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December 14, 2001

RFA Urges Gov. Davis to Hold the Line on MTBE Ban

Delaying the MTBE Ban Hurts CA Consumers and Renewable Fuels Development

WASHINGTON, DC – The Renewable Fuels Association (RFA) has sent a letter to California Governor Gray Davis urging him to maintain the original deadline – December 31, 2002 – for removing MTBE from California’s gasoline supply to protect water resources. Delaying the ban could make it difficult for California to secure the future ethanol supplies needed to remove MTBE.

“When you issued Executive Order D-5-99 phasing out the use of MTBE in gasoline two and a half years ago, the U.S. ethanol industry accepted the challenge to assist your efforts to provide both clean air and clean water without increasing fuel costs to California consumers,” wrote Bob Dinneen, RFA president. “The U.S. ethanol industry initiated the most aggressive and rapid expansion in its history.”

It is expected that 675 million gallons of ethanol will be required annually to replace MTBE in California’s reformulated gasoline program. Since March 1999, when the Executive Order was signed, 10 new ethanol plants have opened and several expansions have been completed, increasing ethanol production more than 550 million gallons. Further, there are 18 plants under construction and slated to begin production before the MTBE phase out deadline. These plants will add another 470 million gallons of production capacity. There are also scores of new plants in various stages of development that will likely be in production before the end of 2003.

“Consequently, the ethanol industry is alarmed by persistent rumors suggesting the state may yet delay the implementation of the MTBE phase out because of concerns about the potential impact of transitioning from MTBE to ethanol,” wrote Dinneen. “Such concerns are unfounded. We are confident the existing MTBE phase out schedule can be met without consumer cost increases or supply disruptions. Indeed, if the California market for which the new ethanol capacity was built does not materialize, that product will be forced to pursue alternative marketplace opportunities, potentially complicating California’s ethanol supply situation when the state finally decides to impose its MTBE ban. Thus, there is a far greater risk of consumer price increases associated with delaying the MTBE phase out than keeping the current schedule.”

The members of the RFA have been working closely with the rail, barge, vessel and pipeline industries to establish multiple, cost-effective and secure transportation options for shipping ethanol to all points within California. Each of these industries has stated publicly they have the capability and capacity to assure ethanol is shipped to California in a timely and competitive manner.





 

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