Many factions joined in agreement to push for big increase ethanol use

Thursday, June 5th 2003, 12:00 am
By: News On 6

WASHINGTON (AP) -- Oil companies have no love for ethanol, a fuel made of corn, yet they have signed on to a proposal that will see more of it replace gasoline.

The American Lung Association says ethanol could add to air pollution, but is backing environmentalists in support of the gasoline additive.

They are both part of an unusual coalition of traditionally warring factions -- farmers, oil companies and leading environmentalists -- who crafted a delicate compromise that would require ethanol to be used in gasoline nationwide, at least doubling demand for the fuel to 5 billion gallons a year by 2012.

Clearly, it would be an economic boon to corn growers.

But the other groups say they support the proposal because of other parts of the legislative package: a ban on the gasoline additive, MTBE, that is blamed for polluting drinking water, and measures to give refiners more flexibility in the way they make gasoline by removing a requirement that the fuel contain a minimum amount of oxygen.

Supporters of the new ethanol requirements and other motor fuel proposals said they have enough votes in the Senate to make the package part of a broader energy bill.

A vote to add the provisions to the energy bill was expected as early as Thursday. The House already has approved a similar package as part of an energy bill passed earlier this year.

The ethanol industry and politically powerful farm groups have tried to spur ethanol production for years, but each time were stymied in Congress by equally powerful interests that opposed widespread use of the corn-produced fuel.

But then the warring sides joined forces.

"It's a very formidable coalition. There's no question about that," said Sen. Dianne Feinstein, D-Calif., who has tried unsuccessfully to keep the ethanol requirement out of the energy bill, or at least water it down. Her latest attempt this week, to allow states to decide whether to require refiners to use ethanol, was defeated, 62-34.

The political breakthrough that led to the ethanol compromise now before the Senate came when a way was found to satisfy the demands of not only the ethanol lobbyists, but also the oil companies and environmentalists.

"The political deal, the horse trading that they did was to give refiners more flexibility by taking away the oxygenate requirement (in gasoline)," said William Becker, who heads a group representing state and local air quality officials and who participated in some of the talks.

Environmentalists signed on because of the MTBE ban and provisions that ensured no "backsliding" in air quality requirements in regions with the most serious air pollution, including the Northeast.

"The real benefit of this is to support the farm economy," said Blake Early, a lobbyist for the American Lung Association. But he said his group supports the compromise because it will resolve some of the motor fuel supply problems that are threatened to undermine efforts to ensure areas with pollution problems use clean-burning fuel.

"The air quality benefits alone do not support 5 billion gallons of ethanol use," Early said. "We're supporting this to get the other fixes."

Meanwhile, the oil companies saw the compromise as a way to solve the MTBE problem and avoid future lawsuits arising from complaints that the additive is contaminating groundwater. At least 17 states already have taken steps to ban or curtail MTBE use, but a federal ban would provide refiners clearer direction.

"We fought tooth and nail with the ethanol industry for years," said Edward Murphy, an executive of the
American Petroleum Institute, the oil industry's trade group. "We ordinarily don't get down on the same side with them."

But in this case the compromise is "good for the petroleum industry, good for the environment and obviously good for the agriculture interests."

The measure would:

-- Require the use of at least 5 billion gallons a year of ethanol in gasoline by 2012, double the production expected this year.

-- Ban on the use of a rival additive, MTBE, an oxygenate that reduces air pollution but has been found to contaminate drinking water.

-- End the requirement for gasoline to have a minimum level of oxygen in areas with serious air pollution problems. Refiners say they can meet air quality requirements without the oxygenate.

About 2.1 billion gallons of ethanol were produced last year, accounting for about 1 percent of the nation's motor fuel. Production is expected to reach 2.7 billion gallons this year, said the Renewable Fuels Association, the ethanol industry's trade group. Using 5 billion gallons of ethanol would displace about 250,000 barrels of oil a day, the industry group said.