Rare Alliance Lines Up Against Ethanol Waiver

Environmentalists and the oil industry, in a rare alliance, are opposing a special break for ethanol producers proposed by the Bush Administration during last year’s presidential campaign.

In a letter to Carol Browner, administrator of the U.S. Environmental Protection Agency, oil industry and methanol trade groups, regional air pollution officials, the Sierra Club and the Natural Resources Defense Council object to one aspect of rules proposed for cleaner-burning reformulated gasoline.

The 1990 Clean Air Act requires the introduction of reformulated gas in many U.S. markets beginning in 1995 as one way of reducing smog-producing vehicle emissions.

The rules will be discussed today and Thursday at public hearings in Washington. EPA officials say that public comment will be taken into consideration as the final rules are developed.

Los Angeles, San Diego, New York City and six other metropolitan areas are under federal mandate to use the new, cleaner gasoline. Many other cities are expected to introduce the fuel voluntarily.

Ethanol--made from corn--is one of two gasoline additives now used to cut smog. While it does improve gasoline combustion, it also increases the rate at which gasoline evaporates, and this in itself produces one type of smog.

The EPA last year proposed restricting ethanol’s use in reformulated gasoline during the summer, when evaporation is worst. But after protests from corn-growing states and ethanol producers, the Bush Administration proposed a waiver to allow greater use of ethanol while calling on oil refiners to take up the slack by creating less-evaporative gasoline, at their expense.

“We don’t like to arbitrarily increase the price of fuels to our customers, which this would do,” said Richard J. Stegemeier, chairman and chief executive of Los Angeles-based Unocal Corp. “And we would have serious objections if the mandate made us produce an even (less evaporative) gasoline than we’re forced to today.”

Ethanol costs about twice the wholesale price of gasoline, but is given federal subsidies to make up the difference.

“This may sound good to the producers,” Stegemeier said, “but it shouldn’t sound good to customers because, one way or another, they are paying for this.”

Environmentalists have mixed opinions about the merits of ethanol as an alternative fuel. They like the fact that it is a renewable energy source, since corn and other possible base components can be regrown from year to year.

But under current farming and manufacturing methods, it requires as much energy to produce ethanol as the finished ethanol product contains. And the fuels used to produce ethanol are primarily non-renewable fossil fuels. For technical reasons, environmentalists say that the Bush Administration’s reformulated gasoline proposal would increase, not reduce, air pollution.

“Why should we sacrifice air quality benefits in order to promote this industry?” said A. Blakeman Early, a Washington representative for the Sierra Club.

Archer-Daniels-Midland Co., the Illinois-based agricultural giant that controls 70% of the nation’s ethanol production, has long been criticized by environmentalists for not developing more efficient sources and techniques than corn and the current distillation process.