March 23,
2000
Honorable Carol Browner, Administrator
U.S. Environmental Protection
Agency
401 M Street, S.W.
Washington, DC 20460
Dear Administrator Browner:
On behalf of the 24 members of the Governors' Ethanol Coalition, we are
writing as follow up to our conversation on February 29, 2000, regarding
the role of ethanol in the reformulated gasoline program. We assured you
during our meeting that the ethanol industry can meet the increased demand
for ethanol as a result of the phasing out of MTBE and committed to
providing evidence of this.
Enclosed please find a recent study conducted by John M. Urbanchuk,
Executive Vice President of AUS Consultants titled "Ability of the U.S.
Ethanol Industry to Replace MTBE". According to the report, the U.S.
ethanol industry has the ability to double ethanol capacity given a
two-year timeframe. Furthermore, the ethanol industry can exceed the
increased demand for reformulated gasoline, as estimated by the U.S.
Department of Energy, Energy Information Administration, resulting from
the phase out of MTBE.
As stated in the material, the increased capacity for ethanol production
is projected to result from improvements in production efficiency
leading to increased utilization of existing plants; expansion of
existing operating facilities; new construction in place; and proposed facilities
currently in various stages of development. These expansion plans
will result in total production of more than 3.4 billion gallons of ethanol
by 2004, or 317 million gallons more than will be needed to replace
MTBE and meet all other uses of ethanol. The study has also examined
the potential difficulties in meeting the demand for ethanol resulting
from material or construction constraints, and the result is that
there is no evidence indicating that this would inhibit the industry.
s ability to meet demand.
While the cost to add the new ethanol capacity to replace MTBE is estimated at
nearly $1.9 billion, the positive impact resulting from ethanol's
replacement of MTBE for our nation's economy is significant. The
study projects this expansion of ethanol capacity will add $11.7 billion
to real GDP by 2004, increase household income by an estimated $2.5
billion, and generate an additional 47,800 jobs.
We understand that an additional concern about ethanol is adequate
access to transportation of the supply. Also enclosed is a letter
addressed to U.S. Senator Tom Harkin from U.S. Secretary of Agriculture
Dan Glickman in which he cites a paper prepared by the Office of Energy
Policy and New Uses (OEPNU) in the Office of the Chief Economist. Again,
this study assumes a phase out of MTBE by 2004, and the analysis reveals
that a number of transportation options remain available for ethanol
transport over the long term. The study concludes no significant problems
for ethanol transport if MTBE were to be phased out over a four year
period.
The evidence is clear that the ethanol industry does have the ability to
meet the demand for oxygenated fuel as required by the Clean Air Act in place
of MTBE and there is adequate access for transport of ethanol. We applaud
your recent action to phase out MTBE, and we urge you to maintain the
progress on clean air by ensuring ethanol's role in reformulated
gasoline.
