April 7, 2000

EPA plans to eliminate MTBE, a gasoline oxygenate used to reduce emissions of smog, could mean good news for corn growers in Texas and across the nation.

Carol Browner, administrator of the Environmental Protection Agency, said EPA will ban MTBE under the Toxic Substance Control Act. MTBE has been linked to groundwater pollution in California and elsewhere. It is used in one-third of the gasoline sold in the United States.

"The elimination of MTBE should give rise to other types of oxygenates," said George Caldwell, associate director of Commodity and Regulatory Activities for the Texas Farm Bureau. "One type is ethanol, which will definitely open up an area for corn market opportunities."

According to the American Coalition for Ethanol, ethanol production in 1994 consumed 535 million bushels of corn. If used as an MTBE replacement, gasoline would require the use of an additional 600 million bushels of corn annually.

Caldwell does not think it will be long before farmers and the refining industry replace MTBE with ethanol-blended gasoline. "It is possible to have some impact this year," he said.

Currently, ethanol-blended gas accounts for about 20 percent of the nation’s oxygenated fuel usage.

In a prepared statement, Agriculture Secretary Dan Glickman explained the importance of ethanol production in agricultural communities.

"Farm income will rise because of increased demand for corn. Rural income will rise as farm income increases, and new jobs will be created for ethanol plants. And we will have greater energy security because we are replacing oil imports with domestic sources of renewable energy," Glickman said.

"Since 1981, the ethanol industry has grown from 100 million gallons to about 1.5 billion gallons. More than 5 percent of domestic corn production, or 550 million bushels of corn, is used every year to produce ethanol.

"We can and will do better than that," Glickman insisted. "Ethanol will continue to play an important role in ensuring that we maintain our air quality standards. And even more ethanol would be required to meet the national renewable fuel average, which would start at the current level and encourage substantial new production in the future. This Administration, in short, is not going to take or support any action that undermines the continued growth of ethanol and other renewable fuels as we proceed into the 21st century."

As a part of the Administration’s Bioenergy/Bioproducts Initiative, and to increase demand for agricultural commodities under the Farm Safety Net proposal, Glickman has directed USDA’s Commodity Credit Corporation to provide up to $100 million in fiscal year 2000 and up to $150 million in 2001 and 2002 in incentive payments to ethanol and other bioenergy producers to expand production of bio-based fuels.

"I have been a strong advocate for ethanol and renewable fuels virtually my entire life in public service, and I look forward to its continued growth under the renewable fuel standard we are proposing today," Glickman said.