***UPDATED BELOW.....SPINNING THE ETHANOL MANDATE

T

his is worth reposting today:

It appears as though SB 380, the bill that starts with a 10% ethanol mandate and ratchets up to a 25% ethanol mandate over time, is scheduled for a floor vote in the State Senate tomorrow (Jan 31). The bill is on the fast track, introduced on January 11, public hearing January 16, committee vote yesterday, and on the floor tomorrow. I think the Dems are moving this as quickly as possible because they know that the more people learn about the bill, the less likely it is to pass.

WMC opposes the bill for three primary reasons:

1. SB 380 will result in significantly higher gas prices. In a captive market created by legislative fiat, the ethanol industry will be able to exert significant price power over a commodity that blenders are legally required to buy. Obviously, this will result in higher prices. But motorists will take a double hit. The bill requires the fuel industry to purchase ethanol credits to reach the statutorily required mandate levels, EVEN IF THEIR CUSTOMERS DON’T BUY ETHANOL. In other words, if their customers only buy 12% ethanol, and the mandate is 25%, they have to purchase credits to get the remaining 13%. Those credits, which will be owned by the ethanol producers, will not come cheap. And of course, those substantial costs will be passed on to consumers in the form of higher gas prices.

2. The bill will adversely impact Wisconsin engine and outdoor equipment manufacturers. After the bill’s 10% ethanol mandate ratchets up to 15%, 20% and 25% their will be problems with spark ignition engines (many of which are manufactured or assembled here in Wisconsin). Manufacturers have significant engine wear, performance and carburetion concerns with respect to ethanol blends above 10%, which could result in warranty and product reliability issues. The engines are manufactured and calibrated to combust up to 10% ethanol, but not more than that. The Engine Manufacturers Association (EMA) and the Outdoor Power Equipment Institute (OPEI) are opposed to this legislation because of these concerns.

3. The bill will worsen Wisconsin’s ozone nonattainment situation. Ethanol use results in higher levels of pollutants that form ozone, which is why the federal Clean Air Act restricts the amount of ethanol that can be blended with conventional gas. WMC is very concerned by the prospect of mandating a fuel that results in additional ozone pollution, especially since the EPA has proposed a stricter ozone standard that would place many more Wisconsin counties and businesses into nonattainment, and subject to paying the ozone penalty.

 And here is a blast from the past, Via Badger Blogger:

***SPINNING THE MANDATE:

An insider emails:

Supporters of the bill are arguing this is not a “mandate” because it doesn’t say what the percentage must be at the pump, only that the wholesaler has to hit percentages of 10, 15, 20 and 25% in coming years.  But, since the maximum that any engine (except a few E-85s) can burn is 10%, the 10% level next year is both a ceiling and a floor – a mandate.  It is also a more than doubling of ethanol use in the state in one year.

After starting out at 10%, this Reformulated Ethanol Bill gets nothing but worse.

A couple of interesting twists in the draft:

1)  Credit Sales by ethanol producers:  For every gallon of ethanol produced, the producers get a credit for the difference between the mandate and the gallon (15% mandate = 85% of a gallon credit for every gallon produced).  Sale of credits amount to the producer selling the same gallon of ethanol twice.  The more unattainable the mandate, the higher the price for the credits.  Consumers not only have to pay the captive market price for the ethanol but the cost of the credit as well.

2)  Rolling Average Subsidy:  The devil really is in the details.  The amount of ethanol the wholesaler is required to sell is figured from a five year rolling average of gas sales (eg. - 10% of the average of the last five year’s sales).   If conservation actually works and fuel sales drop, the percentage of ethanol used would actually rise, punishing consumers for being responsible.

Example:  You have sold 100 gallon of gas/year for four years and now you sell 50 gallons.  The amount of ethanol you would be responsible for using would be the average of the last 5-years (90-gallons).  10% is 9-gallons of ethanol for 50 gallons of sales or an 18% ethanol mandate. 

How do you deal with the extra ethanol?  Buy more credits from the guy selling the ethanol!

Politically, the vote looks close because people have been told this isn’t an ethanol mandate.  A key vote (maybe the key vote) is Sullivan.  He is giving indications that he will vote for the mandate that screws Briggs and Stratton and Harley (neither of which make engines that can take over 10% ethanol.  I have heard his staff is saying they haven’t heard much from their district.