As America moves closer to what many hope is an energy-consumption future that will rely less on carbon-based fuels and more on alternative and / or bio-fuels, some disagreements are naturally going to arise along the way. And, there have already been plenty – most of which pit proponents of one proposed alt-fuel technology (say, hybrids or plug-ins) against another (like, for example, clean diesel or fuel-cell technology.)

In recent months, one disagreement has escalated into something more like a battle – and in this case, it’s between carmakers and ethanol producers. The battle is all about the amount of ethanol allowed in gasoline at the pump.

The little-known fact is that you're likely already driving on ethanol. Three out of every four gallons of gasoline pumped in America contains some American-made ethanol, according to Growth Energy, an ethanol advocacy group. "Ten percent ethanol is the most common blend, but that depends on availability of ethanol for blending," said Growth Energy spokesman Chris Thorne. "For example, most states in the Midwest have easy access to ethanol, and E10 is widely available, as are E85 and blender pumps that dispense higher blends of ethanol for Flex Fuel vehicles."
 
"But there are far, far fewer E85 and blender pumps on the East Coast," Thorne said. "Because of the lack of infrastructure to carry ethanol to that market and others that are farther from ethanol production facilities."
 
That's why the legislative priorities of Growth Energy includes the  development of flex fuel vehicles, pumping stations and pipelines, said Thorne.

The conflict between carmakers and ethanol producers has ramped up against the backdrop of a shake-out in the ethanol industry over the last year or so, which saw several ethanol producers file for bankruptcy.

This was due in part to slumping ethanol sales, which in turn was partly due to plummeting gasoline prices last November. Those prices remained low for many months.

Even though gas prices have crept back up since then, the volatility of those prices sometimes meant that gas was cheaper than corn-based ethanol. Another factor is that the current ethanol infrastructure is not adequate to support an industry that wants to grow: fewer than 2,000 gas pumps are presently in place that can dispense E85 fuel, out of a total of an estimated 170,000 gas pumps nationwide.

Buying Less Ethanol

So, according to some federal government estimates, U.S. consumers will buy about 50 percent less E85 fuel – a blend of 85 percent ethanol and 15 percent gasoline -- in 2009 compared to ’08.

Ethanol producers obviously would like that to change. That desire is partly behind the ethanol makers’ petition to the Environmental Protection Agency to allow more ethanol to be mixed into regular gasoline used in the average car – up to 15 percent, compared with the presently-allowed maximum of 10 percent. In addition, they have thrown their support behind legislation that would allow the U.S. government to mandate that carmakers build more vehicles that can run on E85.

Carmakers are strongly opposed to both of those efforts. On the one hand, auto manufacturers are concerned that increasing the ethanol levels in gasoline without further testing could damage the older cars currently on the road that have not been designed to run on E85 – about 245 million vehicles in all, according to industry estimates.

Additionally, carmakers oppose any kind of government mandate that would dictate how many flex-fuel vehicles should be built – a mandate, they say, that would require consumers to pay more for a technology they might never use (especially if gas prices drop again and consumers choose to stick with the then-cheaper gasoline alternative.)

A new wrinkle in the conflict between these two industries was introduced in mid-September, when several U.S. Senators co-sponsored a bill that, if passed, would freeze the previously-mandated production of corn-based ethanol at this year’s level – instead of boosting those production levels significantly over the next few years as required by a law passed in ‘08.

That legislation required an annual increase in the amount of ethanol produced in the U.S. -- from the 4.7 million gallons produced in ’07, to 9 million gallons this year, and then increasing up to 15 billion gallons by 2015. One of the co-sponsors of the bill, Sen. Susan Collins of Maine, cited concerns about how that mandate has impacted food prices – and how it will do so in the future.

According to the latest available commodity price reports, the combined price of corn, wheat and soybeans has spiked by more than 400 percent since early 2006.

“Hard-working families are being squeezed between skyrocketing energy prices and soaring increases in food costs,” said Collins in a statement. “I am concerned that the increasing use of food crops to produce biofuels, such as corn-based ethanol, is contributing to the rising cost of food. Freezing the mandate is a common-sense approach to immediately addressing this problem.”

The ’08 legislation – dubbed the Energy Independence and Security Act (EISA) – gave the EPA with the authority to waive the mandates, or adjust them as necessary if consumers were in need of price relief.

Additionally, in April, several senators, including Collins, co-signed a letter to the EPA asking for a status report on the pending rule-making process for the waiver of all or portions of the ethanol mandate passed by Congress last year.

The Senate legislation proposed in September would maintain federal support for ethanol from non-food sources, such as wood or “cellulosic” sources like wood chips, switchgrass and corn cobs. Meanwhile, the EPA has until December 1 to decide whether to approve the ethanol producers’ request to increase the ethanol content in regular gasoline from 10 to 15 percent.

Charles Territo, a spokesman for the Alliance of Automobile Manufacturers, stressed that carmakers are opposed to any “policies that mandate specific technologies.”

Good For Your Car?

The two camps also disagree on how much testing should be conducted in order to determine whether the higher levels of ethanol in regular gasoline – for vehicles not designed to use E85 fuel – would cause damage to fuel lines, catalysts and other components.

Growth Energy points to research conducted in late 2008 and early 2009 as part of a larger Department of Energy-sponsored study on the issue. The initial findings showed that no short-term damage occurred due to using a 15-percent ethanol blend.

Territo remarked that those results were “only preliminary and inconclusive, and only looked at how the vehicles fared after being driven 500 miles. More study is necessary to know how the prolonged use of (gasoline with higher ethanol levels) will affect the long-term durability of autos. Keep in mind that vehicles today are often warrantied for as many as 120,000 miles.”

In April, an EPA official told a Senate panel that the Energy Department’s tests on the impact of higher ethanol levels would be completed over the course of the next year – meaning, hopefully, by next spring. 

“We’re not anti-ethanol at all,” said Territo. “There are presently 7 million vehicles on the road that have been designed by carmakers to operate on E85 fuel. And, carmakers have continued to increase the production of E85-capable vehicles – from 320,000 in 2001 to more than 1 million in 2008.

“We’re just concerned about how the higher blends would impact those 245 million vehicles now on the road that are only designed to run on blends of 10 percent ethanol or less. If higher levels of ethanol damage the vehicle, it’s the carmakers who are going to have to deal with car owners.”

Growth Energy's Thorne said that ethanol producers are “not looking to lock horns with the auto industry. We want to work with them. And we believe that levels of 15 percent are safe.

“Plus, ethanol is low-carbon, and it reduces our dependence on foreign oil – and as we know, oil is a dirty fuel," Thorne said. "And if we’re allowed to ramp up production of ethanol, that creates a lot of jobs for Americans.”

Growth Energy maintains that increasing the blend up to E15 would create more than 135,000  new “green” jobs and inject $24.4 billion into the American economy annually.

“And we have a lot of entrepreneurs in our industry who are constantly refining the efforts to more efficiently derive the fuel from the corn,” Thorne said. “There are investors poised to invest large amounts of capital into the production of ethanol, but they’re not sure yet how big the market will be, so they’re sort of in a holding pattern.

“So, we’d like to increase the size of the market, to allow those investors and entrepreneurs to further develop ethanol, and develop the technology that will produce cellulosic ethanol. And one way to increase the market is to increase the allowable level of ethanol.

“We feel that the current 10 percent cap is a mandate that drivers must use fuel that is 90 percent petroleum. But, by opening up the market, we can not only tap into an enormous potential for job creation, but also give consumers more of a choice.”

Territo of the Alliance of Auto Manufacturers commented that “the best way to increase the amount of ethanol being consumed is to invest more heavily in the E85 infrastructure. Less than 2,000 E85 pumps is just simply not enough, and that has to increase. I think that effort would go a long way toward helping the ethanol producers expand their market and sell more of their product.”

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