U.S. will approve higher ethanol blend: group

WASHINGTON Tue Apr 14, 2009 6:31pm BST

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WASHINGTON (Reuters) - The U.S. government will eventually allow higher levels of ethanol to be blended into gasoline, Renewable Fuels Association President Bob Dinneen said on Tuesday.

Ethanol is currently approved to make up 10 percent of gasoline, but producers have lobbied the government to increase the blend level.

"I absolutely believe that when all the science is in, the efficacy of using greater than 10 percent blends will be validated," Dinneen told reporters at an Energy Information Administration summer energy outlook conference.

Growth Energy and 52 ethanol manufacturers petitioned the Environmental Protection Agency last month to raise the maximum blend level for ethanol in gasoline to as much as 15 percent.

Dinneen said he expects the EPA to issue a notice "within days" to begin collecting public comment on the issue. The EPA has 270 days to act on the ethanol producers' request.

The Renewable Fuel Standard enacted by Congress required 9 billion gallons of renewable fuels such as ethanol to be blended into the nation's gasoline supply last year. The mandate, rising annually, will reach 36 billion gallons in 2022.

With a 10 percent blend rate, the Energy Department estimates that as early as 2013 the amount of ethanol required to be produced will exceed the amount the U.S. vehicle fleet could consume. If the slowing economy continues to cut into gasoline demand, the so-called 10 percent blend wall could be reached a year earlier.

The renewable fuel mandate also requires a certain amount of ethanol to be produced from non-grain sources such as grasses and wood chips. Dinneen said it will be difficult to meet the requirement for production of 100 million gallons of cellulosic ethanol next year.

He said it could be done if technology were developed to produce cellulosic ethanol from corn fiber on a commercial scale.

"But if you're talking about producing cellulosic ethanol from green field plants devoted that alone, it's not going to happen," Dinneen said.

(Reporting by Ayesha Rascoe; Editing by Lisa Shumaker)

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