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Ethanol

Energy Legislation & President Bush Touting Ethanol

Senater Majority Leader Harry Reid's bill, S. 1419, the "Renewable Fuels, Consumer Protection and Energy Efficiency Act of 2007 includes requirement to produce 36 billion gallons ofbofuels by 2022, nearly five times the 7.5 billion gallon ethanol mandate targeted for 2012 included in the Energy Policy Act of 2005.

President Bush is promoting a Twenty-in-Ten program that proposes to cut gasoline consumption and greenhouse gas emissions from motor vehicles by 20 percent over the next 10 years. The Bush plan includes increasing the supply of renewable and other alternative fuels by setting a mandatory fuels standard to require the equivalent of 35 billion gallons of renewable and other alternative fuels in 2017 – nearly five times the 2012 target included in the Energy Policy Act of 2005.

Some sectors have problems with ethanol. Ethanol cannot be transported in the country's existing gasoline pipelines because of its high corrosiveness. This is one reason the petroleum opposes increased ethanol production, in addition to competitive considerations. Ethanol will also drive up the price of corn used to make it so beef producers, the poultry industry and gocers' assocaiton oppose increased use of the fuel. However, American farmers are gearing up to grow the amount of corn needed to satisfy the new mandates.

Research on the effects of ethanol shows that ethanol may increase ground-level smog by increase nitrogen oxide emissions. Other research states that ethanol will reduce smog because it burns cleaner. Some research says ethanol will increase global warming because the heat content is less than gasoline so it takes more of it to do the same work. Other research says ethanol reduces greenhouse gases by 10-20 percent.

New Coalition Promotes Ethanol

A 400 member coalition of farm groups, hunters, businessmen and environmentalists have formed a new coalition called the 25X'25 Renewable Energy Alliance and they are lobbying to get $64.5 billion in new federal incentives to expand the use of ethanol. The group wants to produce 25% of the nation's energy from farm and ranch products by 2025.

The group wants to protect ethanol from a possible drop in oil prices by having the tax incentives to rise for ethanol-fuel blenders when oil prices drop and when oil prices rise, the tax credits would shrink. This system would be installed when the current 51-cent-per-gallon ethanol subsidy expires in 2010. Group members range from the American Farm Bureau to General Motors and the National Wildlife Federation.

Ethanol Investments

According to Bloomberg Markets, the $66 million that Morgan Stanley paid for Aventine Renewable Energy, a maker of ethanol, in 2003 is worth about $750 million in 2006. Bloomberg Markets also reports that Bill Gates' Cascade Investment spent $84 million to become the biggest investor in Pacific Ethanol.

The Energy Policy Act of 2005 will significantly increase investments in biofuels because it requires refiners to produce 7.5 billion gallons of renewable fuels by 2012. This should increase the 4.4 bilion gallons of ethanol used in 2006, which represents 3 percent of ethanol used in all gasoline, to 5 percent by 2012.

EPA Revokes Burdensome Federal Gas Formula Mandate

Feb 15, 2006 - - In a move to provide greater flexibility in producing clean-burning gasoline to protect and improve air quality, EPA is revoking the two percent oxygen content requirement for reformulated gasoline (RFG) nationwide.  The Energy Policy Act authorized the action, which reduces production burdens while continuing to protect the environment with clean fuel blends as the use of ethanol increases.  Currently, about 30 percent of gasoline is RFG.  The revocation takes effect nationwide on May 6 and in California 60 days after the regulation's publication in the Federal Register.

More information is at: http://www.epa.gov/otaq/rfg_regs.htm

Contact:  John Millett, 202-564-4355 / millett.john@epa.gov

Ethanol and MTBE As Fuel Additive Oxygenates

The 1990 Clean Air Act amendments required the use of reformulated gasoline (RFG) in metropolitan areas in noncompliance of the law. One requirement for RFG was that it contain 2 percent oxygen content by weight - - oxygenates. The two most economical oxygenates are Methyl Tertiary Butyl Ether (MTBE) and ethanol. MTBE, which comes from the oil companies, quickly became the most widely used oxygenate, with ethanol, whicih comes from farmers, became a distant second.

By the mid-1990s, traces of MTBE began showing up in groundwater supplies. Oil companies became the targets of lawsuits from property owners and municipalities whose water had been affected. The fuel industry's best defense was that it was using MTBE to comply with the 2 percent oxygen content requirement and thus merely following the law. Of course, critics point out that the law did not specify the use of MTBE. The Energy Policy Act of 2005 repealed the 2 percent oxygen content requirement. The act also bans the use of MTBE beginning on May 6, 2006.

Ethanol Will Increase Nitrogen Oxide Emissions & Smog

DOE Energy Information Administration

Congressional Research Service (CRS) Report to Congress

WILLIAM L. CHAMEIDES, Chair of the National Research Council Committee on Ozone-Forming Potential of Reformulated Gasoline and Member of the National Academy of Sciences and Regents Professor of Earth and Atmospheric Sciences, Georgia Institute of Technology

Senator Diane Feinstein

Institute for Local Self Reliance

Energy Justice Network

Module 4: Environment

American Experiment

Public Opinion

Audubon

American Enterprise Institute (Putting Air Regulations in Perspective)