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Posted by on Nov 19, 2010 in Fuel, US |

Ethanol Update: GOP Deficit Hawks Grumbling

A new twist on the issue of ethanol in motor fuel.

We’ve been reporting for more than three years on the detrimental effects of ethanol-blend fuels on marine engines and fuel systems, and on the marine industry’s opposition to a petition by the ethanol industry to increase from 10 percent to 15 percent the amount of ethanol that can be added to motor fuel. Now, just weeks after the EPA approved that E-15 petition, buzz is building that all may not be smooth sailing for the ethanol industry when the new Congress is seated in January.

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In a column posted November 11 on Forbes.com, market analysts Gary Clark and Rachel Ziemba speculate that deficit hawks in the Republican Party may be reluctant to renew the legislation that enables various credits, tariffs and other subsidies for the bio-fuel industry. Ethanol produced from corn and blended with gasoline for motor fuel is presently the most widely-used bio-fuel. Ethanol producers receive a 51-cent-per-gallon “blender’s credit” and are protected from imported ethanol by a 54-cent-per-gallon tariff. The politics of this would be very complicated; some Republicans who represent corn-producing states and support the subsidy renewals will likely butt heads with those just elected on a platform of cutting the deficit, eliminating what they perceive to be wasteful government programs, and curtailing efforts by the government to drive energy policy. There’s also sentiment that states should be allowed to opt out of Federal mandates concerning bio-fuel targets.

But the use of ethanol in fuel is not just an effort to reduce oil consumption. It’s also used as an additive to reduce exhaust emissions, an “oxygenate” that helps engines burn hydrocarbons more completely. And in many markets its use is mandated by EPA clean-air laws. Even without a subsidy, we’d see ethanol in some fuels, only now it would cost more.

Meanwhile, the National Marine Manufacturers Association, the marine industry lobby organization, testified at a Nov. 16 EPA hearing in Chicago that the agency’s plans to label pumps dispensing E15 fuel were inadequate, as were its plans to educate consumers about the differences between E-10 and E-15 fuels.
Charles Plueddeman