Newsletter Archive

On January 1, 1995 the federal Reformulated Gasoline (RFG) program was developed to help reduce urban ozone pollution. The federal RFG program required the use of 2.0 weight percent of oxygen sold in the gasoline in these designated areas. The program was implemented in metropolitan areas that had the worst urban ozone pollution. Other locations voluntarily joined the program in an effort to improve air quality.

As a result of the RFG program, many producers began to blend MTBE into their gasoline. MTBE (Methyl Tertiary-Butyl Ether) is an oxygenate additive that is used in the reformulation of gasoline and improves air quality. According to the Oxygenated Fuels Association, use of MTBE has a number of benefits including the fact that it can be blended at the refinery. Once it is blended, the reformulated gasoline can be shipped through the pipelines and exchanged readily within the distribution network.¹

MTBE has been quite successful in fighting air pollution,² however, controversy over the additive began when MTBE was detected in drinking water in certain parts of the country. For example, MTBE was discovered in wells in Santa Monica and South Lake Tahoe in 1996 and 1997.³ Although the health risks associated with MTBE in drinking water are still unknown, the high cost and difficulty in cleaning MTBE leakages has forced many states to pass or draft legislation to ban or limit the use of MTBE.⁴

Currently, there are seven states that have enacted to ban MTBE: Arizona, California, Colorado, Connecticut, Illinois, Michigan, and Missouri. All but Colorado have established time frames in which to phase out MTBE. The only full ban of MTBE already in effect is in Colorado.⁵

In addition to the seven states enacting bans on MTBE, ten states have restricted the use of MTBE. These include: Indiana, Iowa, Kansas, Kentucky, Minnesota, Nebraska, New York, Ohio, South Dakota, and Washington. Among these, New York and South Dakota prohibit the sale of gasoline containing MTBE, but continue to allow MTBE to be used in other applications. Indiana, Iowa, Kansas, Kentucky, Minnesota, Nebraska, Ohio and Washington have moved to limit the volume percent of MTBE allowed to be reformulated into their gasoline. Table 1 shows the status of individual state restrictions. Six other states have legislation pending. They are: Massachusetts, New Hampshire, Pennsylvania, Delaware, New Jersey, and Rhode Island.⁶

Currently, 15% of the areas requiring RFG/oxy-fuel oxygenate use ethanol. These areas tend to be in the Midwest, in close proximity to ethanol production facilities. As the number of states banning or limiting MTBE increases, more opportunities will open for ethanol producers. According to the Renewable Fuels Association, fuel-ethanol is the most likely substitute due to its positive impact on air quality and fuel performance. Ethanol's characteristics pose minimal water quality risks because it is easily degraded. Ethanol also poses minimal health effects making it a viable replacement fuel additive.⁷

MTBE proponents claim that replacing MTBE with ethanol will increase the cost of gasoline due to low ethanol supplies coupled with the high cost of transporting the ethanol. Proponents also believe that the ethanol infrastructure is not adequate to produce and distribute the quantities of ethanol that will be needed to replace MTBE. They add that ethanol could be expensive as a fuel additive because it cannot be mixed at the refinery. It has to be transported by truck or rail (emitting harmful emissions into the atmosphere) to the distribution facilities where it is blended, and it cannot be transported by pipeline.⁸

The ethanol industry refutes these arguments by pointing out that ethanol is currently marketed and distributed in every state in the U.S. and that if ethanol were to replace MTBE nationwide, ethanol would be shipped by barge or rail cost competitively. Ethanol proponents also state that there would be no transportation impediment to the use of ethanol as a replacement of MTBE.¹⁰ Moreover, studies performed by the state of California on the environmental and health effects of ethanol found that it has benefits over MTBE in terms of water contamination and "no substantial effects on public health impacts of air pollution."¹¹

In responding to supply concerns, ethanol proponents are quick to point to the increase in ethanol production capacity over the last several years.¹² Currently, there are 63 ethanol plants in 20 states in the U.S. The domestic ethanol industry set an annual production record of 1.77 billion gallons in 2001, up 20 percent from 1.47 billion gallons in 1999. Current U.S. fuel ethanol capacity is about 2.4 billion gallons per year, and 460 million gallons of capacity are under construction in five states including Iowa, Michigan, Nebraska, South Dakota, and Wisconsin.¹³

Table 1

States That Have Acted to Ban or Restrict MTBE Use

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Of the almost 13,000 MW of installed biopower capacity in the United States, about 8 percent is present in California,¹ and concentrated mostly in two areas - the Central Valley and the Northern California Forests.² Biopower is generated from four main sources: timber (wood) residues, landfill gas, agricultural residues, and municipal solid waste. Timber residues account for the largest percentage of California's biomass power generation capacity at 43 percent (433MW). Landfill gases fuel power plants as well, and account for 34 percent, or 339 MW, of the state's biomass capacity. Crop and processing residues from the agriculture industry are used to generate 14 percent, or 139 MW, of California's biopower capacity. Another major source of biopower comes from municipal solid waste (MSW), which supplies 9 percent of the total production capacity. MSW also has great promise¹; Californians generate 33 million tons of MSW each year.³

A number of incentives exist as part of the state's continued efforts to increase biomass usage for power. Governor Gray Davis has offered $11 million in grants to encourage farmers to take part in the conversion of agriculture biomass to energy.⁴ The Landfill Gas Electricity Generation Incentive is making $622,500 available to the owners of landfills who choose to use the gas emitted to produce electricity.⁵ Last year, the 13-state Western Regional Biomass Energy Program chose three biomasst-to-energy projects located in California. These are: testing and certification of a soybean or vegetable oil/ diesel fuel blend; an information system to help assess forest biomass in Plumas County; and monitoring of an anaerobic bioreactor at a regional landfill. California is also a part of a multi-state effort to develop a small, modular generator able to use a variety of biofuels to produce electricity.⁶

40,000,000 gallons of gasoline are sold each day in California.⁷ As in other states, MTBE (Methyl Tertiary-Butly Ether) has been used to comply with the Clean Air Act oxygenate requirements. In 1999, Governor Davis signed Executive Order D-5-99 requiring California to eliminate all MTBE from its gasoline by December 2002 - the ruling was later extended to December 2003. This extension allows time to bring in oxygenates, such as ethanol, into California's gasoline markets. The extension provides an opportunity for the fuel-ethanol industry to help the state meet its oxygenate requirements. Currently, California's fuel-ethanol production capacity is around 9 million gallons each year.⁸ Phillips Petroleum Company recently removed all MTBE from its 76 brands of gasoline, which affects 1,500 locations statewide. ExxonMobil announced its plans to replace MTBE with ethanol by early 2003, still - almost one year ahead of the governor's schedule.

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California Law Reduces Automobile Pollution
Governor Gray Davis signed into law new regulations that make greenhouse gas emission standards stricter. The California Air Resources Board will have the power to set "maximum" but "economically feasible" emissions standards. These standards must be set by 2005 and must be met by all automobiles sold by 2009. While these regulations will be set only for California residents, they represent ten percent of the national market, so the law will affect all American consumers. Groups opposed to the new law say that it will raise car prices and limit consumer choices. www.washingtonpost.com/wp-dyn/articles/A41533-2002Jul21.html

EarthShell Packaging^® Now Available in Select West-Coast Wal-Marts
Ninety Wal-Mart Stores in Washington, Oregon and Northern California will begin to carry EarthShell Packaging^® plates and bowls. This follows successful test marketing in Maryland and Oregon. EarthShell^® products are made from potato starch and natural limestone. The packaging biodegrades when exposed to moisture and can be used as part of compost, making it much more environmentally friendly than traditional polystyrene foam packaging. www.earthshell.com

Biomass Plant to be Built in Los Angeles
Alchemix Technologies and Environmental Strategies & Technologies International, Inc. (ESTI) have signed a letter of intent for a joint venture to build an electrical generating plant in Los Angeles. This plant will use garbage, waste products, tires and other biomass as a fuel. The plant will use Alchemix's HydroMax technology to convert the biomass into low-cost hydrogen or electricity. The letter of intent also states that each year a new plant will be built over the next five years. www.alliancecorp.ws/ESTTAlchemixLOI.htm

"76" Stations Provide MTBE-free Gasoline
California '76' brand petroleum stations announced on July 22, 2002 that they are the first to provide MTBE-free gasoline year round in all of its retail outlets in California. '76' was also the first retailer to blend ethanol into their gasoline. The announcement comes a year and a half before the deadline to remove MTBE from gasoline in California. http://www.phillips66.com/newsroom. www.phillips66.com/newsroom

Dung-Fired Power Plant Opens
The first dung-fired power plant opened in Britain July 18, 2002. The plant uses the excrement from 5,000 cows to light up homes on the north coast of Devon. The dung, called slurry, comes from 28 local dairy farms and is fermented for 20 days to produce methane for the plants gas-fired generators. After the slurry has been fermented, it is treated to remove tuberculosis and foot-and-mouth spores and returned to the farms as fertilizer. www.reuters.com/news_article.jhtml?type=humannews&StoryID=1218779

Call for Papers: Journal of Industrial Ecology
The Journal of Industrial Ecology, an international peer-reviewed journal owned by Yale University and published by MIT Press, is soliciting papers for a special issue on the sustainability of bio-based materials. http://www.yale.edu/jie/cfpbiobased.htm

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Data Sources:
OxyFuel News: Ethanol (U.S. Avg: Terminal); MTBE (Houston, TX: spot); Gasoline (Gulf Coast: spot, regular grade)
USDA-National Agricultural Statistics Service, "Agricultural Prices," "Grain Stocks"

Data Sources:
U.S. DOE-Energy Information Administration, "Petroleum Supply Monthly"
USDA-National Agricultural Statistics Service, "Agricultural Prices," "Grain Stocks"

*Please note: Units used for fuel data have been revised to correct an error in previous editions.