Even before the current economic downturn, US ethanol producers were struggling. Last November, VeraSun (one of the largest US corn ethanol producers) filed for Chapter 11 bankruptcy. This week, another leading corn ethanol producer, Aventine, announced it might also seek Chapter 11. Meanwhile, Reuters reports that cellulosic ethanol maker Verenium Corp's auditors recently called into question that company's financial future.
In a creative strategy that apparently involves a shift to the lemonade business, on March 6 a coalition of major ethanol producers (Growth Energy) formally requested that EPA raise the cap on the amount of ethanol that can be blended into US gasoline from the current 10% up to 15% — contending that this would create green jobs.
EPA has 270 days to respond to this request. EPA press, Cathy Milbourn, 202-564-7849.
The Des Moines Register recently noted: "Unless it is changed, the 10 percent [the ethanol cap] would prevent refiners from complying with the nation's annual biofuel usage mandates, which are set to grow from 11.1 billion gallons this year to 20.5 billion in 2015 and 36 billion by 2022."
Agriculture Secretary (and former governor of leading corn-producing state IA) Tom Vilsack has voiced strong support for raising the ethanol cap — but says an immediate increase to 12-13% is a more realistic first step.
Vilsack made similar statements in his recent address to the National Farmers Union. NFU press: Liz Friedlander, 202-314-3191.
The current 10% cap applies to regular gasoline, which fuels ordinary cars. Right now, E85 (a blend of 85% gasoline with 15% ethanol) can only be burned in cars with a special flex-fuel engine, which can burn either regular gasoline or E85. The conventional wisdom, and EPA's position up until now, is that if you put E85 into an ordinary car's gas tank, the fuel system would corrode over time. Hence the current 10% cap. The ethanol industry argues that the cap is based on outdated science and older cars.
One of they key things EPA must do during the 270 days it has to respond to the ethanol industry's request is to come to a scientific and technical finding on whether the basis for a 10% cap has changed. Given the strength of ethanol backers in Congress and state politics, the decision will be an early key test of the Obama administration's declared determination to let science trump politics.
Another troubled industry — auto manufacturing — is pushing back against raising the ethanol cap, preferring to increase the availability of E85 for flex-fuel vehicles over burning a more ethanol-rich gasoline blend in ordinary cars. Also opposed to raising the cap are makers of motorcycles, lawn-mowers, and other specialty engines now burning regular gas, whose products could be damaged by gas with more ethanol.
- Alliance of Automobile Manufacturers. Press: Charles Territo, 202-326-5500.
- Current E85 fueling stations across US.
Environmentalists and others argue that the ethanol industry's troubles are partly caused by a drop in demand for gasoline. They say the industry is already artificially boosted by mandates and subsidies, and that more of the same will not fix what ails it. Not only does corn-based ethanol not make economic sense, they argue, but it imposes an unacceptable environmental cost on the rest of the nation.
In December 2008, a coalition of environmental groups led by the Environmental Working Group called for cutting ethanol subsidies out of federal economic stimulus plans.
Press contacts for Clean Air Task Force:
- Jonathan Lewis, 617-624-0234 x10.
- Environmental Working Group: Don Carr, 202-667-6982.
- Friends of the Earth: Nick Berning, 202-222-0748.
- Network for New Energy Choices: Dulce Fernandes, 212-991-1062.