More Ethanol in Your Gas Tank? Struggling Producers Petition EPA for Help

Even before the recession took hold, the ethanol industry was suffering. Recent months haven't been any kinder. So industry representatives are urgently turning to the Obama administration, asking it to do something they say is critical for their survival: change the federal limit on how much ethanol can be blended into gasoline.

The industry's push to allow drivers to fill up on higher blends of ethanol has been building since late last year. It's still largely opposed by automakers, which worry that higher ethanol blends might harm cars.

Today, Growth Energy, which represents several of the nation's largest ethanol producers and more than 50 ethanol manufacturers, formally petitioned the Environmental Protection Agency to approve gasoline blends containing up to 15 percent ethanol. At the moment, gasoline can contain up to 10 percent ethanol. The EPA has 270 days to respond to the request.

Meanwhile, behind the scenes, "there are lots of letters floating around, some from politicians, some from what we'll call friends of politicians," with various proposals for getting more ethanol into fuel, says Coleman Jones, General Motors' biofuels implementation manager.

EPA chief Lisa Jackson and Energy Secretary Steven Chu have already indicated that the Obama administration is examining whether drivers should be allowed to put higher ethanol blends in their cars. As Jackson put it recently, the issue "is right in front of us." Though that comment touched off speculation that a decision might come within weeks or months, EPA officials insist that no decision is imminent.

The ethanol industry's appeals, however, are growing steadily louder. Ethanol plants continue to suspend operations or shut down, spurring producers to look for additional federal support. With gasoline prices having fallen dramatically, ethanol is no longer a cheap alternative to oil. The market for flex-fuel vehicles, which can run on up to 85 percent ethanol, is expanding very slowly. And the industry itself has grown so quickly that it is running out of potential buyers for ethanol.

Raising the blend limit, says retired Gen. Wesley Clark, now cochairman of Growth Energy, is "the No. 1 issue" before the industry. Without a growing market for its product, Clark says, the ethanol industry will struggle even more to attract investment.

Adds Matt Hartwig of the Renewable Fuels Association: "If you want the industry to grow and expand and include the next-generation technologies that are so close to fruition," raising the amount of ethanol blended into gas is "very important." Hartwig says the move would not only help the industry financially but also ensure that domestic ethanol use continues to increase, as required by federal law.

In light of today's request, the debate is likely to shift to matters of mechanics. The ethanol industry says cars can run safely on blends of up to 15 percent ethanol, perhaps even higher. While the EPA examines the new petition, some in the industry are calling for an immediate change to let all cars run on E-12 or E-13. Others are proposing "a partial waiver" that would allow some vehicles, such as newer models, to run on E-15 but keep others at E-10.

The latter proposal, however, has automakers like GM particularly worried, because they say drivers might end up putting the wrong type of fuel into their cars at the service station and cause internal vehicle damage. In general, automakers want much more research done. They point to extensive ethanol studies from Australia showing measurable deterioration of emissions-control devices in some cars.

The ethanol industry's arguments aren't just running up against heated automaker opposition. There's also the question of what the EPA can do legally. To allow higher blends, EPA officials say they must first have reliable, comprehensive data on the lifetime impact of higher ethanol blends on cars and their internal workings. Some industry representatives say such data are already available. But according to EPA officials, that research is not yet finished.