Appeals Court Case Indicates EPA Could Open Avenues for E30

By now, word has spread about the decision out of the U.S. Court of Appeals for the D.C. Circuit turning down a petition from a number of biofuel interests – including the Energy Future Coalition – seeking the court’s review of an EPA rule governing the test fuels used to certify new vehicles for compliance with emissions and fuel economy standards.

And of course, that has prompted many in the oil industry and their allies to characterize the ruling as a major defeat of the biofuel industry in its pursuit of higher ethanol blends in our nation’s gasoline supply.

But it’s not quite that black and white.

The clean fuels industry challenged a rule that requires an auto manufacturer to show a fuel is “commercially available” before it can be approved as an alternative test fuel. Simply put, biofuel interests challenged EPA to allow the certification of vehicles with an E30 test fuel, citing a range of health, environmental and performance benefits that come from the fuel blend.

The obvious takeaway from the biofuels industry’s position is that a fuel like E30 will become commercially available if EPA approves it as an alternative test fuel.

Research is emerging, showing that the prospects of increasing both the ethanol content – and with it, the octane number – of the gasoline pool has the strong potential to enable improved fuel economy in future vehicles with engines that will be downsized and capable of maintaining cruising speeds with greater efficiency.

So, while the court chose not to review the rule as had been requested by the biofuels industry, EPA’s evolving position during the litigation suggests the possibility that higher blended test fuels will eventually be used.

The appeals court concluded that “if EPA permitted vehicle manufacturers to use E30 as a test fuel, there is substantial reason to think that at least some vehicle manufacturers would use it,” citing a Ford Motor Company comment that development of such a mid-level ethanol blend fuel “would enable the first steps to the development of a new generation of highly efficient internal combustion engine vehicles.”

Of greater interest to the biofuels industry are the concessions made by EPA that may have influenced the court’s ruling. In responding to arguments made by clean energy interests, EPA committed to accepting applications from automakers for alternative test fuels without requiring that the fuel be “readily available nationwide.”

The agency also admitted that the rule’s “commercially available” standard is a discretionary “factor EPA would consider,” rather than a “mandatory prerequisite” for approving a new test fuel. The agency even conceded during oral arguments that the rule’s reference to “commercial availability” merely “codif[ies] the practice of the agency,” which has been to consider a new fuel’s potential to become commercially viable in the future. Furthermore, the agency said that it will ask how the new fuel is “going to be available on the market,” not whether it is currently available on the market.

Interestingly, other automakers agree with Ford that the high octane rating offered by a mid-level ethanol blend would allow them to develop the highly efficient vehicles of the future. Mercedes commented that a vehicle “optimized for a high-octane, mid-blend ethanol fuel . . . can simultaneously fulfill what the customer desires ‑ performance and economy, while reducing the environmental impact.” And GM “supports the future of higher octane and higher ethanol content in order to provide a pathway to improved vehicle efficiency and lower [greenhouse gas] emissions.”

There is a market-driven dynamic at work with E30. Automakers will need to sell more efficient vehicles to comply with federal law, and drivers will welcome the better mileage and lower cost offered by a mid-level ethanol blend. EPA should use the discretion that the agency admits it has to certify E30 as an alternative test fuel and expand the biofuels market – a move that will boost the economy, particularly in rural areas; ensure greater energy security by increasing domestically produced transportation fuels; and improve the environment through lower emissions.

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