Posted May 6, 2010

With the U.S. EPA expected to rule on the E15 waiver sometime this summer, the battle between those that advocate higher blends of ethanol and those that don't is heating up. In the space of two days, the auto and oil industries urged caution on the pending decision on the use of E15 and an Archer Daniels Midland executive advocated going to E11 or E12 for "smoother implementation on the way to higher blend levels."

The Auto Alliance, the American Petroleum Institute and the Outdoor Power Equipment Institute have asked the U.S. EPA to delay action on the E15 waiver. Based on preliminary results of a testing program for use of blends higher than E10 with non flex-fuel vehicles (FFV), those groups say higher blends of ethanol have not been proven safe or effective. "Testing for engine and vehicle compatibility and environmental issues is scheduled for completion in 2011," said Coleman Jones, biofuel implementation manager for General Motors. "There's no need for precipitous action when the scientific results are so close at hand."

ADM's comment on the issue came during its quarterly earnings call. Patricia Woertz, executive chairman and CEO, mentioned in prepared remarks that if the EPA approves the E15 waiver it would set things up for increased future demand. However, due to challenges in widespread adoption, the company feels that an increase to E11 or E12 would be an easier next step toward higher blends. For every 1 percent increase in the blend wall, she said, it would add about 1.3 billion additional gallons of ethanol.

The EPA has talked about 2001 and newer vehicles being compatible with E15 but that, potentially, older vehicles would not be included in the E15 waiver. A system where only some vehicles could use higher blends of ethanol would be challenging, Woertz said. Not only would it be more difficult for blending, distribution, dispensers, tankage and retailers, but it could be confusing for consumers and blenders, possibly leading to E15 not being accepted by blenders.

The Renewable Fuels Association is also advocating that the EPA immediately allow for the blending of E12 in response to the oil spill in the Gulf of Mexico. The RFA repeated that it believes that oxygenate stacking rules, allowed by the Clean Air Act, already allows for flexibility to blend up to 12 percent oxygenate, including ethanol. Bob Dinneen, president of the organization, tackled the subject and others in a letter written to President Barack Obama on May 5.

But that's only a short term step, the letter said. Next, the RFA is advocating that the EPA grant the E15 waiver this summer, as soon as DOE testing is completed on catalytic converters. Just like ADM, RFA doesn't want to see only a partial waiver for E15 only in newer vehicles, which it says would be confusing and limiting. "To date, EPA has provided no scientific justification for such a limit on the waiver," Dinneen said. "We believe no such restriction exists and as such EPA should move as expeditiously as prudent to approve the full waiver."

Growth Energy said the auto and oil industry-funded Coordinated Research Council study was inconclusive and incomplete. The study has only tested eight engines and, of those, only four are 100 percent complete, said Tom Buis, CEO of Growth Energy. "It would be foolish to accept these results as fact," he said.

The Green Jobs Waiver, which Growth Energy submitted to the EPA, asking the agency to allow E15, was accompanied by a "pile of data" from academic, government and third-party research, proving that E15 would not be harmful to engines and emissions systems durability or drivability. "If we move to E15 we can reduce greenhouse gas emissions equivalent to removing 10.5 million cars from the road, create 136,000 jobs here in the U.S., and end oil imports equivalent to what Venezuelan strongman Hugo Chavez sells into the United States every day," he said.