The High-Stakes Fight Over Ethanol Content in Gasoline

Should gasoline have more ethanol in it? This is a story about a five percent change, and if you don't think that's significant, just multiply it by billions of gallons annually. Unfortunately, the auto industry (which is worried about engine damage) isn't going along. The environmental community is not too keen on the idea, either.

The Environmental Protection Agency (EPA) delayed a decision on the issue Monday, causing both sides to claim victory. But the EPA's position, despite the delay, seems to be favoring the ethanol industry.

Growth Energy, the biofuels industry lobbying group, asked the EPA in March to raise the percentage of ethanol from 10 to 15 percent. This is a vital move for an industry on the ropes: Ethanol prices are down and corn costs way up, which has led to hard times and a round of plant closures.

Back in February, the Renewable Fuels Association said that 10 of the country's 150 ethanol companies had been forced to close 24 plants in just the previous three months (and another dozen companies were in financial peril). This reduced annual ethanol capacity by two billion gallons.

The problem is so severe that the federal Energy Information Administration has projected that the ethanol industry will fail to meet expanded targets set out in a 2007 law.

In a letter sent to Growth Energy co-chairs General Wesley Clark and Jeff Broin, EPA Assistant Administrator Gina McCarthy (a former environmental commissioner in Connecticut) wrote, "To achieve the renewable fuel requirements in future years, it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent--.Although all of the studies have not been completed, our engineering assessment to date indicates that the robust fuel, engine and emissions control systems on newer vehicles (likely 2001 and newer model years) will likely be able to accommodate higher ethanol blends, such as E15."

Current data is based on only two vehicles, however, and the EPA says it will test an additional dozen by the end of May. Growth Energy calls it a "strong signal" that what is called the blend wall can be raised to 15 percent.

Dave McCurdy, president and CEO of the Alliance of Automobile Manufacturers, praised the EPA postponement. He said the agency "needs to be certain that prolonged use of mid-level blends will not damage existing engines, fuel lines and emissions systems. Widespread failures resulting from higher blends of ethanol would be costly to automakers, a setback for the biofuels industry and most of all a disaster for the driving public."

A spokesman for the Alliance, Charles Territo, said that the group (which represents 11 automakers) said that "testing should be completed before a final determination is made."

Environmental groups are wary of higher ethanol blends, especially following a report in the journal Science earlier this year that ethanol production can actually increase greenhouse gas emissions (when the conversion of forests and grasslands to corn farming is factored in).

Frank O'Donnell of Clean Air Watch says the EPA is "under real political pressure" to allow E15. The agency, he said, "appears to be on a course that ultimately might permit two types of ethanol blends: E15 for new cars, and E10 for older cars as well as boats and lawnmowers. I can envision a nightmare at gas stations as people try to find the right gas."