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Senate targets ethanol infrastructure

DANIEL LOOKER 04/07/2011 @ 3:59pm Business Editor

The Senate Energy and Natural Resources Committee Thursday gave Senator Tom Harkin (D-IA) a chance to promote a bill that would open larger markets for ethanol. It could be the first step toward passing legislation aimed at helping ethanol from both corn and cellulose get past the 10% blend wall that could limit growth of the industry.

Harkin told committee members that the U.S. has already reduced dependence on foreign oil, producing enough ethanol to displace the equivalent of the gasoline consumed by Britain and France combined.

“We’ve made substantial progress on reducing imported oil, and we could easily do more,” he said.

To help ethanol reach a larger market, Harkin has introduced a bill, S 187, the Biofuels Market Expansion Act of 2011.

The legislation would do three things:

  • require a large majority of cars sold in the U.S. to be “flex-fuel” vehicles that can burn up to 85% ethanol, which would cost about $100 per car.
  • require major fuel distributors to install increasing numbers of blender pumps for ethanol over a six year period and authorize grants to help owners of smaller filling stations install the pumps.
  • authorize loan guarantees for pipelines that could move ethanol from production areas to major markets such as New York or New Jersey.

Harkin tried to counter misconceptions about ethanol, pointing out that the fuel has about twice as much energy as what it takes to grow corn and distill it into fuel. And he disagreed with the premise of a New York Times article that ethanol use is putting pressure on food prices.

The U.S. still exports about the same amount of corn and uses the same amount of corn for livestock feed as in recent years, Harkin said. “What’s happened is that we’ve increased production” of corn as the ethanol industry has expanded.

Both the chairman of the Energy Committee, Senator Jeff Bingaman (D-NM) and the ranking Republican, Lisa Murkowski of Alaska, agreed that the blend wall is a serious issue.

“It could leave cellulosic ethanol with no market at all,” said Murkowski, who also wondered if federal mandates for biofuel use “may be just too aggressive.”  Murkowski emphasized that she’s not anti-ethanol or against biofuels.

Bingaman is a strong biofuel supporter, but he said he’s concerned that promoting one fuel with federal policy might make it harder to market other biofuels such as butanol, a type of alcohol that is chemically different from grain alcohol. It can be shipped through existing petroleum pipelines.

“I’m not suggesting that we can simply put our renewable fuels policy on hold while we wait for the drop-in fuels to come to market,” Bingaman said Thursday. “As best we can tell right now, ethanol from cellulose is likely to be the next renewable fuel to enter the marketplace.”

Holding a hearing on a bill is the first step toward passing a law. With the federal government facing a possible shutdown over the inability of the House and Senate to agree on a budget Congress seems to have a full agenda. The House has been less friendly to ethanol, recently passing a budget that would block EPA from implementing 15% blends of ethanol into gasoline this year.

And lobbyists representing gasoline retailers and auto manufacturers Thursday told the Energy Committee about problems for their industry if higher blends reach the marketplace.

John Eichberger of the National Association of Convenience Stores said that installing a new blender pump, tank and pipes can cost a retailer over $120,000. And his industry is concerned about legal liability if motorists owning cars too old for approved use of E15 buy the fuel.

Still, the Committee may vote on Harkin’s bill.

“It could be sometime this year,” Rosemarie Calabro, a spokeswoman for Bingaman told Agriculture.com

Bingaman would like to pass energy legislation this year, she said, but isn’t yet sure whether it would be a comprehensive law or done with several smaller pieces of legislation.

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