Putting the Brakes on Ethanol

At first glance, the new ethanol rules drafted by the Environmental Protection Agency (EPA) might seem to be a bold step toward increasing consumers’ use of this renewable fuel, which is often derived from corn. After all, EPA regs now approve the use of E15, a mix of 15 percent ethanol and 85 percent gasoline. But a deeper look shows that, while the new regulations appear to favor increased use of the biofuel,  the finer points of the rules will likely mean little expansion of ethanol use.  

Why? Because the EPA rules limit E15 use to vehicles built no earlier than the 2007 model year. The EPA failed to certify E85 use for by vehicles prior to that -- and this means gas stations and convenience stores may be unwilling to add E15 fuel to their product offerings.

Retailers Already Objecting

The National Association of Convenience Stores (NACS), whose members sell an estimated 80 percent of the fuels purchased in the United States, flatly warned against the sale of E15. The group fears possible liability factors if vehicles are “mis-fueled.”  

In a release, NACS advised that “retailers should exercise extreme caution when considering whether to sell E15 gasoline, following the EPA’s decision today to authorize the use of E15 in vehicles manufactured in model year 2007 and later.”

Confusion over which fuel consumers should use -- plus the storage and dispensing issues that come with  adding another type of fuel -- mean retailers might well steer clear of the whole thing.

“The EPA’s decision to allow the use of E15 in certain vehicles does nothing to remove retailers’ obligations to ensure that all of their equipment is lawfully certified to store and sell this product," said NACS Vice President of Government Relations John Eichberger. "Furthermore, limiting E15 use only to vehicles manufactured since 2007 could expose retailers to a significant liability risk if a consumer was to fuel a non-approved engine with E15.”

Environmentalists Question Age Limit
Currently, fuel retailers are only authorized to sell fuel containing up to 10 percent ethanol. Likewise, most vehicle warranties authorize fuels containing no more than 10 percent ethanol. The new rules authorize the sale of E15 -- but only for use in vehicles from 2007 onward. That’s the rub.

“The EPA’s scientifically unjustified bifurcation of the U.S. car market will do little to move the needle and expand ethanol use today,” said Bob Dinneen, President of the Renewable Fuel Association (RFA). “Limiting E15 use to 2007 and newer vehicles only creates confusion for retailers and consumers alike. America’s ethanol producers are hitting an artificial blend wall today. The goals of Congress to reduce our addiction to oil, captured in the Renewable Fuels Standard, cannot be met with this decision.”

Particularly vexing to renewable fuel advocates is the fact that the EPA’s own testing showed E15 to be safe and effective in all light-duty vehicles. Dineen said the EPA’s refusal to authorize its use in older vehicles made it look “almost as though they pulled the number out of a hat.”

Liability May Hinder Adoption
The Bush Administration strongly advocated ethanol and other renewable fuels, but the Obama Administration changed course to favor battery-electric vehicles. Because of the EPA’s ruling, the RFA says that wholesale adoption of E15 by gasoline marketers and retailers is unlikely.

In its weekly newsletter from Sept. 17, 2010, the Petroleum Marketers’ Association of America stated, “Limiting the waiver to a specific class of vehicles based on date of manufacture means retailers would be forced by market conditions to carry both E10 and E15 products, thus increasing the risk of consumer mis-fueling.”

Under the Clean Air Act, motor fuel retailers might be considered liable for emissions increases that may occur if E15 is used in non-approved engines. Customers may also attempt to hold retailers liable for damage to engines that occur because of mis-fueling.

All this means that you’re unlikely to find gasoline retailers offering E15 anytime soon.