Alliance for Rural America
September 5, 2002
The Honorable
U.S. Senate
Washington D.C. 20510
Dear Senator….
The Alliance for Rural America’s (ARA’s) seven member organizations represent
over 550,000 farmers and rural consumers from all over America. We firmly
believe that an important component of a balanced renewable energy framework for
the nation’s motor fuel needs includes ethanol and other biobased fuels. That
component should also include the advancement of ethyl ethanol and other
biobased fuels. That component should also include the advancement of ethyl
tertiary butyl ether (ETBE). As you work toward completion of the energy bill
that is now being considered by a Conference Committee, we ask for your support
in an important component of an overall energy policy for the nation.
The Senate Energy bill includes provisions that would establish a 5 billion
gallon per year ethanol mandate in motor fuel by the year 2012. The stated
purpose of this mandate is to reduce reliance on foreign oil and to help
domestic farmers and ethanol producers get their product to market in a useful
manner.
The Energy Conference determines that is a need to mandate the use of ethanol,
ethanol’s ether, ethyl tertiary butyl ether (ETBE) is a positive option that
will provide for cleaner air and protect the water resource while maintaining
the necessary volume to assure reasonable fuel prices for the consumer.
ETBE Expands Gasoline Supplies and Reduces our Dependence on Foreign Imports
Every gallon of ethanol converts into 2.3 gallons of ETBE due to the
availability of U.S. gas liquids. If all the MTBE plants in the U.S. were
converted to ETBE, they would consume 1.7 billion gallons per year (BGY) of
ethanol and make 3.9 BGY of ETBE. At 2 percent by weight oxygen in gasoline,
ETBE expands the gasoline pool by 13 percent by volume where MTBE adds 11
percent and straight ethanol just 5.7 percent. Switching to ETBE in reformulated
gasoline is equivalent to the volume of gasoline refined from imported Iraqi
crude oil, or all of the Venezuelan gasoline imports to the U.S.
ETBE Substantially Increases the Economic Efficiency of Ethanol
Unlike ethanol, the very low water solubility of ETBE permits it to be blended
into gasoline at the refinery where it can then be distributed via pipeline and
barge to all gasoline terminals. Since it can be freely mixed with all gasolines,
it eliminates the gasoline segregation barriers that contribute to “boutique
fuel” shortages and higher cost associated with ethanol blending. Since ETBE can
be added at the refinery, it eliminates any new infrastructure investment for
the refiner and the gasoline marketplace.
ETBE Protects Water Resources.
ETBE is 75 percent less water soluble that MTBE and 99 percent less than
ethanol, which is 100 percent soluble. This means substantially reduced risks to
groundwater resources should gasoline leak from an underground storage tank. Not
only is ETBE less soluble in water, it biodegrades faster and has other physical
properties which make it easier to remove from water and to migrate shorter
distances from a spill.
ETBE Provides Greatest Reductions of Air Pollutants
ETBE reduces exhaust emissions of VOC’s, NOX, Toxics, and CO by more than twice
that of ethanol blended by itself. ETBE also eliminates all of the large
evaporative BOC increases associated with ethanol. In addition, because of its
high displacement of aromatics in gasoline, ETBE provides 20 percent more CO2
reduction than using straight ethanol. The net result is that ETBE is one of the
most effective oxygenates for reducing overall emissions from the vehicles.
MTBE Producer Transition Cost are Minimized
MTBE merchant producers can easily convert MTBE units over to ETBE production at
a cost of $5 to 40 million per production unit. In addition, most of the
refinery and petrochemical MTBE capacity can be converted for little or no
capital.
ETBE Lessens the Burden on the Highway Trust Fund
Since ETBE blenders will be able to use the Alcohol Tax Income Credit rather
than the Gasohol Excise Tax Exemption (used for conventional ethanol blending at
the terminal), the amount of ethanol subsidy diverted from the Highway Trust
Fund will be greatly minimized. Of the 3 billion gallons per year of new ethanol
demand created under a RFS, 1.5 billion gallons are expected to be subsidized
from General Revenues instead of the Highway Trust Fund if ETBE use were
maximized. Maximizing the use of ETBE can free up nearly $800 million dollars
per year from the Highway Trust Fund for incremental road and highway projects
(that would otherwise be lost under conventional ethanol blending).
Ensuring the Viability of the ETBE Alternative
Preserve the ETBE Tax Fix
Tax barriers have prevented ETBE from being used in the past. The Senate bill
has rectified those barriers by allowing the ethanol used in ETBE access to the
same subsidies enjoyed by direct blended ethanol. Allowing the use of ETBE as an
alternative to direct blended ethanol would not reduce or increase the amount of
domestic ethanol required by the Senate supported mandate. It would simply give
refiners a more efficient choice in how to meet the 5 billion gallon per year
ethanol mandate while assuring adequate fuel supplies for the consumer.
Importantly, this tax change will not increase government spending over the cost
of the ethanol mandate itself as the Joint Committee on Taxation has given this
tax change a negligible score.
Restore the “Safe Harbor” Protections for all Renewables including ETBE
The
Senate bill provides liability protection for all renewable fuel products except
for ethers. This special exclusion suggests to the marketplace that ETBE is an
inferior of defective product while, in actuality, it is a superior product. Of
all the commercial oxygenates, it has the lowest water solubility and has the
highest comparability with materials used in automobiles and gasoline storage
systems. Also, unlike most ethanol blends, gasoline blends made with ETBE will
meet and exceed the SDTM specifications that are used to define quality
gasoline, which maximizes vehicle performance. Therefore, the special exclusion
for “ethers” in the RFS liability protection language needs to be eliminated.
As you move toward the completion of the energy bill, please remember that rural
America has come to the table with many solutions. The Alliance for Rural
America urges you to include these solutions as we move toward an energy policy
that includes an energy supply that is not just adequate and affordable, but
diverse, decentralized, domestic and renewable.
Sincerely,
Larry Mitchell
National Spokesperson
Alliance for Rural America