Ethanol makers push U.S. to boost fuel blend rate

WASHINGTON (Reuters) - The U.S. government should set the ethanol-to-gasoline blend rate above the current 10 percent to ensure federal targets for using the renewable fuel are met, industry leaders said on Tuesday.

They said a blend rate of 15 percent or 20 percent may be more appropriate. Jeff Broin of POET, the largest U.S. ethanol maker, said a newly formed trade group, Growth Energy, would work with the Environmental Protection Agency on the issue.

Asked if the Obama administration would support higher blends, Broin said “We see tremendous alignment between our goals.”

During the campaign, President-elect Barack Obama supported the ethanol mandate and development of renewable fuels.

U.S. gasoline consumption is around 140 billion gallons a year. Federal law requires the use of 9 billion gallons of renewable fuels this year and 10.5 billion gallons in 2009, rising to 15 billion gallons a year by 2015.

Two members of Growth Energy said shipping and cost constraints could discourage further blending of ethanol with gasoline as soon as 2009, a situation the ethanol industry calls hitting the “blend wall.”

“We’re seeing it at a 10 billion (gallon) rate and we’re already there,” said David Vander Griend of ICM Inc, a designer of ethanol plants and equipment.

Wayne Hoovestol, head of Green Plains Renewable Energy Inc, said ethanol would hit the blend wall in 2009.

Growth Energy members said food makers were wrong to blame ethanol as a culprit behind higher food prices.

“We can feed our country. We can fuel our country,” said Tom Buis, president of the National Farmers Union. He said renewable energy offered farmers a chance to make money.

Reporting by Charles Abbott; Editing by David Gregorio