Growth Energy CEO Tom Buis recently sat down for an interview with Informa Economics. Following are some of his views on the major issues –– both short- and long-term –– that he sees affecting the U.S. ethanol industry.
EPA and the Department of Energy are in the process of completing research on the likely effects on automobile engines of moving from a 10 percent blend of ethanol in gasoline (E10) to E15. This research is divided into two parts, one that examines automobiles manufactured 2007 through 2010, and another that focuses on automobiles manufactured 2001-2006.
Buis noted that results from the 2007-10 cars are scheduled to be completed any day now, while those for the 2001-06 model years likely will be completed by the end of November. He said that Growth Energy would have preferred that the government had conducted only research project. However, he added, "if this is how EPA is going to proceed, it does allow us to move as quickly as possible –– immediately after the first round of testing is completed and E15 is approved for newer cars –– on the work to bring other rules into conformity with the EPA's decision, such as fuel certification and rules about labeling."
The organization's preference was for EPA to approve E15 for all cars because such a move would create a bigger market for U.S. ethanol, Buis said.
Asked about liability issues, should E15 cause any unanticipated difficulties in automobile engines, Buis said Growth Energy does not believe E15 "will cause significant liability concerns." Further, he said, EPA is proposing a method to label and publicly educate consumers about E15. "We are sure that the administration will take whatever steps necessary to ensure that consumers can make informed decisions at the pump," Buis added.
Remember, he said, the waiver to move to E15 is voluntary. "Anyone with concerns about higher blends does not have to purchase E15."
However, when pressed on the liability issue, Buis dodged. "There will be an exhaustive effort to clearly label fuel at the pump and thoroughly educate consumers to prevent misfueling and to establish labeling guidelines so consumers know what they are reaching for at the fuel pump. These efforts have taken place repeatedly in our nation's history –– from the switch from leaded to unleaded fuel, and incorporating two types of diesel fuel into the passenger vehicle fuels market –– and we have faith that the American consumer has the intelligence and capability to successfully determine the right fuel for his or her vehicle."
Cellulosic ethanol has not yet become commercially viable, but Buis said some plants that are operating today are "on the brink" of economic viability. But, he added, the industry needs financing and access to the market in order to create additional demand. "To that end, we're working with the Department of Energy to fix the federal loan guarantee program for cellulosic ethanol, and get that financing moving."
Overall, said Buis, the U.S. ethanol industry needs what he calls "permanent market access." He noted that under current circumstances, the only way the industry can reach the federally mandated use of 36 billion gallons of renewable fuels by 2022 "is if we have E27." However, he added, moving to E15 "is a step we can take today to open that market, but for long term success of the ethanol industry we need blender pumps, pipelines and flex fuel vehicles."
Buis also said Growth Energy was working to amend the 2007 Energy Act to permit corn-based ethanol to qualify as an "advanced biofuel," thus allowing a higher federal usage mandate to apply. "The 2007 Energy Act prohibits corn starch based ethanol from qualifying as an advanced biofuel," said Buis. "We are working with lawmakers to eliminate this clause. Our chances of this passing are tied to the likelihood of an energy bill passing."
Growth Energy also is predicting that the volumetric ethanol excise tax credit of 45 cents for every gallon of ethanol blended into gasoline will be renewed before the end of 2010. Unless Congress extends the tax credit, it will expire Dec. 31. Buis did not offer details about the predicted extension, saying only that the VEETC "could be extended through whatever legislative vehicle is on the table."
According to Growth Energy, there are approximately 43 million U.S. automobiles manufactured in 2007 and later, and another 86 million manufactured between 2001 and 2006.
