It will be interesting to see how EPA rules on the E15 waiver request. It could go a number of ways. Whichever way it goes there are going to be some major repercussions, both economically and legally.
Lets examine some of the scenarios.
1. The EPA could do nothing, just as they did when the 10% ethanol waiver was proposed years ago. By doing nothing, E15 will be allowed.
2. The EPA could rule in favor of the E15 waiver.
3. The EPA could allow the E15 waiver with exceptions.
4. The EPA could deny the E15 waiver.
5. The EPA could deny the E15 waiver and prohibit the blending of ethanol in all premium unleaded gasoline.
In scenario 1 & 2, the lawsuits will fly. There are no car warranties that allow ethanol blend levels above 10%. Maybe the EPA plans on using TARP money to pay for the damage to cars, boats and small engines. Actually, nothing will probably happen for quite some time. The distributors are going to have to think about the liability of selling E15. They will probably be targets of the damage suits. Service stations are going to have to think about their liability, since they will also be the targets in the damage suits, plus they have no U/L approved E15 pumps, so in some states they may not even be allowed to sell E15. Any way you look at it, it is going to be a long time before E15 starts showing up in the marketplace widely.
Scenario #3 is the most interesting and troublesome for the ethanol industry. The EPA could allow E15 for certain cars and might possibly prohibit the blending of ethanol in all premium unleaded gasoline so that those users that must have ethanol free gasoline have a universal source, like the marine and aviation industry and public safety. Of course if that happens there goes 10-12% of the gasoline supply that they could be putting ethanol in. Perhaps the ethanol industry shot themselves in the foot in their greedy haste. After all the federal RFS mandate was supposed to be incentivising the production of E85 and flex-fuel vehicles, not making all of the gasoline in the country E10. Since the EPA is the only department in the government responsible for ethanol policy and oversight, the liability rests on their doorstep. The economic damage and possible deaths that occur because of ethanol blended fuel being used in equipment that it should not be used in will be entirely the result of their policy decisions.
Scenario #4 will have interesting consequences. It will force the distributors to put ethanol in every last drop of gasoline they can find in the next two years as they hit the blending wall, resulting in more economic damage in the marine and aviation industry and small engine and public safety areas. The ethanol industry will make a bald attempt at buying the corn state senators to force an E15 bill through congress. Those senators are already making loud noises about such a bill.
Scenario #5 is the most ironic. I’ll leave it to the reader to figure out the consequences. The ethanol industry should be careful what they ask for. If the EPA reads EISA 2007, this would be the logical scenario, then they would tell the ethanol industry to figure out how to make E85 viable.
But then again the EPA may not rule by 1 December 2009: http://www.reuters.com/article/GCA-GreenBusiness/idUSTRE5A84XO20091109 Which makes no sense, because whatever they finally rule lawsuits or congressional action will ensue.
Neither A Whimper Nor A Bang … just a letter: Here
