Environmentalists and oil lobby are unlikely allies in dispute over ethanol

June 28, 1992|By Peter Honey | Peter Honey,Washington Bureau

WASHINGTON -- A quirky marriage of interests has brought together two old adversaries -- environmentalists and oil refiners -- in a brawl with ethanol producers over how to make cleaner auto gasoline.

The dispute, which has reached the White House, reflects the growing complexity of environmental issues in the high tech '90s.

It shows, too, how environmental bureaucracy can turn old enemies into strange bedfellows; and at the same time thrust two of Washington's paunchiest lobby groups -- oilmen and corn-growers -- into a head-butting contest.

The producers of ethanol, a relatively clean-burning alcohol derived from fermented plant matter, say they are being squeezed out of a fair, and environmentally correct, share of the auto gasoline market.

The oilmen worry that ethanol -- produced mainly from corn in this country -- will muddy waters throughout their vast commercial domain. They have been deprecating the newcomers with such phrases as "bad for air quality improvement" and "not based on sound science" -- words more usually heard from environmental groups.

The environmentalists say they don't care who sides with them; they just want cleaner fuel. But they still look askance at their newfound ally.

"When we first saw API [the American Petroleum Institute] taking an aggressive stance alongside us, we sort of wondered if there was something we didn't know!" half-joked the Sierra Club's A. Blakeman Early. "But it seems they're just looking after their interests."

It all started 19 months ago with enactment of the sweeping Clean Air Act. Among the hundreds of new regulations was one requiring the Environmental Protection Agency to draw up new formulas and standards for cleaner-burning gasoline, which is to be sold in the country's smoggiest cities, including Baltimore, by 1995.

The Clean Air Act called for significant cuts in "volatile" gases and carbon monoxide from automobile emissions, which are the main cause of urban smog. The smog is produced when the hydrocarbons and nitrous oxides from tailpipes react in strong sunlight -- which is why smog generally is worse during the sunny summer months.

Scientists say the easiest solution is to add cleaner, oxygenating compounds to the gasoline -- additives such as ethanol or its methane-based cousin, methanol.

Last August, after six months of arduous negotiation, a regulatory agreement setting out the formulas and emission standards, was signed by all the interested parties -- including the EPA, farmers, ethanol makers, environmentalists, states, auto makers and petroleum producers. The agreement is still open for public comment, a period that has been been extended to Aug. 1.

Since signing the agreement, the ethanol industry has discovered that it could end up with a smaller market share than it originally thought because, under the regulatory agreement, refiners would have to reduce the ethanol content of gasoline in summer.

Ethanol evaporates so quickly that some of the fuel passes through a car engine without being burned -- hence raising the level of "volatile" emissions above the summer limits specified in the agreement.

So shocking would this be for business, says Archer Daniel Midland Corp., the leading force in the ethanol lobby, that it has had to cancel plans to build two new ethanol plants. The agreement, the company says, has effectively "closed out" ethanol from the reformulated gas market.

Ethanol lobbyists are trying to change the agreement to allow ethanol levels to stay the same all year round. Ethanol is so effective in reducing carbon monoxide, they argue, that it should be granted a "credit" to permit slightly higher volatility of the auto emissions.

The EPA has interpreted the agreement so rigidly that it is practically a different document from the one the industry signed last summer, says Bob Dinneen, legislative director of the Renewable Fuels Association, ethanol's primary lobby group.

"It's like we thought we were buying 212 Elm St., but when we wanted to move in they said it was No. 210," he said.

The petroleum industry rejects this as "gross exaggeration." Despite the summer cutbacks, API officials say, ethanol still retains a lucrative share of the market. In any case, ethanol is not crucial to reformulated gasoline; there are other additives based on methanol, for example.

API officials insist that their main reason for opposing ethanol is as much environmental, as commercial:

* A rise in auto emission volatility, they say, could weaken effectiveness of the new clean air regulations and prompt an automatic kick-in of even tougher restrictions on emissions from small industries, like paint shops and dry cleaners -- many of which use petroleum-based products.

* Not only would such an event hurt the petroleum industry, it TC would also hurt local and state economies, the API people argue -- so bending to ethanol now simply would lead to bigger problems later.

The dispute is in the balance, as lobbyists from all parties press lawmakers and administration officials to come down on their side. A congressional hearing is expected within the next few weeks.

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