EPA Set to Give Ethanol a Big Boost?

In the midst of a drive by Washington’s powerful ethanol lobby to expand what critics often deride as an artificially created, and government aided and promoted market for “fuel made from food,” the top administrator from the Environmental Protection Agency (EPA) Wednesday testified before the Senate Interior and Environment Appropriations Subcommittee, telling lawmakers the agency will make a final determination late summer on allowing higher levels of ethanol to be blended into gasoline.

The ethanol industry is currently petitioning the EPA for a waiver to increase ethanol blends in gasoline from 10 percent to 15 percent, in order to create a larger market–and artificial demand–for the fuel source.

Administrator Lisa Jackson said the agency’s decision awaits completion of Department of Energy (DOE) tests on ethanol—namely, how higher ethanol blends might adversely affect vehicle engines, a long-running concern of automakers and the marine leisure industry, among others—which she expects to receive by May. “We expect that once we get that additional data, and it will be publicly available, the EPA will be in a position to move toward a final decision on the waiver, late summer in the time period,” Jackson said in response to a line of questioning by ethanol booster Senator Ben Nelson of Nebraska.

Co-chair of Ethanol Across America, Nelson recently launched a campaign to browbeat the EPA by offering an amendment to an EPA appropriations bill demanding higher ethanol blends. The amendment failed, but sources say that Nelson and fellow proponents of ethanol remain committed to expanding use of the fuel. This is despite frequent criticisms of ethanol from across the philosophical spectrum: Fiscal conservatives tend to regard ethanol as a boondoggle tying together the worst practices of pork-barreling and interference with the free market; progressives and some social conservatives have criticized ethanol as environmentally unfriendly, with some also pointing to the impact that using food to produce fuel has on global food prices, and thus hunger and malnutrition in poorer countries.

Once hailed as the “fuel of the future” by Henry Ford in the 1920s, ethanol opponents say that the market has roundly rejected ethanol as a viable fuel source, and emphasize that it is not a new product. Fewer than 2 percent of all refueling stations in the United States currently offer ethanol, despite extensive government subsidies aimed at its production (a 1998 report by the Department of Agriculture (USDA) observed that “the fuel-ethanol industry was created by a mix of Federal and State subsidies, loan programs and incentives. It continues to depend on Federal and State subsidies”).

One critic contacted by Capitol Confidential says that if EPA grants the waiver, it will constitute little more than further de facto federal welfare for the ethanol industry. Another critic notes that it could also result in a problem for the administration if, as some fear, the warranties of hundreds of millions of cars were voided.