By the OGJ Online Staff
WASHINGTON, DC, June 12 -- The US Environmental Protection Agency Tuesday denied California's request to waive the federal oxygen content requirement for reformulated gasoline.
Administrator Christie Whitman said, "After an extensive analysis, the agency concluded that there is significant uncertainty over the change in emissions that would result from a waiver. California has not clearly demonstrated what the impact on smog would be from a waiver of the oxygen mandate. We cannot grant a waiver for California since there is no clear evidence that a waiver will help California to reduce harmful levels of air pollutants."
In April 1999, California Gov. Gray Davis (D) asked the agency to waive the 2.0 wt % oxygen requirement, given that the state had opted to ban the oxygenate methyl tertiary butyl ether starting in 2003.
The only other commercially available alternative is fuel ethanol, and state officials fear there is not enough supply to meet California demand. State officials also maintain that fuel ethanol volatility could undo the clean air benefits surrounding reformulated gasoline.
Ethanol fuel producers say they can expand to meet demand growth, but others are skeptical. Analysts say there is 131,000 b/d of fuel ethanol capacity with nearly half controlled by one supplier, the agribusiness giant Archer Daniels Midland Co. Plans are on the drawing board to double that figure by 2005, but only 8,700 b/d is under construction with an additional 26,700 b/d in advanced planning.
Refiners are expected to continue lobbying the White House and Congress to revise clean fuel rules so reformulated gasoline can be sold without a mandated oxygenate level.
Other states, including most recently New York and New Jersey, are moving forward with MTBE bans because of concerns the chemical can seep too easily into groundwater.
Whitman said, "The administration is concerned about the risks of MTBE in drinking water in California and other states. Clean air and clean water are equally important. We do not want to pursue one at the expense of the other. As it currently stands, the Clean Air Act provisions limit the agency's ability to address these concerns. We are exploring all options and currently assessing the health risks of MTBE."
Ethanol interests, supported by powerful Midwest agribusiness companies, are calling on Congress to mandate national ethanol levels.
Under legislation proposed by Sens. Chuck Hagel (R-Neb.) and Tim Johnson (D-SD), the Department of Energy would require fuel refiners, blenders, or importers to use a minimum percentage of renewable fuels. The renewable fuel standard would require in 2002 that 0.8% of the fuel supply (on a btu basis) be derived from renewable fuels such as ethanol and biodiesel. The standard would increase to 3% by 2011 and 5% by 2016, an eightfold increase in the use of renewable fuels by 2016.
EPI attempted to mandate national fuel ethanol levels during the Clinton administration but lost legal challenges.
The White House supports extending the 5.4¢/gal excise tax credit for ethanol and as a "renewable" fuel made from corn it could benefit from a proposed House energy tax bill.
Tom Adams, president of the Oxygenated Fuels Association, said, "Now that the federal government has made it clear it intends to enforce the requirements of the Clean Air Act, OFA urges Gov. Davis to reconsider the scheduled phase-out of MTBE in California.
"The implications of an ethanol monopoly in California have been laid out clearly both by experts within California and across the US. Furthermore, updated scientific and testing data has vindicated MTBE by demonstrating that the health and environmental issues that MTBE's detractors cited in calling for its removal were greatly over-stated."
Adams said the California Energy Commission has estimated that removing MTBE from the California market would create a 6 to 10% gasoline shortfall by 2003. CEC estimated the shortfall would be caused by limited supplies of clean gasoline substitutes such as alkylate; limited refinery flexibility to produce RFG with ethanol; and ethanol production problems and the costs of transporting it to California.