E15 battle continues with infrastructure concerns

Source: Amanda Peterka, E&E reporter • Posted: Friday, May 4, 2012

U.S. EPA made a premature decision on E15 and has done an inadequate job addressing the concerns of engine manufacturers and fuel retailers, the oil industry said today.

On a conference call, the American Petroleum Institute warned that the nation’s retail fuel infrastructure is not equipped to handle E15, a blend of gasoline mixed with 15 percent ethanol. Bob Greco, the American Petroleum Institute’s director of downstream and industry operations, further called the introduction of E15 only a temporary solution, at best, to meet a flawed federal renewable fuel standard.

“EPA has not done its homework before introducing E15 to America,” Greco said. “The agency’s enthusiasm for E15 has clouded its judgment and led to approval of a fuel before adequate study has been done.”

The comments are the latest in a bitter battle that has pitted the oil industry, engine manufacturers and some environmental groups against the ethanol industry, which argues that the introduction of E15 is vital for advancing the nation’s renewable fuel goals.

The Renewable Fuels Association disputed API’s claims even before today’s call, saying the industry has “manufactured” concerns “in order to scare consumers away from more ethanol use.”

EPA approved the fuel in October 2010 for use in passenger vehicles from model years 2007 and later. The agency approved E15 for use in models from 2001 to 2006 in January 2011.

Since then, EPA has approved a label and plan aimed at preventing the “misfueling” of vehicles not approved for E15. The agency recently announced the first registrations of companies allowed to produce ethanol for the blend.

The American Petroleum Institute today circulated a March study showing that an estimated half of the nation’s existing retail fuel equipment is not compatible with E15. The study, done by Larry Gregory Consulting LLC, is “sobering,” Greco said. He cited other Department of Energy and Government Accountability Office studies showing similar results.

While EPA has not mandated that gas stations use E15, the oil industry has contended that the federal renewable fuel standard has acted as a de facto mandate by requiring yearly volume requirements of biofuel production or the purchase of fuel credits.

Greco said that the difficulties with infrastructure compatibility could make it more expensive to comply with the standard by discouraging gas stations from selling E15.

“The underlying problem with all this is we’ve got a renewable fuel standard that is becoming unworkable for the industry,” Greco said. “We have ever-increasing volumes of ethanol that are going to be forced into the market regardless of the demand for them.”

Matt Hartwig, the Renewable Fuel Association’s director of public affairs, countered API’s claims, saying the oil industry was using the infrastructure issue as a tool to “prevent the modernization and choice consumers are demanding from moving forward.” He noted that his organization has put together a retailer handbook for gas stations to navigate regulations and said that it is committed to working together to address infrastructure concerns.

“The nation didn’t have the infrastructure in place for a transcontinental railroad, but that didn’t stop us from moving forward because it was in the best interest of the nation,” Hartwig said in an email. “The same is true with America’s fueling infrastructure. Because some upgrades may be needed is no reason to accept the status quo as the best we can do.”

Despite their differences, both the oil and ethanol industries have supported bills by Rep. John Shimkus (R-Ill.) and Sen. John Hoeven (R-N.D.) that would provide liability protection for retailers and producers of E15 and other fuels. A provision in the legislation would allow retailers to use existing compatible equipment without having to go through required certification processes.

A House Energy and Commerce Committee subpanel held a hearing on the bill last month, and its sponsor, Shimkus, is making changes to address concerns about oil company liability for contaminated drinking water (E&E Daily, April 20).