the road" again...

EPA Delays Decision on Increased Ethanol Blend

Last March, Growth Energy, an ethanol promotion group representing 55 ethanol producers in 10 states, asked the Environmental Protection Agency, or EPA, to increase the maximum amount of ethanol blended in gasoline from 10 to 15 percent. By law, the government had until December to respond. But late last year, EPA announced it would delay its decision until June.

Tom Buis, CEO Growth Energy: "You know one of the most common tactics in Washington if you don't like something is to demand further testing. Demand a study. Demand a commission. Well we can test til the cows come home."

Growth Energy, along with the Renewable Fuels Association, or RFA, another ethanol promotion agency, agreed to the delay, believing objective testing would pave the way for a 50 percent increase in the current ethanol blend rate.

Bob Dinneen, President, RFA: "I think EPA has been derelict in the way they have handled the E15 situation. Quite frankly, they ought to be allowing E15 today. If they want to continue studying E15, they ought to allow E12 today. At least make some movement to allow the market for ethanol to grow."

RFA president Bob Dinneen has been taking the E15 message to the streets. This week, Dinneen checked-in with ethanol producers at a hospitality tent near the College World Series in Omaha.

Bob Dinneen, President, RFA: "I think EPA has stuck their heads in the oil-drenched sands of the Gulf Coast. We have a disaster happening. There's a national emergency going on. We need more domestic, clean-burning renewable fuels like ethanol. We can do it, we can blend more, we can save consumers money and EPA dithers..."

Last week, however, EPA officials DELAYED THE DECISION AGAIN, saying they would have an answer for ethanol producers later this year. The decision was not well-received by ethanol proponents.

Bob Dinneen, President, RFA: "Would I be surprised if EPA were to kick the can again next fall? No, I wouldn't at all. What the president needs to do is get control of his administration. Because the president speaks, you know, quite eloquently about the need to reduce our dependence on imported oil... on the need to get more ethanol from corn in the marketplace. Where's EPA? Why aren't they listening to the messages being sent by the president of the United States? There's a disconnect between EPA and the White House, and that needs to be resolved."

EPA officials declined Market to Market's request to appear on-camera, choosing instead to issue this statement regarding the status of testing by the Department of Energy:

Official U.S. EPA Statement: "DOE is on track to complete testing designed to determine the impact of higher ethanol blends on vehicles built after 2007 by the end of September. DOE is also testing some vehicles built before 2007 and is also testing tanks and other fuel handling equipment to see how they might be affected by E15. While results from the tests conducted to-date look good, EPA will not make a final decision until DOE completes its current comprehensive testing of the newer vehicles. EPA is taking steps to ensure the appropriate pieces are in place should the results of the complete set of tests be positive. Based on DOE's schedule, EPA believes it will be able to make a final determination on whether to approve the use of higher ethanol blends this fall."

While officials from other government agencies, including USDA, are optimistic about a positive outcome, proponents are concerned the industry is running out of time.

Tags: biofuels Environmental Protection Agency ethanol news renewable fuels