U.S. on track to finish test on higher ethanol blend

WASHINGTON Fri Sep 24, 2010 9:08am EDT

WASHINGTON (Reuters) - U.S. Energy Secretary Steven Chu said on Thursday his department was on schedule to deliver testing data on a higher blend of ethanol for motor vehicle gasoline.

"We're going to have all the information ready for the EPA by the end of the month," Chu told reporters at a conference.

The Department of Energy is studying whether fuel containing 15 percent ethanol, known as E15, can be burned safely in traditional car engines. The current blend level is 10 percent.

Chu's agency previously had delayed completion of the tests, but is now expected to deliver data on the first set to the Environmental Protection Agency by the end of September. The first set centers on the effect of E15 on cars built in 2007 and later.

The DOE is expected to deliver data on cars built from 2001 to 2006 by the end of November.

If the EPA approves the blends, it could provide a boost for the domestic ethanol industry, which has suffered in recent years from tight financing and high costs for corn and other inputs.

Companies that could benefit include Archer Daniels Midland, Poet, a privately held company, and oil refiner Valero Energy Corp.

The auto industry has urged the government to conduct full tests for E15 because it is worried the blend could corrode fuel lines and damage engines.

EPA Administrator Lisa Jackson told a congressional hearing on Thursday her agency would make a decision soon after receiving the data. "We are prepared to render our decisions within two weeks," after getting the data, she said.

Growth Energy, a group of ethanol producers who filed for a government waiver that would allow the higher blends, has said E15 could be available in March or April, if the EPA approves the fuel for both sets of cars by the end of the year.

But many producers also say E15 can be used safely in nearly all older engines and fear the government's bit-by-bit process could bring confusion to the market.

"EPA's insistence on bifurcating the market this way, and possibly again with 2001 and newer (cars), without providing any scientific evidence creates unnecessary confusion that may hinder additional ethanol sales, not expand them," said Matt Hartwig, a spokesman for the Renewable Fuels Association trade group.

(Additional reporting by Timothy Gardner and Charles Abbott; Editing by Walter Bagley)