By MATTHEW L. WALD, The New York Times, 10-13-2010
WASHINGTON — The Obama administration made a gesture of support for the ethanol industry on Wednesday, with a declaration by the Environmental Protection Agencythat gasoline retailers can sell fuel blends containing up to 15 percent ethanol for use in late-model cars.
The ruling, which was requested by ethanol producers, was widely expected but is the subject of heated debate over whether E15 is safe for cars and other gasoline-powered devices. Fuel sold today typically contains as much as 10 percent ethanol, but automakers and other critics say that a higher blend of ethanol could corrode engines.
The agency said Wednesday that government testing found the blend would not damage the engines in cars with a model year of 2007 or later — about one in seven cars on the road — and would not cause unacceptable increases in air pollution. The agency is still testing cars for the 2001 to 2006 model years and expects to issue a ruling on those as soon as next month.
Oil producers, gasoline retailers and the makers of gasoline-powered equipment denounced the decision, many of them in the hours before it was released. A spokeswoman for the auto manufacturers — which generally support renewable fuels but want additional testing before more ethanol is used in cars not designed for it — described the announcement as “ethanol creep.”
Gina McCarthy, the E.P.A. assistant administrator for air and radiation, said that the decision advanced an important national goal of reducing oil consumption. The federal government would like to see Americans use 36 billion gallons of alternative fuels by 2022, including 21 billion from advanced biofuels beyond the corn-based ethanol that is prevalent now. Currently, the industry says it can produce about six billion gallons of corn ethanol a year.
It was not clear why the agency made an announcement on one group of cars when a decision on another group is coming in a month or two, but analysts suggested that election-year politics played a role.
Kevin Book, an analyst at ClearView Energy Partners, a research firm, said that in the midterm Congressional elections in three weeks, “there are nine at-risk Democrats from the top 10 ethanol producer states. If you’re fighting for every seat in a midterm election, you can’t afford to wait until the rule is finished.”
But Ms. McCarthy said the agency was obligated to respond to a petition by an ethanol producer group, Growth Energy. It had originally intended to reply this summer.
The first group of cars affected is small. R. L. Polk, the auto industry consultant, said that as of January, there were 231 million vehicles of the model year 1981 or later, of which 35 million, or 15 percent, were covered by Wednesday’s decision. Another 85 million vehicles, or 37 percent, are in the group for which a ruling could come next month. But the newer vehicles are driven more miles and burn a disproportionate share of the fuel.
The fuel itself gets a mixed reception from environmental advocates. Ethanol production consumes prodigious quantities of natural gas, diesel fuel and other inputs that lead to carbon dioxide emissions. And it contributes to the demand for corn, helping to drive up the cost of that commodity, raising food prices and diverting farmland that could be used for growing crops for human consumption.
It also pits farmers against car owners. Ethanol can eat away at the seals in engines and fuel systems that are not designed for its use. The E.P.A. said that cars sold in the 2007 model year and later were more able to withstand ethanol because they were built to tighter pollution standards and that older cars might be able to accept higher blends as well.
But the automakers and fuel suppliers fear liability if the higher-ethanol fuel damages engines. Hand-held garden equipment and boat engines could fail in ways that create safety problems, people in those industries say.
Ethanol also evaporates more easily than gasoline, which can put an ingredient of smog into the air.
A more practical barrier to widespread adoption of E15 are the gas stations that would sell it. Even if a station has enough pumps to offer a new grade of fuel, most have too few underground tanks, experts say.
Stations that sell regular, midgrade and premium fuel typically do it with one tank of regular and one of premium; the pump blends the two for midgrade. For them, going to E15 would mean giving up sales of premium, said Prentiss E. Searles, the marketing issues manager at the American Petroleum Institute, the trade group for the oil industry.
“If you’ve got a limited number of vehicles that can use E15, it doesn’t make a lot of sense,” Mr. Searles said.
John Eichberger, a spokesman for the National Association of Convenience Stores, which represents 115,000 of the about 160,000 locations in the United States that sell gasoline, said that some gas stations might sell E15 by giving up selling diesel fuel.
Mr. Eichberger said many other state and federal regulations would have to change before E15 could be legally sold. But the basic problem, he said, was that “we don’t have a retail infrastructure that can handle the product, we don’t have consumers ready to buy it, and we don’t have the auto industry ready to approve the use in their cars.”
Even gas pumps aren’t certified for E15, Mr. Eichberger said.
He and others said that once the fuel was offered for some cars, it would be mistakenly used in others. It is likely to sell for less per gallon, making it look attractive to buyers, although it may turn out to be more expensive per mile, because ethanol has less energy than gasoline.
But Todd Becker, the chief executive of Green Plains Renewable Energy, said that the decision “tells the investment community that this is an expanding sector of the energy market.” Ethanol’s biggest problem, he said, is access to the retail market, which he complained was controlled by oil companies.
The problems of E15 could mirror those of E85, an 85 percent blend of ethanol. While the auto companies have made millions of vehicles that can use it, most of them still fill up on regular gas because very few places sell E85.
Source: http://www.nytimes.com/2010/10/14/business/energy-environment/14ethanol.html?scp=4&sq=ethanol&st=Search
