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| Ethanol Use in Gasoline and RFG Will Grow Much discussion has been generated about mandating the use of ethanol in conventional gasoline as a substitute for the demand the ethanol industry expects from the RFG program maintaining a mandatory oxygen requirement. Indeed, the American Lung Association endorsed S. 2962 introduced by Senator Robert Smith in the 106th Congress and reported by the Senate Environment and Public Works Committee containing such a mandate. It is clear that such an approach provides one path for obtaining the necessary political support for phasing out MTBE and eliminating the oxygen mandate in RFG. In the 107th Congress, the Environment and Public Works Committee has reported S. 950 which contains many of the elements the American Lung Association recommends today but does not include an ethanol mandate. Senator Daschle has introduced S. 670, which adopts an ethanol mandate similar to the approach to S. 2962. The American Lung Association believes there will be a large role for ethanol in gasoline with or without any mandate for one simple reason: octane. Assuming that MTBE is eliminated from gasoline, which the ALA supports, refiners face a dramatic shortage in clean octane even if every MTBE plant in the nation is converted to produce iso-octane or alkylates, the most logical substitutes for MTBE. This is because MTBE plants converted to produce iso-octane or alkylates lose about 30% volume and produce a product that contains 15 percent less octane per gallon. This octane shortage may be increased by EPA?s Tier 2 low-sulfur gasoline standard that will be in full effect in 2006. Refiners may lose modest amounts of octane in conventional gasoline, as they treat it to reduce sulfur in order to meet the new 30 ppm sulfur average requirement. As a result of these two impacts, a rough calculation indicates that demand for ethanol needed to supply octane in gasoline should increase to 3.8 billion gallons per year by 2006. (SeeTab 6) This is at least twice the baseline volume of ethanol projected by the Department of Agriculture to be produced in 2006.7 Should Congress fail to lift the oxygen mandate for RFG so that the entire octane currently provided by MTBE is replaced by ethanol in order to simultaneously meet the oxygen requirement, the demand for ethanol would reach 4.6 billion gallons per year in 2006. Such an outcome would undoubtedly lead to shortages, price spikes, and disruptions that could only lead to reductions in the air quality benefits and loss of public support for the RFG program. Clearly, we will need large increases of ethanol in gasoline, as we phase out MTBE. From an air quality perspective, it is best to set air quality performance requirements for gasoline and allow refiners to use ethanol when and where they need to while meeting such performance requirements. Such performance requirements must take into account evaporation effects from permeation and co-mingling from dramatically increased use of ethanol in gasoline. Should Congress decide to mandate ethanol in gasoline, we urge that additional air quality protections be put in place that would encourage ethanol use in ways that benefit air quality and not add to the air pollution burden. -------------------------------------------------------------------------------- 1 U. S. Environmental Protection Agency, Regulatory Impact Analysis, 59 FR 7716, Docket No. A-92-12, 1993 2 Report of the Blue Ribbon Panel on Oxygenates in Gasoline, September 1999, pp. 28-29 3 Ozone-forming Potential of Gasoline, May 1999, p. 158 4 California Environmental Protection Agency Air Resource Board, Air Quality Impacts of the Use of Ethanol in California Reformulated Gasoline, December 1999 5 See Discussion at 64 Federal Register, 26084, May 13, 1999 6 In-use Volatility Impact of Co-mingling Ethanol and Non-ethanol Fuels, SAE 940765, February 1, 1994 7 U. S. Department of Agriculture, Economic Analysis of Replacing MTBE with Ethanol in the United States, March, 2000 -------------------------------------------------------------------------------- The Committee on Energy and Commerce 2125 Rayburn House Office Building Washington, DC 20515 (202) 225-2927 Feedback |
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