The US Senate June 5 voted 67-29 to include a "renewable fuels standard (RFS)" in a pending comprehensive energy bill, S. 14. Senate Majority Leader Bill Frist (R-Tenn.) and his Democratic counterpart, Minority Leader Tom Daschle of South Dakota, sponsored the amendment.
The measure phases down use of the fuel additive methyl tertiary butyl ether nationwide, installs an ethanol mandate plan requiring refiners to more than double their use of ethanol to 5 billion gal/year by 2012, and eliminates the 2 wt % oxygenate standard for reformulated gasoline (OGJ, May 12, 2003, p 26).
RFS represents a compromise finalized last year between fuel ethanol producers, integrated oil companies, some public health advocates, and a US Northeast-based state air pollution group, the Northeast States for Coordinated Air Use Management (NESCAUM). The plan had broad bipartisan support on Capitol Hill but was included in last year's doomed energy bill that fell victim to election- year inertia.
Past and future
This year, industry lobbyists and congressional staff say there is a reasonable chance lawmakers will pass an energy package. But even if a large energy bill ultimately fails, an ethanol-RFG plan is still expected to become law, either alone or part of less problematic legislation.
The American Petroleum Institute says RFG reform is needed to give states and suppliers a clear road map for clean fuel programs. Refiners, however, led by the National Petrochemical & Refiners Association, say that Congress should just eliminate the oxygenate standard instead of forcing an expensive ethanol mandate on fuel suppliers. More than a dozen states are in the process of banning MTBE because of groundwater contamination concerns.
The Senate version includes liability protection for ethanol and ethyl tertiary butyl ether (ETBE), but an MTBE "safe harbor" may be added later when lawmakers negotiate with the House to produce a final bill, congressional sources predicted. Final discussions on an energy bill may not happen until fall, according to some lobbyists. The Senate is still debating the overall bill with titles on electricity, Indian energy, nuclear power, and energy efficiency still to come. And amendments seeking to reduce the impact of possible natural gas supply crunches this winter may top the agenda.
During the week of June 2, opponents of the RFG-ethanol mandate proposal, including senators from California and New York, threatened to offer hundreds of amendments and possible competing proposals. Prior to passage, the Senate considered several measures, but the powerful compromise between the farm and oil lobbies held; only one minor amendment passed in the end.
Senators did accept by voice vote an amendment sponsored by Sen. Barbara Boxer (D-Calif.) designed to promote the use of cellulosic biomass ethanol made from agricultural residue. (Currently, more than 90% of fuel-grade ethanol is made from corn.) Under the Boxer provision, regulators treat 1 gal of cellulosic biomass as the equivalent of 1.5 gal of renewable fuel for accounting and credit-trading purposes under the new ethanol mandate standard. If the cellulosic biomass is made from agricultural residue, the ratio expands to 2.5 gal.
Responses to ethanol vote
The Renewable Fuels Association, which represents fuel ethanol producers, said the RFS amendment "is the cornerstone to a necessary, national energy policy." RFA said the agreement sends a strong signal that Congress is ready to confront pressing national energy issues. "Only the RFS fuels agreement will immediately reduce our dependence on foreign oil, reduce gasoline production costs, and provide a national solution to MTBE," said Bob Dinneen, RFA president.
Frank Maisano, spokesman for the Oxygenated Fuels Association, an MTBE trade group, said it has some serious concerns with the ethanol mandate portion of the clean fuel plan. "There are still some disturbing elements in the Senate approach. The Senate, for example, has undertaken too great an intervention in the fuels marketplace. At least the Senate has recognized that when the government mandates products, it must address potential liabilities that can result from such mandates," he said. Maisano said his group generally favors the House-passed fuels provisions because "it will be much easier on the environment and on the pocketbook."
The House bill creates a 5 billion gal/year fuel ethanol market by 2015. It does not phase down MTBE but offers merchant producers incentives to switch production to other clean fuel additives. It also gives MTBE the same product liability protection afforded to ethanol and ETBE in last year's Senate bill.
