Expected EPA partial waiver for E15 'will only make a small dent in the market'

By Agri-Pulse Staff

© Copyright Agri-Pulse Communications, Inc.



Washington, Oct. 6 - Ethanol demand will not increase significantly if the Environmental Protection Agency allows E15 (15% blend) only for vehicles built in 2007 and later. That's according to Geoff Cooper, VP for research & analysis at the Renewable Fuels Association (RFA) which believes the market will only see a dramatic demand increase if E15 is allowed for all light-duty vehicles.

With an EPA decision to extend E15 use to cover 2001-2006 model years not expected until December, Cooper writes that “While some in the industry maintain that the pending EPA decisions to bifurcate the gasoline and vehicle markets would be a boon to ethanol demand and help us conquer the E10 blend wall, the Renewable Fuels Association (RFA) has consistently stated that a partial waiver on E15 is unlikely to have an immediate or significant impact on the market. Rather, it is our position that the needle on ethanol demand only moves significantly if an E15 waiver applies to ALL light duty vehicles regardless of vintage."

Cooper says that based on RFA discussions with key stakeholders and data analysis, gasoline marketers and retailers “are unlikely to offer E15 unless it is approved for use in every vehicle that pulls up to the pump.” He points out that in its Sept. 17 newsletter, the Petroleum Marketers' Association of America stated, “Limiting the waiver to a specific class of vehicles based on date of manufacture means retailers would be forced by market conditions to carry both E-10 and E-15 product, thus increasing the risk of consumer misfueling. The good news is that the waiver will likely not require E-15 but only allow its use. Refiners are not expected to supply E-15 as a result of the waiver approval alone.”

Since waiver discussions began, the RFA has held that there's no reason that E15 shouldn't be approved for all vehicles. Cooper notes that much of the data included in the E15 waiver request came from testing the RFA helped to conduct and showed E15 to be safe. Continuing to challenge EPA's approach and the agency's lack of scientific evidence to support it, RFA recently released a report by automotive engineering firm Ricardo that used EPA's own methodology and examined the likely impacts of E15 use in older (MY 1994-2000) vehicles. The Ricardo study concluded that “…adoption and use of E15 would not adversely affect fuel system components in properly engineered vehicles, nor would it cause them to perform in a sub-optimal manner, when compared to the use of E10.” Extending approval of E15 to these older vehicles would eliminate many of the headaches for the gasoline supply chain that would otherwise result from a partial waiver.

Cooper concludes that EPA approves the use of E15 only for MY2007 and newer vehicles in the next few weeks, “the practical impacts on ethanol demand will be minimal” since MY2007 and newer vehicles may represent only 20-25% of the current light duty vehicle fleet, not the 30% cited by the EPA.

Cooper insists that “the only scenario that likely results in a substantive and lasting boost to ethanol demand is approval of E15 for all vehicles” and that “The RFA remains hopeful that EPA will honestly and scientifically review the data. Such a review could only lead to one conclusion: E15 is a safe and effective fuel for use in all light duty vehicles.

To read Cooper's complete analysis, go to: www.ethanolrfa.org/exchange/entry/e15-scenerios

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