House panel victory for ethanol lobby
Energy committee defeats Clean Air Act exemptions
WASHINGTON (CBS.MW) - Ethanol producers won a legislative victory Wednesday as House energy lawmakers defeated a proposal that would have allowed states to opt out of requirements for oxygenated fuels.
After a lengthy and often contentious debate that broke along regional rather than party lines, the House Energy and Commerce Committee voted 33-22 to reject the measure.
Since 1990, the Clean Air Act has required additives, called oxygenates, be added to gasoline in the nation's smoggiest cities in order to make the fuel burn cleaner. The two most popular oxygenates are corn-derived ethanol and natural gas-derived methyl tertiary butyl ether, or MTBE.
Wednesday's amendment was sponsored by California Reps. Christopher Cox, a Republican, and Henry Waxman, a Democrat. The entire California delegation backed the measure.
The Bush administration last month rejected a California request for an oxygenate exemption.
Waxman argued that the legislation wouldn't result in any deterioration in air quality since the state would still be required to meet pollution standards.
Instead, California could use gasoline that doesn't contain oxygenates, such as an oxygen-free fuel produced by Chevron (CHV: news, chart, profile) and other oil companies, Waxman said.
Without a waiver, California, which currently relies on MTBE to meet oxygenate requirements, will have no choice but to switch to ethanol in 2003, when a statewide ban on MTBE goes into effect. State lawmakers voted to ban the additive in response to contamination of groundwater.
More than a dozen other states have also banned MTBE.
Decatur, Ill.-based Archer Daniels Midland (ADM: news, chart, profile) is the nation's largest ethanol producer, squeezing out 797 million gallons of fuel-grade ethanol in 2000. Oklahoma-based Williams Companies (WMB: news, chart, profile) is No. 2 at 320 million gallons.
The ethanol industry has forecast it will blend around 1.8 billion gallons of ethanol this year in about 15 percent of the nation's fuel supply. Around a quarter of the nation's gasoline is mixed with MTBE.
California has expressed concerns that increased demand and transportation bottlenecks could boost gasoline prices. Ethanol also faces criticism from environmental groups, who contend that the additive can increase smog in some cases.
Ethanol's backers contend the additive is effective and is the safest way to meet clean air requirements.
The amendment was offered as part of a wide-ranging energy conservation bill that the committee is expected to vote on later Wednesday. See full story.
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