Menu
Tax Notes logo

Full Text: Agriculture Dept. Official's Testimony To Finance Subcommittee Hearing On Alternative Transportation Fuel Additives.

SEP. 29, 1993

Full Text: Agriculture Dept. Official's Testimony To Finance Subcommittee Hearing On Alternative Transportation Fuel Additives.

DATED SEP. 29, 1993
DOCUMENT ATTRIBUTES
  • Authors
    Conway, Roger K.
  • Institutional Authors
    U.S. Department of Agriculture
  • Cross-Reference
    For citations to a related news story and other testimony from the

    hearing, see the September 30, 1993, Tax Notes Today table of

    contents.
  • Subject Area/Tax Topics
  • Index Terms
    fuel, alcohol
    fuel, gasohol
    tax policy, energy
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 93-10225
  • Tax Analysts Electronic Citation
    93 TNT 202-106
STATEMENT OF DR. ROGER K. CONWAY, DIRECTOR OFFICE OF ENERGY U.S. DEPARTMENT OF AGRICULTURE PREPARED FOR COMMITTEE ON FINANCE, UNITED STATES SENATE, SUBCOMMITTEE ON ENERGY AND AGRICULTURAL TAXATION
====== FULL TEXT ======

September 29, 1993

Mr. Chairman and members of the subcommittee, we appreciate the opportunity to appear today to discuss the Department's (USDA) activities regarding the Federal reformulated gasoline program, renewable oxygenates, and the role ETBE might play in that program. My brief remarks will highlight the Department's role in the regulatory process.

USDA was actively involved in discussions that led to the reformulated gasoline regulatory proposal that allowed ethanol and other renewable oxygenates to participate in the reformulated gasoline program by relaxing volatility standards for fuels blended with renewable oxygenate and increasing volatility standards for all other fuels. The outline of that proposal was announced October 1, 1992, and the proposed regulation was published in the Federal Register on February 28, 1993.

The proposal called for providing reformulated fuels blended with ethanol and other renewable oxygenates, such as ETBE, up to a 30 percent market share in northern ozone nonattainment areas. Similar, but more restrictive provisions were granted for some southern ozone nonattainment areas. The Environmental Protection Agency (EPA) held public hearings on the February 28 proposal on April 14 and 15, 1993. Many of those testifying at that hearing stated their opposition to the proposed rule because they saw it as unworkable and unenforceable.

USDA supported the concept of a renewable oxygenates program in the reformulated gasoline regulation because we believe that such a program would provide ethanol, ETBE, and other renewable oxygenates increased opportunities in this highly regulated market. The Secretary believes that enhancing the use of renewable oxygenates would provide broad benefits for the U.S. agricultural sector. The expanded use of renewable oxygenates would boost the demand for corn and other domestic resources, expand employment opportunities in rural America and improve U.S. energy security.

We have estimated that an effective renewable oxygenate program as part of the reformulated gasoline regulation could increase ethanol production and use up to 2 billion gallons annually by the year 2000. Such use could expand employment opportunities by an estimated 28,000 jobs, 10,000 of which would be direct and indirect jobs in the ethanol processing industry.

Increased demand for ethanol as a fuel additive or an ether feedstock would provide incentives for new technological developments in ethanol processing. USDA estimates that near-term technology improvements could reduce the costs of ethanol production by 5-7 cents per gallon. In the longer term, technological innovations could save as much as 15 cents per gallon over current costs.

These benefits are some of the reasons why Secretary Espy supports a renewable oxygenates program. In his comments to EPA, the Secretary proposed a system of tradable credits to provide improved market opportunities for renewable oxygenates. All gasoline sold in a reformulated gasoline market area would be required to meet the performance standards specified in the regulation. Refiners or blenders who wish to use renewable oxygenates would earn credits. Refiners and blenders who do not wish to use renewable oxygenates in their reformulated fuels would be required to meet stricter performance standards or to purchase credits as a means of fulfilling their participation requirements.

I should add, however, that the views expressed here are those of the Department and do not necessarily reflect a final administration position. Final regulatory authority for the reformulated gasoline program rests with EPA. EPA is currently reviewing comments, including the Secretary's proposal. The deadline for publication of the final rule is December 15, 1993.

Mr. Chairman, this concludes my prepared remarks. I will address any questions you or other members of the subcommittee have at this time.

DOCUMENT ATTRIBUTES
  • Authors
    Conway, Roger K.
  • Institutional Authors
    U.S. Department of Agriculture
  • Cross-Reference
    For citations to a related news story and other testimony from the

    hearing, see the September 30, 1993, Tax Notes Today table of

    contents.
  • Subject Area/Tax Topics
  • Index Terms
    fuel, alcohol
    fuel, gasohol
    tax policy, energy
  • Jurisdictions
  • Language
    English
  • Tax Analysts Document Number
    Doc 93-10225
  • Tax Analysts Electronic Citation
    93 TNT 202-106
Copy RID