The administration of President Bill Clinton plans to significantly reduce or eliminate the use of methyl tertiary butyl ether (MTBE) in gasoline in the US.
The additive has been used mostly in reformulated gasoline to meet the 1992 Clean Air Act Amendments' oxygen requirements. Gasoline storage tank leaks have caused MTBE, a possible carcinogen, to contaminate groundwater in several regions.
MTBE is used in about 85% of reformulated gasoline (RFG), which is required in parts of the country with the worst air pollution problems. RFG is used in about 30% of all US gasoline.
Carol Browner, Environmental Protection Agency administrator, said the administration would ask Congress for legislation to reduce or eliminate MTBE use, preserve RFG's current clean air benefits "by ensuring the use and growth of ethanol and other safe renewables in fuels," and set minimum content levels for ethanol and other biofuels in gasoline.
As a backstop measure, EPA will act under Sec. 6 of the Toxic Substances Control Act to eliminate use of MTBE in gasoline. The law allows EPA to ban or control any chemical substances deemed to pose an unreasonable risk to the public or the environment. But the regulatory process can take up to 3 years.
Browner said phasing out MTBE would have a "negligible" impact on gasoline prices. She said EPA would make a "technical adjustment" in the Phase 2 federal RFG program that will eliminate MTBE use.
Browner said 85% of underground tanks are in compliance with EPA regulations (and presumably not leaking). She said the MTBE contamination of groundwater also occurs from other sources. "It is going well beyond [just] tanks."
EPA is also considering California's proposal to ban MTBE use, but the process will take several months (OGJ, Apr. 5, 1999, p. 39).
US Agriculture Sec. Dan Glickman said the MTBE ban would cause a "dramatic increase" in ethanol's use as a fuel additive.
He said the ethanol industry has grown from 100 million gal in 1981 to 1.5 billion gal in 1999. Over 5% of US corn production, or 550 million bush- els/year, is used to produce ethanol.
Glickman ordered the Commodity Credit Corp., a Department of Agriculture agency, to provide up to $100 million in fiscal 2000 and up to $150 million in 2001 and 2002 for incentive payments to ethanol and other bioenergy producers to expand production of bio-based fuels.
The American Petroleum Institute has joined a coalition to lobby for repeal of the federal oxygen mandate for RFG (OGJ, Feb. 14, 2000, p. 25).
API said, "Elimination of the mandate and an orderly phase-down of MTBE would help protect water quality without jeopardizing improvements in air quality provided by cleaner-burning gasolines. US refiners know they can produce these environmentally beneficial fuels without a mandate.
"An orderly phase-down would keep gasoline available to consumers without putting public health at risk. MTBE contamination has generally occurred at very low levels not likely to `cause adverse health effects in humans,' according to EPA.
"API strongly opposes replacing the federal oxygenate mandate with a renewables mandate that would increase the cost of gasoline and is completely unnecessary to improving air quality. That's replacing one mistake with another.
"Finally, we doubt a strong basis exists to regulate MTBE under the Toxic Substances Control Act. Therefore, we strongly urge Congress to take action to eliminate the mandate and give EPA authority to begin a MTBE phase-down."
The Oxygenated Fuels Association (OFA) said the administration's desire to replace MTBE with ethanol is "a political move that will have disastrous effects on the environment and on gasoline prices."
OFA Executive Director Terry Wigglesworth said, "Ethanol has proven that it cannot compete with MTBE on price, supply, or effectiveness. By removing MTBE from the gasoline pool, the administration is asking Americans to pay more than they already are for gasoline and to breathe dirtier air."
OFA said the administration's action would grant a de facto monopoly to the ethanol industry, which receives a 54¢/ gal federal tax credit.
The Western States Petroleum As- sociation is taking a view similar to API's and OFA's.
Executive Director Doug Henderson said, "WSPA's refining members have been and remain committed to Gov. Gray Davis's strategy to phase out MTBE in California in a way that protects the environment and gasoline consumers. However, today's action by US EPA leaves out an important component of the governor's MTBE strategy, which is complete removal of the federal mandate requiring that roughly 10% of every gallon of gasoline include an oxygenate. With MTBE banned, ethanol will have an effective monopoly over the oxygenate market.
"Based on past studies by the California Energy Commission, California consumers will suffer greatly from a national MTBE ban without at the same time removing the ethanol industry's monopoly by removing the oxygenate mandate. Air quality experts, environmental organizations, water agencies, business and taxpayer organizations, and nearly the entire California congressional delegation support either a US EPA waiver of the mandate or legislation to repeal it," said Henderson.
Effect on refiners
So far, US refiners have been quiet about EPA's move to ban MTBE, despite the fact that the decision means many will have to retool their operations to one degree or another, only 8 or so years after they began retooling to meet EPA's minimum gasoline oxygen requirement.
If there's a lesson to be learned from this, says one source, it's that command-and-control legislation is an inefficient way to achieve desired environmental benefits. If US refiners had been asked to meet certain emissions targets rather than required to meet specific gasoline specifications, the industry would not be in the position it now finds itself in.
Through its Wilmington refinery in California, Ultramar Diamond Shamrock Corp. is already affected by the push to eliminate use of MTBE. "So we know what our options are," said spokesman Scott Spendlove.
The alternatives are to use basically twice as much ethanol to get the same effect as with MTBE or to increase the capacities of alkylation units at refineries, he said. This is because alkylate is a high-octane blending component that contains no sulfur or aromatics.
A 25% expansion of an existing alkylation unit could cost about $50 million, however, while adding whole units would run into hundreds of millions, Spendlove said.
Because gasoline prices are dictated by supply and demand fundamentals, it's practically impossible for refiners to pass on those added costs to consumers. That could push some of the smaller refiners out of direct participation in gasoline markets, Spendlove said.
If the EPA pushes elimination of MTBE too fast, he said, it could curtail gasoline production, which would push up prices at the pump.
Ultramar Diamond Shamrock produces only a small amount of MTBE at its McKee refinery in Dumas, Tex.
Alkylation of the isobutylene that is now being used to manufacture MTBE is a good way to use the material, says Stone & Webster Engineering Corp.'s Warren Letsch. But this option requires isobutane feed for the alkylation unit.
An alternative is to dimerize the isobutylene that is now used to produce MTBE, then hydrogenate the product to produce iso-octane, says Letsch.
But either way, many refiners will have to make capital investments.