Vilsack Urges EPA to Boost Ethanol Blend Percentage

February 10, 2009 06:00 PM

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Other strategies: building up infrastructure for second- and third-generation fuels

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

The Environmental Protection Agency (EPA) should raise the maximum amount of ethanol it requires to be blended with gasoline for non-flex fuel vehicles in order to help the U.S. ethanol industry, USDA Secretary Tom Vilsack said on Tuesday, although he did not specify how high the cap should be.

The U.S. government currently sets the ethanol-to-gasoline blend rate at 10 percent. Ethanol groups have complained the cap is stifling development and growth of the alternative fuel industry. They have suggested rates of 15 percent, or even 20 percent, but Bush administration officials had previously been discussing a percentage boost to 12 percent or so.

An increase in the percentage that can go into gasoline would be a way to stimulate the corn-based ethanol industry, Vilsack said, and that is why he said he is advocating a shift and talking about options together with EPA Administrator Lisa Jackson. "Obviously we're encouraging [Jackson] to consider an adjustment to the blend ratio," Vilsack said.

"My hope is that we can get a blend rate that is higher than 10 percent," Vilsack said. "That is going to create more opportunities for the ethanol industry. We're encouraging EPA to do that. We hope that they'll listen to our concerns."

Comments: As I have previously noted, EPA must decide whether to change the blend rate. USDA and other federal departments offer advice and information to the agency.

Vilsack said other strategies to improve future biofuel use include building up infrastructure for second- and third-generation biofuels.

Background: The federal Renewable Fuels Standard requires use of 21 billion gallons a year of advanced biofuels, such as cellulosic ethanol, by 2022 -- beginning with 600,000 gallons this year. It sets a peak of 15 billion gallons a year of corn ethanol. The target this year is 10.5 billion gallons.

Comments: Regarding the blend percentage, the issue is primarily back to the same position it was during the closing days of the Bush administration, where officials were inclined to okay a small boost in the blender percentage, but that decision was never announced, for whatever reasons.

Vilsack is correct when noting the EPA will make the final recommendation. Whether an Obama-led EPA is different on this matter from the Bush EPA remains to be seen.

A longer-term perspective is evident in that Vilsack's call for a higher percentage signals what could happen in the future should corn carryover stocks get into a burdensome situation – a recommendation could be made to Congress to again boost the mandate for corn-based ethanol. I am not predicting this, but note the possibility if stocks bulge and/or prices plummet “too much.” That potential policy alternative is considerably different from the days when the executive and some in the legislative branch favored acreage diversion programs. And since acreage diversion programs have been removed from the policy toolbox by past legislation, this or any future administration will have to examine things like the blend percentage or other steps to address any oversupply situation.

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


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