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Sunday, February 7, 2010

Intermediate-Level Blends of Ethanol in Gasoline, and the Ethanol “Blend Wall”

Brent D. Yacobucci
Specialist in Energy and Environmental Policy

On March 6, 2009, Growth Energy (on behalf of 52 U.S. ethanol producers) applied to the Environmental Protection Agency (EPA) for a waiver from the current Clean Air Act limitation on ethanol content in gasoline. Currently, ethanol content in gasoline is capped at 10% (E10); the application requests an increase in the maximum concentration to 15% (E15). If granted, the waiver would allow the use of significantly more ethanol in gasoline than is currently permitted. The existing limitation leads to an upper bound of roughly 15 billion gallons of ethanol in all U.S. gasoline. This "blend wall" could limit the fuel industry's ability to meet an Energy Independence and Security Act (EISA, P.L. 110-140) requirement to blend increasing amounts of renewable fuels (including ethanol) into motor fuels—thus the interest among ethanol producers in the waiver. 

On November, 30, 2009, EPA sent a letter to Growth Energy neither granting nor denying the waiver, stating that studies necessary for the agency to make a decision have not been completed, and that some of that data may be available in May or June of 2010. To meet the high volumes of renewable fuels mandated by EISA, EPA recognized that "it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent." 

Under EISA, the EPA Administrator must grant or deny the waiver request within 270 days of receipt (December 1, 2009). The Clean Air Act is silent on the consequences if EPA does not grant or deny the waiver within the 270-day window, as is the case in the Growth Energy petition. 

To grant the waiver, the petitioner must establish to EPA that the increased ethanol content will not "cause or contribute to a failure of any emission control device or system" to meet emissions standards. EPA is to consider short- and long-term (full useful life) effects on evaporative and exhaust emissions from various vehicles and engines, including cars, light trucks, and non-road engines (e.g., lawnmowers). In its November 30 letter, EPA noted that long-term testing on newer vehicles has not been completed, but that the agency expects that model year 2001 and newer vehicles "will likely be able to accommodate higher ethanol blends, such as E15." In the letter the agency made no statements about older vehicles or non-road engines, but stated that EPA could "be in a position to approve E15 for 2001 and newer vehicles in the mid-year timeframe." 

In addition to the emissions control concerns, other factors affecting consideration of the blend wall include vehicle and engine warranties and the effects on infrastructure. Currently, no automaker warranties its vehicles to use gasoline with higher than 10% ethanol. Small engine manufacturers similarly limit the allowable level of ethanol. In addition, most gasoline distribution systems (e.g., gas pumps) are designed to dispense up to E10. While some of these vehicle and fuel distribution systems may be able to operate effectively on E15 or higher, their warranties/certifications would likely need to be updated. 

If EPA were to grant a waiver only for newer vehicles, a key question is how fuel pumps might be labeled to keep owners from using E15 in older vehicles and other equipment. A related question is whether fuel suppliers would even be willing to sell E15 if some of their customers may not use it. Further, it is unclear whether existing fuel distribution systems which were designed to dispense E10 can handle the higher-level ethanol blends. 

Date of Report: January 28, 2010
Number of Pages: 13
Order Number: R40445
Price: $29.95

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