The Environmental Protection Agency has changed the rules requiring certain states to add oxegenates – like ethanol or MTBE – to gasoline to fight air pollution. Here’s the actual announcement from EPA made late yesterday:
In a move to provide greater flexibility in producing clean-burning gasoline to protect and improve air quality, EPA is revoking the two percent oxygen content requirement for reformulated gasoline (RFG) nationwide. The Energy Policy Act authorized the action, which reduces production burdens while continuing to protect the environment with clean fuel blends as the use of ethanol increases. Currently, about 30 percent of gasoline is RFG. The revocation takes effect nationwide on May 6 and in California 60 days after the regulation’s publication in the Federal Register.
In other words, the government is no longer going to tell refiners exactly how they have to make cleaner-burning gasoline. The new regulation implements a provision in last year’s comprehensive energy bill that did away with the oxygenate requirement – and that was in response to complaints by states that have banned MTBE because it pollutes groundwater, leaving them with ethanol as their only option.
Now, the smoggiest areas of the country in 14 states – California, Connecticut, New York, Delaware, Georgia, Illinois, Indiana, Louisiana, Maryland, New Jersey, Pennsylvania, Texas, Virginia, Wisconsin – and the District of Columbia are still going to have to meet clean air standards by using cleaner burning gasoline. They may still choose to use oxygenates, like ethanol, or go some other route.
What will this mean for the ethanol industry, since much of the increased demand lately has come from states replacing MTBE with ethanol? Likely not much, because while the energy bill eliminated the oxygenate requirement, at the same time it created a new renewable fuels requirement that calls for refiners to use four billion gallons of renewables this year, and 7.5 billion by 2012. So, as an article in USA Today states, the outlook is still bright for ethanol.