Help on the Way for Ethanol Industry?

Washington Matters

Help on the Way for Ethanol Industry?

The ailing ethanol industry is pushing for a stimulus package all its own -- and for a change it wouldn't cost the taxpayer a dime.

Led by Growth Energy, a new trade association representing biofuels interests in Washington, the ethanol industry formerly petitioned the Environmental Protection Agency Friday to bless an increase of ethanol blends in gasoline from the current 10% to as high as 15%. There is a tremendous amount of pressure on EPA administrator Lisa Jackson to approve the higher blends and smart money says she'll approve a 13% blend for use in newer cars.


There are some concerns with the auto industry and small-engine manufacturers about possible ill-effects a higher blend could have on their products. But the ethanol industry believes that testing will ultimately show that blends of 15% and even 20% won't cause engine damage. Preliminary tests have not found harm.

Automakers have been reluctant to go along, but Ford recently expressed willingness to acquiesce to ethanol blends higher than 10%. It sent a letter to Jeff Broin, the head of Poet, the largest ethanol producer in the country, saying that "Ford endorses efforts to increase base level blends [of gasoline] up to E15 and collaborate with key stakeholders to overcome challenges with introducing these higher levels of ethanol."


"E15 is completely acceptable in our cars,� adds Michael Harrigan, an automotive consultant and a fuels systems engineer at Ford for 30 years.

EPA currently limits ethanol blending to 10%, except for E85, a fuel blend that is 85% ethanol and 15% gasoline and can only be used in the 6 million or so cars and trucks built specifically to run on it. Lifting that cap is crucial for the struggling ethanol industry. It's not just being choked by a lack of capital, as are so many other industries, but its market is limited as long as it can only add 10% of its product to gasoline at the pump. Were EPA to approve the 15% blend it could add another 6 billion gallons or more of annual ethanol demand.


Former NATO commander and presidential candidate Gen. Wesley Clarke, now representing Growth Energy, argued at a news conference that lifting the 10% cap on ethanol blends could result in the creation of more than 130,000 new American jobs and "inject $24 billion into the American economy annually." Clarke also said, lifting the cap on ethanol blending would unleash a wave of new investment in biofuels that would not use corn or other foods, but rely instead on agricultural and forestry waste.