Bush Says We’ll “double the amount of ethanol,” While The EPA Eliminates Mandated Inclusion of Ethanol in Reformulated Gasoline

In the March 8, 2006, issue of Personal Finance, there is an article that discusses a change in federal regulations at the Environmental Projection Agency (EPA). The PF article stated:

In the early 1990s, the EPA came to the conclusion that key cities and counties around the US needed to change gasoline blends to cut damaging emissions from automobile usage.

This changed the blends of gasoline to include a higher concentration of oxygenating agents, led by ethanol. While modern cars with fuel injection and other on-board engine management devices already make adjustments to compensate for fuel, temperature and load demands on engines, ethanol— for other reasons—became the EPA’s mandated choice.

To make everything more challenging, the EPA enabled local and state jurisdictions to make their own mandates as to the exact recipes for their local gasoline blends utilizing ethanol and other similar chemical additives.

The result: a crazy quilt of gasoline blends with individual states having as many as three to seven different blend recipes.

The fallout is that prices for gasoline at the pump have been soaring, independent of crude oil costs. With refiners working to meet local demands, any unanticipated changes have resulted in shortages or pricing spikes.

The EPA is getting tired of hearing complaints from refiners, distributors and consumers. Quietly it eliminated the mandated inclusion of the oxygenating-agent blends in our gasoline supplies.

How does this jive with what President Bush said on August 8, 2005 at the signing ceremony for the Energy Policy Act? President Bush stated, “The bill also will lead to a greater diversity of fuels for cars and trucks. The bill includes tax incentives for producers of ethanol and biodiesel. The bill includes a flexible, cost-effective renewable fuel standard that will double the amount of ethanol and biodiesel in our fuel supply over the next seven years. Using ethanol and biodiesel will leave our air cleaner. And every time we use a home-grown fuel, particularly these, we’re going to be helping our farmers, and at the same time, be less dependent on foreign sources of energy.”

And do you really believe that the Energy Policy Act is particularly “helping our farmers?” Wouldn’t the real beneficiaries be the ethanol producers and the companies selling the reformulated gasoline (RFG)?

You might wonder what lead to the EPA making this change in February. According to their background information, “Recently, Congress passed legislation which amended Section 211(k) of the CAA to remove the RFG oxygen requirement.” Well guess what? That change was enabled by the same Energy Policy Act the President signed last August. Here is the language from Title XV: Ethanol and Motor Fuels – Subtitle A: General Provisions of the Energy Policy Act, “(Sec. 1504) Amends the Clean Air Act to repeal general requirements governing the oxygen content of both gasoline and of reformulated gasoline.” So which is it? Are we increasing the use of ethanol or not?

Here are some other related sections of the Energy Policy Act that might clarify(?):

(Sec. 208) Establishes in the Environmental Protection Agency (EPA) the Sugar Cane Ethanol Pilot Program. Directs the Administrator of EPA to establish a pilot project in multiple states to study the production of ethanol from cane sugar, sugarcane, and sugarcane byproducts.

(Sec. 1501) Amends the Clean Air Act to establish a renewable fuel program consisting of cellulosic biomass and waste-derived ethanol, and biodiesel. Directs the EPA Administrator to promulgate regulations to implement a renewable fuel program to ensure that gasoline introduced into commerce in the United States contains the applicable volume of specified renewable fuel (except in noncontiguous states or territories).

Directs the Administrator to study and report to Congress on the effects of ethanol content in gasoline on permeation, the process by which fuel molecules migrate through the elastomeric materials (rubber and plastic parts) that make up the fuel and fuel vapor systems of a motor vehicle.

Requires such study to include estimates of the increase in total evaporative emissions likely to result from the use of gasoline with ethanol content in a motor vehicle, and the fleet of motor vehicles, due to permeation.

(Sec. 1510) Directs the Secretary to establish a program to provide guarantees of loans by private institutions for the construction of facilities for the processing and conversion of municipal solid waste and cellulosic biomass into fuel ethanol and other commercial byproducts.

(Sec. 1511) Amends the Clean Air Act to: (1) authorize funds for certain loan guarantees to implement commercial demonstration projects for cellulosic biomass and sucrose-derived ethanol; and (2) direct the Secretary to issue loan guarantees for up to four projects to commercially demonstrate the feasibility and viability of producing cellulosic biomass ethanol or sucrose-derived ethanol (including use of cereal straw and municipal solid waste as a feedstock).

Authorizes appropriations for FY2005-FY2007 for a resource center to develop bioconversion technology using low-cost biomass for the production of ethanol at the Center for Biomass-Based Energy at the Mississippi State University and the Oklahoma State University.

Authorizes the Secretary to provide grants to merchant producers of cellulosic biomass ethanol to build eligible production facilities for the product.

(Sec. 1512) Authorizes the Secretary to provide grants to merchant producers of cellulosic biomass ethanol, waste-derived ethanol, and approved renewable fuels in the United States to assist them in building eligible production facilities for the production of ethanol or approved renewable fuels. Authorizes appropriations for FY2006-FY2008.

(Sec. 1514) Directs the EPA Administrator to: (1) establish an Advanced Biofuel Technologies Program to demonstrate advanced technologies for the production of alternative transportation fuels; (2) give priority to projects that enhance the geographical diversity of alternative fuels production and utilize feedstocks that represent 10% or less of domestic ethanol or biodiesel fuel production during the previous fiscal year; and (3) fund demonstration projects to develop conversion technologies for producing cellulosic biomass ethanol, and for coproducing value-added bioproducts (such as fertilizers, herbicides, and pesticides) resulting from biodiesel fuel production. Authorizes appropriations for FY2005-FY2009.

(Sec. 1516) Authorizes funds for, and authorizes the Secretary to issue, loan guarantees to projects to demonstrate commercially the feasibility and viability of producing ethanol using sugarcane, sugarcane bagasse, and other sugarcane byproducts as a feedstock.

So, is there still a contradiction? The EPA has eliminated the requirements for using ethanol. The Energy Policy Act, which lead to the EPA changes, promotes getting ethanol from sources other than corn.