The Environmental Protection Agency on Wednesday gave the ethanol industry a long awaited boost, approving 15 percent ethanol blends in gasoline, up from the current limit of 10 percent. But the decision was roundly criticized.
One of the questions the EPA is wrestling with is whether 15 percent ethanol blends will harm car and truck engines. The agency ruled that gasoline blends containing 15 percent ethanol are safe and can be sold in the marketplace. That's a ruling the ethanol industry had been after for more than a year.
"EPA's announcement today is an important first step and a historic decision," said Tom Buis, CEO of the pro-ethanol group Growth Energy.
The lobbying group petitioned the government for the approval.
Buis said the 15 percent ethanol should help the industry sell of its products. But despite expressing optimism in a telephone news conference, Buis conceded that the EPA ruling fell short of what his group and others in the ethanol business want.
"While some will look at this whole effort by EPA as a glass half empty, we at Growth Energy view the decision as a glass half full," he said.
What's missing from the glass is a whole lot of ethanol. That's because the EPA approved 15 percent ethanol for only about one-fifth of all U.S. cars and trucks, those made in 2007 and after. That will limit how much is actually sold. The picture could become brighter for the industry if the EPA loosens the restrictions.
EPA Assistant Administrator for Air and Radiation, said the agency hopes to rule by the end of the year on whether 15 percent ethanol is suitable for vehicles made between 2001 and 2006.
"The earlier vehicles we have concerns from an engineering perspective, about the design," McCarthy said. "We have questions about whether E15 will be compatible and that's why we need additional test results."
The split decision on using more ethanol prompted one industry group to say the EPA's approval will do little to boost ethanol sales. Minnesota agriculture commissioner Gene Hugoson doubts many retailers will add pumps for the new fuel.
The American Coalition for Ethanol said 15 percent ethanol might confuse motorists since it will expand choices at stations that do add the pumps. The coalition expressed concerns that, unless drivers take time to make sure gasoline with additional ethanol is approved for their vehicle, they'll refuse to buy it.
Gas station owners are also concerned.
Lance Klatt, executive director of the Minnesota Service Station & Convenience Store Association, said his members are wary of 15 percent ethanol.
Klatt said they're worried about whether their pumps and storage tanks are can handle the new ethanol or whether they'll have to invest in new equipment should they decide to sell the product. He also said merchants are concerned that they could be liable if a motorist mistakenly pumps 15 percent ethanol into a vehicle that cannot use it.
Klatt said the EPA can levy a $25,000 fine in such cases. The EPA plans to come up with a gas pump labeling system it hopes will prevent that from happening.
Concerns about fuel with additional ethanol extend to farm country, where many livestock groups oppose any expansion of corn-based ethanol.
"You're taking all this food, making fuel out of it, and paying subsidies that completely destroy the free market," said John Burkel, a turkey producer in northwest Minnesota.
Burkel said turkey production is finally profitable again this year after several years of low or non-existent profits - much of which he blames on ethanol. He says production of the fuel used so much corn that prices for the grain jumped, inflating feed costs.
The EPA's approval of fuel with additional ethanol, Burkel said, is another example of how government favors corn producers at the expense of other farmers.
"We can co-exist with anybody in this environment if it's on a level playing field," he said. "And we just think we've been discarded from the equation when it comes to an end-user of corn."
Burkel said corn prices are climbing rapidly again, and he worries that will take more money out of his pocket.
Supporters of 15 percent ethanol say it will take a while for the new product to make it to the marketplace. At the earliest, they hope it will start showing up at gas pumps in the first few months of next year.