Is EPA Ethanol Mandate a Joke?

Why "mandate" that refiners use less ethanol they are already using? Shouldn't a "mandate" require that they use more than they already are? Isn't that the point? Regulators on Tuesday set the new renewable fuels standard of nearly 4.7% for next year to meet a federal mandate that at least 5.4 billion gallons of ethanol be blended into transportation gasoline in 2008.

The standard for 2007 was slightly more than 4 percent, which amounted to roughly 4.7 billion gallons, according to the Environmental Protection Agency. The volume target increases every year until reaching 7.5 billion gallons in 2012. Why is this a joke? The U.S. currently has 134 operating ethanol plants with a total capacity of 7.2 billion gallons. That means the "mandate" could have been raised another 20% to 30% and current capacity could have easily handled it.

With producers like ADM (ADM) currently undergoing capacity upgrades that will have it producing 1.6 billion gallons itself annually, if congress and the EPA are indeed serious about making a dent in our oil consumption and the strangle hold it has on us, more aggressive targets are required. Verasun (VSE) has put expansion on hold chiefly due to uncertainty over Congressional legislation.

The industry is currently subdued after it meteoric rise in early 2006. Unless congress want the inevitable consolidation that will occur, concentrating production in only a few companies, action is required. We are at a crossroads. We have the production available, but unless we force refiners like Exxon (XOM), BP (BP) and Chevron (CVX) to use it, they will not, as it ultimately threatens them.

Ethanol currently sells for $1.96 a gallon and every car in the US can run on a 10% blend. Currently several states have not yet enacted the 10% blend level and this EPA "mandate" only assures that will not happen anytime soon.

Almost 8 million of autos and trucks can run on the E85 blend. My Suburban can, but I cannot buy the fuel here. Supply it and you can bet I will. I would gladly support an Iowa farmer over a Saudi Shiek and smile while doing it.

Down the road, Konrad Imielinski reports:

The U.S. House of Representatives could vote on a wide-ranging energy bill next week that would triple the use of ethanol. There is speculation that legislation will require 20.5 billion gallons of ethanol by 2015, with 5.5 billion gallons of that coming from cellulosic ethanol. The bill is also speculated to set short-term targets of 9.5 billion gallons by 2008 and 11.6 billion gallons by 2009. Back in June, the Senate passed a proposal to require 36 billion gallons of ethanol use by 2022. Democrats will also attempt to hit the oil industry with $15 billion in taxes and require utilities to get 15 percent of their electricity from wind, solar and other renewable sources.

Congress needs to act and the party that takes the lead may just get credit years from now for saving us from oil. Isn't that enough motivation?

Comments

[gacetillero]

Pay closer attention. The new mandate is exactly what was prescribed under the Renewable Fuels Standard in the Energy Policy Act 2005. The EPA has *no* discretion in setting the mandate. Granted, it's unfortunate that their press releases are written to make it sound like they do.

[contrariwise]

Hey buddy, good on you for tearing a page out of my commie playbook. State planning is the way to go! Never mind that food prices are rising and people are going hungry because of misdirected investment in a sector that wouldn't exist without government mandates. You look pretty well fed yourself, so that's obviously not a concern for you.

[jrkirk]

"I would gladly support an Iowa farmer over a Saudi Shiek and smile while doing it."
----------------------...
What is missing here is the cost factor. Would the author spend more on E85, and be happy with a 20-25% cut in miles per gallon? Perhaps he would, but somehow I doubt it. The nation is starting to realize the limitations of this strategy, and the increase in the price of other related commodities (i.e., groceries, ag products, etc.) that is the ultimate result. Ethanol can be a good supplement to an overall energy program, but to hang our hat on only this strategy will result in failure, just like it did in the 1970's.

[vboring]

the current generation of ethanol is so energy intensive to produce that some studies have claimed it actually increases CO2/mile, that 1 barrel of fossil fuel produces less than 1 energy equivalent barrel of ethanol fuel.

biodiesel is energy positive, but not by much.

ethanol is a great subsidy for Midwestern states, but pretty useless for anything else

[ColeMan]

Congress setting Energy mandates, just like Hillary's threat to take oil companies' profits, are scary. A few years ago we had mandates for MTBE's use in Gasoline and now the MTBE producers and oil companies are facing lawsuits for unanticipated side effects of MTBE leaking into drinking water. Ethanol on tap, everyone! Big Government mandates are great for the lawyers, bad for the consumer.

[done]

I AM GOING TO SAY THIS AGAIN, ANYTHING TO DO WITH ENERGY IS SUBSIDIZED BY THE FEDRAL GOVRENMENT.

Everything from Fossil fuels, to a fricken solar panel on your damn roof of your house. Prices are getting higher mainly because of enegy going up as a whole. then you bash an alternitive to a energy demand. that is how greedy americans are, just worry about what its goin to cost. you can thank ethanol for having the cheapest gas in the world right now. americans buying gas is like are salaries, the more you make, the more you spend, if you can afford to buy the gas, hell burn her up.

[gashog]

We really should go in the opposite direction to these ill conceived and scientifically nonsense ideas that adding additives like ethanol will help us drop our dependency on foreign (Arab) oil. Since it can be verified thermodynamically that ethanol has less energy per gallon than pure gasoline and that today's modern cars and vehicles with catalytic converters and other emissions controllers prevent the tailpipe gases from fouling the air quality the incorrect idea that oxygenated fuels would improve emissions quality should be changed. Today's cars and trucks will get more miles per gallon from pure 100% gasoline fuels that are refined from DOMESTIC oil field sources (like the Alaskan oil fields and offshore oil fields which are being developed by the Chinese with Cuban help!). Americans should wake up and admit that inorder to enjoy energy independence we must start developing our own natural resorces and stop buying the oil from the Middleeast. Tell our Congress to approve domestic oil production and use what God gave us. Use the Corn for food and beef on cornfed diets will be mad-cow-free and the costs of everything will drop while USA productivity and inflation will improve!

[User 212284]

Almost agree with you. Ethanol makes gasoline burn cleaner and is used to boost octane. It is very efficient up to a 10% consentration.


On Jun 12 08:11 PM gashog wrote:

> We really should go in the opposite direction to these ill conceived
> and scientifically nonsense ideas that adding additives like ethanol
> will help us drop our dependency on foreign (Arab) oil. Since it
> can be verified thermodynamically that ethanol has less energy per
> gallon than pure gasoline and that today's modern cars and vehicles
> with catalytic converters and other emissions controllers prevent
> the tailpipe gases from fouling the air quality the incorrect idea
> that oxygenated fuels would improve emissions quality should be changed.
> Today's cars and trucks will get more miles per gallon from pure
> 100% gasoline fuels that are refined from DOMESTIC oil field sources
> (like the Alaskan oil fields and offshore oil fields which are being
> developed by the Chinese with Cuban help!). Americans should wake
> up and admit that inorder to enjoy energy independence we must start
> developing our own natural resorces and stop buying the oil from
> the Middleeast. Tell our Congress to approve domestic oil production
> and use what God gave us. Use the Corn for food and beef on cornfed
> diets will be mad-cow-free and the costs of everything will drop
> while USA productivity and inflation will improve!

[ewood]

Yes, you are correct that the EPA ethanol mandate is a joke. However, it sounds like you should do more research on ethanol and the fraud that it is. "Supporting the Iowa farmer" isn't as sexy as you think. First of all, your suburban FFV would get less miles per gallon using E85 than you currently do on gasoline (ethanol has a lower energy content than gasoline [75,000 BTUs vs. 114,000 BTUs]). Second, as you have seen this year, it plays a role in increasing the cost of other commodities, as well as beef, poultry, dairy, and eggs. Lastly, it takes almost 3000 gallons of water to yield 1 gallon of ethanol. That, my friend, does not make ethanol a renewable fuel.

Take a look at this website to fill in the blanks of what you don't know:

www.businessweek.com/a...