STUDY FINDS EPA RFG ETHANOL RULE DEVOID OF BENEFIT

A study prepared for the American Petroleum Institute concludes the U.S. Environmental Protection Agency's plan to mandate the use of ethanol in 30% of reformulated gasoline (RFG) is "singularly devoid of benefits."

James Sweeney professor and chairman of Stanford University's engineering-economic systems department, prepared the paper in response to the EPA rulemaking (OGJ, Mar. 14, p. 36; Jan. 24, p. 16).

EPA claimed the rule would improve air quality, cut foreign oil imports, cut main energy use 20%, and lower greenhouse gas emissions.

EPA'S CLAIMS DISPUTED

But Sweeney's analysis found use of ethanol or ethyl tertiary butyl ether (ETBE) would not improve focal air quality and would increase greenhouse gas emissions. He said the mandate would raise transportation costs and could increase oil imports.

Sweeney said the rule would increase RFG costs, estimating that RFG containing ETBE would be 3.8/gal more than RFG with methyl tertiary butyl ether (MTBE) and RFG with ethanol would be 2.5/gal more.

"But because ethanol enjoys large tax breaks, the cost increases would not necessarily show up at the gasoline pump. Some would show up in terms of an increased federal deficit, reduced revenues for the Highway Trust Fund, or higher taxes.

"These higher per gallon costs translate to overall economic cost increases on the order of 5330 million/year. In addition, there would be enforcement and compliance costs, costs of offsetting increased toxic emissions that accompany the substitution of ethanol or ETBE for MTBE, and costs of modifying refinery terminals to blend ethanol."

Sweeney said gasoline blended with any of the three oxygenates could meet EPA emission performance standards, and there would be no identifiable local environmental effects.

But he said the ethanol mandate would increase the release of greenhouse gases, while the use of natural gas based oxygenates would lower emissions.

"The mandate would not reduce imports of oil, but might well increase imports, although by a very small amount. Depending on the mix of ETBE and ethanol, the EPA mandate might reduce oil imports by as little as 12,000 b/d or increase imports by up to 40,000 b/d," he said.