#BlendCap

Well, the good news is that the EPA has thus far refused to allow gasoline blends of more than ten percent ethanol. The bad news is that the Agency has yet to take a firm stand against the idea of eventually allowing E15 into the nation’s gas pumps. In fact, as the EPA’s response to the ethanol lobbying group Growth Energy’s request to allow E15 [ full document in PDF form here] opens:

It is vitally important that the country increase the use of renewable fuels. To meet that goal EPA is working to implement the long-term renewable fuels mandate of 36 billion gallons by 2022. To achieve the renewable fuel requirements in future years, it is clear that ethanol will need to be blended into gasoline at levels greater than the current limit of 10 percent.

The EPA is set to rule as soon as tomorrow on the so-called “blend cap,” which forbids the sale of gasoline with more than ten percent ethanol. The petition to raise the blend cap came from a relatively new pro-ethanol lobbying group, Growth Energy, which requested the cap be moved to fifteen percent ethanol. Growth Energy’s request cites foreign oil dependence, “green-collar jobs” and the future of cellulosic ethanol as reasons to bump the blend cap, but as the New York Times reports, the real problem is that the ten percent limit is bumping up against a congressional mandate to blend 15b gallons of biofuels with gasoline by 2012. What the Times fails to mention is the financial incentive for raising the blend cap: the 51 cent-per-gallon of ethanol blended tax credit. In 2007, when gas consumption was at an all-time high and ethanol blending mandates required a mere 4.7b gallons (with 7b actually blended), that credit cost taxpayers nearly $3b. In 2012, when the mandate hits 15b gallons, the taxpayer tab will be closer to $7.65b.