EPA Partial E15 Approval Leaves Questions Unanswered

Older vehicles denied approval of E15 use and may require additional waiver request.

This week the Environmental Protection Agency (EPA) partially approved the use of blends of ethanol up to 15% in cars and lightweight trucks year 2007 and newer. Gina McCarthy, EPA assistant administrator for air and radiation, said the approval represents about one third of the domestic fuel use and up to 65 million cars or 20% of the cars on the road today.

McCarthy also stated the agency plans to release its decision on 2001 to 2006 vehicles by November or early December, bringing the total cars to 100 million cars and 50% of the domestic fuel use.

As expected, the decision had a mixed response from agricultural interests, with food and livestock groups opposing the higher blends. Many ethanol supporters said the decision was a "first step" in cracking the blend wall first put in place over 30 years ago. The Renewable Fuels Association on the other hand said the decision is "missing an opportunity to reduce America’s dependence on foreign oil and create new economic opportunity by limiting its decision on E15."

The EPA said no waiver is being granted this year for E15 use in model year 2000 and older cars and light trucks – or in any motorcycles, heavy-duty vehicles, or non-road engines – "because currently there is not testing data to support such a waiver." EPA said it was open to conducting additional testing. McCarthy said the agency may need an additional waiver request for that decision.

Tom Buis, president of Growth Energy, said his group would urge for EPA and the Department of Energy to move forward on testing older vehicles so those ultimately can also be approved. The organization continues to believe E15 is safe for all vehicles.

Confusion concerns

Leading up to the announcement many voiced concerns about a split decision being too risky for retailers to make the decision to offer E10 and E15.

“EPA’s scientifically unjustified bifurcation of the U.S. car market will do little to move the needle and expand ethanol use today,” said RFA president and CEO Bob Dinneen. “Limiting E15 use to 2007 and newer vehicles only creates confusion for retailers and consumers alike."

Sen. Chuck Grassley, R-Iowa, said the announcement "unnecessarily complicates the fuel-supply chain and undermines real progress that a waiver for all vehicles would have provided."

A split decision may be too risky for retailers to make the decision to offer E10 and E15. A spokesperson for Valero, a leading retailer, and also an ethanol producer, said its retail stations would "be hesitant to sell a fuel that does not have some sort of warranty protection [from the government] or has been accepted by engine manufacturers or equipment manufacturers."

In a call hosted by Growth Energy, Broin said the ruling will allow retailers different options. There is a potential to use tanks under ground that offer premium, mid-grade and one for legacy cars.

"What I believe is there will be different octane levels, with a sticker for legacy vehicles and another for newer vehicles which can use E15," said Jeff Broin, chairman of Growth Energy and president of the largest ethanol producer POET. It will allow "multiple octane levels, multiple values and in the end, long-term value for the consumer."

Growth Energy stated E15 adoption will not be instant. Buis noted it took 32 years to reach 10% adoption levels and it must have "market advantages for retailers to use " to drive the adoption of higher blends.

Broin added that he expects E15 to be a good value for consumers and that will drive adoptions. If one retailer adopts E15 and sells it at a lower price, it will drive other stations to use the economic advantages of higher ethanol blends and market it as such. EPA’s announcement does allow for the work on adjusting state fuel regulations to accommodate E15. To the extent that some retailers do offer E15, infrastructure issues can be addressed as well.

Buis said he expects all technical issues to be resolved within the next several months and E15 could see its first introduction by the end of the first quarter. Broin said the Midwest is mostly likely to implement the higher ethanol blends.

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