Posted: Thursday, October 21, 2010 10:00 AM
Ethanol refiners say 15 percent blend is still too little
By DAVE WILKINS
A government decision to allow higher ethanol blends has left the corn-ethanol industry and other food and agriculture groups disappointed, but for quite different reasons.
The Environmental Protection Agency announced Oct. 13 that it would allow late model vehicles to use gasoline containing up to 15 percent ethanol -- E15 -- up from the E10 currently allowed in most vehicles.
The agency said it would allow E15 only in vehicles that are model year 2007 and newer.
The corn-ethanol industry immediately criticized the decision for not going far enough. It contends that E15 can be used in older vehicles without negative effects.
"Limiting E15 use to 2007 and newer vehicles only creates confusion for retailers and consumers alike," Renewable Fuels Association President Bob Dinneen said in a press release.
"This decision continues to leave the market artificially constrained and further limits market opportunities for next generation biofuels very close to commercialization," Dinneen said.
Marie Dodds, director of government and public affairs for AAA Oregon/Idaho, said approval of the higher ethanol blend "is not a bad thing," but there is some cause for concern.
"We're concerned about the potential for confusion among consumers," Dodds said in an interview.
"I'm sure there is going to be a learning curve," she said. "It will be an education process as far as making sure that consumers get the right fuel for their vehicle when they pull up to the pump."
The EPA said it is taking steps to help consumers easily identify the correct fuel for their vehicles. The agency is proposing labeling requirements for E15, including a requirement that the fuel industry specify the ethanol content of gasoline sold to retailers.
Food companies and livestock feeders have also been critical of the EPA's decision because it's expected to increase demand for corn, one of their major inputs.
Corn prices have already been rising on USDA estimates that the new crop will be lower than expected.
Higher ethanol usage would just put more pressure on the corn market, said Ed Field, executive director of the Washington Cattle Feeders Association in Quincy.
"Anytime there's more demand for corn, it makes it tough," Field said in an interview. "Corn is a major feedstuff for us."
Cattle feeders in the Northwest can reduce their usage of corn somewhat by increasing the amount of agricultural byproducts such as potato and sugar beet waste in their rations, but they still have to use some corn.
A coalition of food and agriculture groups that includes the American Meat Institute, the Grocery Manufacturers Association and National Chicken Council has also been critical of the decision to allow higher ethanol blends.
The groups argue that higher ethanol blends will result in dramatic increases in the portion of the U.S. corn crop used to make fuel rather than food and could lead to higher food prices.