Senate Bill Would Double Ethanol Use in Gasoline to Eight Billion Gallons a Year

Over the strong objections of oil companies, a Senate committee on Wednesday approved a requirement that refiners must use more corn-based ethanol and other renewable fuels in gasoline.

WASHINGTON — Over the strong objections of oil companies, a Senate committee on Wednesday approved a requirement that refiners must use more corn-based ethanol and other renewable fuels in gasoline.

The legislation would mandate that refiners use at least 8 billion gallons of renewable components -- almost all of it ethanol made from corn -- in gasoline annually by 2012. That would double ethanol production, a boon to farmers and the ethanol industry.

A House-passed energy bill would limit the requirement to 5 billion gallons.

Supporters of the higher number argued that use of ethanol as a 10 percent blend in gasoline would replace 5 percent of the gasoline by volume beginning in 2012 and reduce U.S. need for oil imports.

"This is about a supply that is domestic," said Sen. Jim Talent, R-Mo., who offered and won voice vote approval for the ethanol mandate as part of an energy bill being crafted by the Energy and Natural Resources Committee.


Sen. Pete Domenici, R-N.M., the panel's chairman, said there was no doubt an ethanol mandate will be a key to getting energy legislation through the Senate. The full Senate is expected to take up the measure in late June.

Talent said ethanol use would ease pressure on refiners by reducing their need for imported oil, reduce gasoline costs and help the environment by curtailing toxic emissions and climate-changing carbon dioxide. "There's no question that ethanol helps the environment," he said.

But the oil industry, in an intense lobbying effort in recent days, said expanding the mandate from 5 billion to 8 billion gallons will require ethanol use in regions where it is not economical and increase fuel costs while providing "negligible reductions in oil imports."

The ethanol industry countered with its own lobbying blitz, arguing that 8 billions gallons of ethanol would replace 2 billion barrels of crude oil that won't be needed in the nation's gasoline supply in 2012 and trigger $6 billion in new investment in ethanol production.

Some senators questioned the environmental benefits, noting that in summer months ethanol use increases the release of smog-causing volatile organic compounds. They also argued that an ethanol mandate nationwide would increase gasoline prices in regions outside the Midwest where most ethanol is produced.

Sen. Dianne Feinstein, D-Calif., who strongly opposes requiring ethanol use nationwide, cited a report by the Energy Information Administration that said an 8 billion gallon ethanol use requirement would add 2.4 cents a gallon to the price of gasoline.

Supporters of the mandate dismissed the study, saying it was based on oil costing $25 a barrel, when all expectations are that oil prices -- which were above $50 a barrel in recent months -- will remain substantially higher than that in the foreseeable future.

Feinstein said an ethanol mandate will make it more difficult for California to meet air quality requirements, especially in the summer months. She cited California agency findings that the use of ethanol during hot days increased smog-causing vehicle emissions.

"You're forcing something on us that is not necessary," she maintained.

By a 12-10 vote, the committee agreed to give California a summertime waiver to the ethanol mandate if needed to meet air quality requirements, although refiners in the state would still be required to use 900 million gallons of ethanol annually.

Meanwhile, President Bush again urged Congress to move expeditiously on energy legislation.

"I think the American people are tired of waiting. I'm getting a little tired of waiting on the energy bill," Bush said as he visited a gasoline station in northeast Washington that features -- as a demonstration project -- a pump that provides hydrogen as a motor fuel.

Consumers cannot today purchase an automobile powered by hydrogen. Even if they could, the cost of hydrogen would be more than twice the average cost of gasoline even at today's high pump prices.

The Senate energy bill calls for an expanded hydrogen development program with the goal of having 100,000 hydrogen-powered vehicles by 2010 and 2.5 million vehicles as well as the hydrogen fuel infrastructure by 2020. It would authorize $3.75 billion over 5 years for hydrogen-related research and envelopment, although that level of spending would not be assured.

The energy panel also approved provisions that would authorize construction of a prototype $1.25 billion nuclear reactor that would be designed to produce hydrogen as well as electric power. It would be located at the Energy Department's Idaho National Laboratory.

Separately, the panel voted to extend for another 20 years a government commitment to limit the nuclear industry's liability from a major nuclear accident, with taxpayers assuming costs above $9.34 billion. Nuclear industry critics have opposed the extension as a government subsidy to a mature industry. The industry maintains the liability cap, established in 1957, is needed if new reactors are to be built.

Source: Associated Press