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E&E News: Inhofe floats ethanol opt-out bill
May 27, 2011

Posted by Matt Dempsey Matt_Dempsey@epw.senate.gov

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Inhofe floats ethanol opt-out bill

Jenny Mandel, E&E reporter

May 27, 2011 

Link to Article

A bipartisan group of lawmakers led by Sen. James Inhofe (R-Okla.) and Rep. Brian Bilbray (R-Calif.) yesterday offered measures in both chambers that would let states opt out of complying with federal mandates for corn ethanol use and expand the definition of advanced biofuels.

The legislation would allow states to pass laws "opting out" of the federal renewable fuel standard's conventional ethanol targets. If a state approved such a law, U.S. EPA would then reduce the national mandate by a percentage to reflect that state's share of consumption in national gasoline usage.

To help protect the market for zero-ethanol gasoline, EPA would then issue credits to fuel terminals that handle gasoline for opt-out states. That mechanism is designed to avoid penalizing fuel terminals for difficulty meeting their own ethanol targets thanks to the opt-out market.

In addition to the corn ethanol provisions, the bill would broaden sections of the Clean Air Act referring to "cellulosic biofuels," replacing that phrase with language to include algae-based fuels and any non-ethanol fuel derived from renewable biomass and reframing them as "next generation biofuels."

Inhofe, ranking member of the Senate Environment and Public Works Committee and a long-standing critic of corn ethanol, has said that ethanol-free gasoline is much in demand in Oklahoma. He described the measure as a "common-sense solution" to the demand for zero-ethanol gasoline.

"I am pleased to introduce this bill, which allows fuel markets to respond to consumer demand for ethanol-free gasoline where it exists," Infofe said in a statement.

Bilbray said the measure would let states "get out from under a crushing federal mandate that pollutes our environment and picks our pockets at the gas pump and grocery store."

Other backers of the bill are Sen. Olympia Snowe (R-Maine) and Reps. Dan Boren (D-Okla.), Darrell Issa (R-Calif.) and Jim Moran (D-Va.).

Industry: Don't mess with the RFS

The measure comes as the advanced biofuels industry is lining up behind a pro-status quo message.

Earlier this month, five groups -- the Biotechnology Industry Organization, the Advanced Biofuels Association, the Renewable Fuels Association, the Advanced Ethanol Council and the American Coalition for Ethanol -- signed onto a letter to Inhofe and others asking that provisions of the renewable fuel standard (RFS) be left untouched for the time being (E&E Daily, May 18).

"The predictable market conditions facilitated by the RFS are critical" to significant existing investments in new biofuels technologies, the groups argued in asking lawmakers not to reopen debate on the mandate.

Making any adjustments to the RFS could trigger far-reaching changes that could hurt the industry, such as efforts to improve provisions intended to create a market for advanced ethanol that has yet to materialize.

Ethanol critics have also attacked federal tax credits available to ethanol blenders that many analysts say are redundant with the requirements to blend the fuel under the RFS.

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