Vilsack: Higher Ethanol Blend Percentage 'Soon'; Pelosi, Harkin, Peterson Back Higher Rate

March 8, 2009 07:00 PM

via a special arrangement with Informa Economics, Inc.

Momentum building towards higher maximum ethanol blend rate for non-flex fuel vehicles

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.

The U.S. government could move "fairly quickly" to increase the 10 percent ethanol-to-gasoline blend rate by 2 or 3 percentage points, and later to 15 to 20 percent, USDA Secretary Ton Vilsack said March 9, echoing comments sources signaled last week. Meanwhile, House Speaker Nancy Pelosi (D-Calif.) and the chairmen of the House and Senate Ag panels told a farm group that they supported a higher ethanol-to-gasoline blend rate, with Pelosi seeing it as a way to reduce reliance on petroleum imports.

Background: An ethanol group, Growth Energy, formally asked the Environmental Protection Agency (EPA) on March 6 for a maximum blend rate of up to 15 percent. EPA has 270 days to respond to the petition. Growth Energy officials have previously noted that EPA could allow a 12 percent or 13 percent blend in the interim. "We can, we believe, move fairly quickly to move the blend rate to 12 to 13 percent in the interim," Vilsack said at the National Farmers Union (NFU) convention. After that, he said, the blend rate could rise to 15 percent or 20 percent.

Asked about raising the ethanol cap, Pelosi, said "I hope so" and pointed to the goal of more domestic fuel production. Vilsack said, "We'd love to see 15 percent. Right now my focus is on 12, 13 percent because I think it is doable more quickly. Our hope is that EPA can come to the same conclusion we have, which is that this is something that can be done within existing regulations without a great deal of time spent reviewing the science.”

Vilsack said he has had several conversations with EPA head Lisa Jackson and her team to encourage the agency "to take aggressive action on the blend rate." An increase to 12 or 13 percent would be a good "first step" and would help expand market opportunities and improve the stability of the ethanol industry, he noted. Ultimately, EPA must decide whether to change the blend rate. USDA and other federal departments can offer advice and information.

Senate Ag Committee Chairman Tom Harkin (D-Iowa) told the NFU confab that he, too, supports moving the blend rate up to 15 percent.

House Ag Committee Chairman Collin Peterson (D-Minn.) also favors an incremental approach toward a 15 percent maximum blend rate for non-flex fuel vehicles.

Meanwhile, the agriculture directors of 10 Midwestern states sent a letter to President Obama Monday also endorsing the acceptance of 15 or 20 percent ethanol blends. The letter noted that, “American ethanol production has nearly reached 10 percent saturation. We must move to a base blend of 15 or 20 percent in 2009 in order to continue growing this vital industry. By working together to promote domestic production and improve market access, we can continue to deliver a clean, renewable fuel that has a positive impact on our domestic economy.” Letter signers include the heads of state agriculture departments in South Dakota, Iowa, Nebraska, Wisconsin, North Dakota, Kansas, Minnesota, Michigan, Montana and Ohio.

On another ethanol industry matter, Vilsack said he is looking for ways to help ethanol plants that are "on the edge" of financial viability due to the lower fuel prices and that he plans to work with the Energy Department to encourage the construction of transmission lines that can get energy produced in rural states to urban areas.

Comments: The House Speaker, the USDA Secretary, and the chairmen of the Agriculture panels all support a higher blend rate. That suggests it is not a question of if but when and how much an increase. While the EPA doesn't take as long as the Food and Drug Administration (FDA) to make a decision, the EPA usually takes a lot of time to address a matter.

NOTE: This column is copyrighted material, therefore reproduction or retransmission is prohibited under U.S. copyright laws.


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