The U.S. Environmental Protection Agency said Tuesday it required more time to decide whether or not to approve an industry request to increase the amount of ethanol blended into gasoline, Reuters reported.
The EPA was supposed to make a decision by Dec. 1 on a petition filed by Growth Energy on behalf of 54 ethanol producers. The petition called for gasoline to be allowed to contain up to 15% ethanol. Currently, U.S. gasoline is approved to contain up to 10% ethanol, which is made mostly from corn.
The recession has caused a drop in crude oil prices to nearly $30 a barrel, forcing many ethanol companies into bankruptcy and a large percentage of production capacity was idled. Profit margins have improved as oil prices have grown to around $80 a barrel, and ethanol producers would be further helped if the blending limit was raised to 15%.
Farmers who provide the corn to make ethanol support the increase, but automakers asked the EPA this summer not to approve higher blends until the agency had test results showing the fuel would not damage vehicle engines.
The EPA said it needs more time to review test data on the effects a higher ethanol-gasoline ratio would have on vehicles and expects to have final testing data on the effects by mid-June.
“We want to make sure we have all necessary science to make the right decision,” the EPA said.
The agency said initial tests indicate vehicles built after 2001 “will likely be able to accommodate” gasoline blended with as much as 15% ethanol, commonly known as E15.
Growth Energy welcomed the EPA’s announcement, saying it indicates the agency was preparing to approve E15 once tests are finished.
“It looks very favorably to go to E15 by the middle of next year,” Tom Buis, chief executive of Growth Energy told Reuters. He added that if his group had not filed its petition, the U.S. would be years away, instead of months, from using E15.
The Renewable Fuels Association, the trade group for ethanol producers, however, said the EPA’s delay “threatens to paralyze” the U.S. ethanol industry. The group said the EPA should immediately approve intermediate ethanol blends, such as gasoline containing 12% ethanol, while it finishes its testing on E15.
Because the EPA has never allowed U.S. automakers to use gasoline blends with more than 10% ethanol, companies had no reason to design, test or provide warranties for vehicles that use higher ethanol blends, the group said.
There is also pressure from some critics who oppose the idea of using food to produce fuel. Some envision the ethanol industry gradually moving away from using corn to produce fuel and produce cellulosic ethanol made from switchgrass and farm waste.
Meanwhile, some environmental groups, disagree that ethanol is good for the environment because it comes mostly from corn in the U.S. and modern farming uses petroleum-based fuel to run machinery and make fertilizer. Meaning a lot of energy is used to make a gallon of ethanol.
The Obama administration supports the ethanol industry because it reduces the need for some imported oil.
Energy legislation passed by Congress in 2007 set binding targets for fuel blending each year, with ethanol use rising from 4 billion gallons in 2006 and 11.1 billion gallons in 2009 to 20.5 billion by 2015 and 36 billion by 2022.
“To achieve the renewable fuel requirements in future years, it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10%,” the EPA said.