Wednesday, October 13, 2010

EPA allows 15% ethanol in blend with gasoline

The Environmental Protection Agency announced today that it will allow higher levels of ethanol for gasoline in cars and light trucks made in 2007 and later. EPA will allow "ethanol levels in gasoline blends to be as high as 15% for vehicles made since 2007, up from 10% currently," Stephen Power of The Wall Street Journal reports. For cars made between 2001 and 2006, the agency says it is awaiting the outcome of additional research and not ready to announce a decision.

Groups including livestock ranchers, auto makers and oil refiners are expected to oppose the decision. "While the groups have varying motives for opposing greater corn ethanol production, they — along with many environmentalists — generally say the government hasn't conducted sufficient testing to warrant higher concentrations of ethanol in motor fuels," Power writes. Opponents note approving the E15 blend for some cars but not others will confuse drivers at the gasoline pump.

Industry officials say without expanding the allowable blend to 15 percent the U.S. will not be able to meet a Congressional mandate of 36 billion gallons of renewable fuel by 2020. The industry has construction projects underway that could expand its annual capacity to 13.5 billion gallons within months, Powers reports. "Another critical concern for the ethanol industry: the 45 cents a gallon excise tax credit that has long helped to drive demand for ethanol is slated to expire at the end of the year," Powers writes. (Read more)

The recent run-up in corn prices did not factor into EPA’s decision, EPA Assistant Administrator for Air and Radiation Gina McCarthy told reporters on a conference call. The Daily Livestock Report predicts that while the rule change will not increase corn usage for ethanol production soon, “it does promise an expanded market for ethanol producers who have been caught between rising (Renewable Fuels Standard) requirements and the 10 percent allowable blend rate.” (Read more, subscription required)

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