Peterson Expects EPA to Approve E15 By Late Summer

House Agriculture Committee Chairman Collin Peterson (D-Minn.) says he expects that by late summer, the Environmental Protection Agency will approve an increase in the permitted ethanol-gasoline blend from the current 10 percent to 15 percent. However, in an interview with Informa Economics, Peterson also held out the possibility that EPA would approve a 12 percent blend as an interim step before moving to E15 later.

When asked about potential liability issues if engines and motors were to be damaged as a result of the increase, Peterson noted that "we've been fighting these battles for 35 years…. We've heard about this for years that we're going to destroy the lawn mowers, the snowmobiles, boat motors and all this stuff. That's baloney. I've talked to the car companies. They don't think the 15 percent blend is a problem, even in older cars, they say privately."

Regarding repeated concerns about the effects of a higher blend on small engines, Peterson said, "I run ethanol in my motor boat. I run it in my lawnmower. We're running 10 percent ethanol in those engines now and 15 percent is not going to destroy those engines. And the manufacturers have changed their whole technology so the current engines are not a problem and I think the boats are the same way."

Asked whether EPA might seek to limit a higher ethanol blend to newer model automobiles, Peterson said: "[A] guy I know had a 1994 Buick, a big Buick tank. He ran 470,000 miles on that car, and he ran 50-50 ethanol and gas. And it never had a problem. I've got guys out there that have been doing this for 20 years, the 50-50 blend." 

As for the expected EPA announcement timeline, Peterson said, "Well, it keeps slipping a little bit, but I think it will be late summer."

Asked if EPA is waiting on research studies to be completed, Peterson said, "I think they're getting a lot of pressure from environmentalists and other people who don't like ethanol. We've been fighting this... I've been involved since 1975 on this and I've seen all of this before. I've heard all these arguments. Whenever we get something going, they trot out all these old arguments again and then we go study them again."

Looking further ahead, Peterson was asked to speculate on the possibility that Congress might increase the mandate for corn-based ethanol beyond the current 15 billion gallons in 2015. He said such a move was not in the cards because "Corn-based ethanol has been demonized. I think we're done [on the mandated level]. The guys that build plants think we're done. I don't think you will see any more [new] corn-based ethanol plants."

The chairman also said it was unlikely that Congress would agree to reduce the ethanol tax credit from its current level of 45 cents per gallon. "No," Peterson said. "It was 51 cents and we cut it to 45 cents. It would be a mistake [to further cut the rate]. If there is going to be any reduction in the ethanol tax incentive … that money should be used to develop our access to the marketplace. That's what we need to do."

For Peterson, "access to the marketplace" means having a $4,000 blender pump at every gas station in the country. "The reason we have to support this industry is we don't have access to the marketplace and E85 is not going to give us access to the marketplace. If we could get a blender pump at every station in America , where you can dial in the level of ethanol so that if you believe your car should not have ethanol, you can dial in zero. If you think it shouldn't be in your lawnmower, you can dial in zero. If you want to run 50-50 and take the risk, you can dial that."

"I'd like to see us get to the day when ethanol stands on its own two feet," he continued. "And I think we can do that if we get access to the marketplace. We can make ethanol cheaper than we can make gas. Right now we make ethanol for $1.60 and gas is $2.35. So let us compete."

Asked if the current 54-cent import tariff will be reduced. Peterson said, "I'm not for getting into that. I don't see it coming down." Acknowledging the import tariff is a "revenue generator," Peterson said that is not the reason why he supports no change in the level. "We need to protect the market until we get into the marketplace. I'm not willing to give that up until we have the marketplace set up. Then we can look at opening that issue up."