Statement of Senator Tom Harkin
U.S. Senate Environment and Public Works
Subcommittee on Clean Air, Wetlands, Private Property, and Nuclear Safety
Washington D.C.
June 14, 2000

Good morning, Mr. Chairman and other members of the Subcommittee. I very much appreciate this opportunity to appear before you to discuss the environmental benefits of ethanol and its role in the reformulated gasoline program (RFG). As we work to address the crisis caused by use of the toxic additive MTBE in gasoline, it is critically important that everyone knows the facts about the advantages of ethanol the safe and renewable alternative to MTBE.

Before getting into the specifics of ethanol, I want to talk briefly about the Clean Air Act Amendments of 1990 and the reformulated gasoline program. When we adopted the RFG program in 1990 the primary reason was of course air quality, but we also had in mind additional objectives through the use of oxygenates, such as enhanced energy security and environmental and economic benefits from using domestically produced renewable fuels like ethanol.

The air quality improvements from the RFG program, including its oxygen content requirement, are impressive. RFG is currently used in 17 states and the District of Columbia and accounts for about 30% of all gasoline sold in the United States. The RFG program has reduced emissions of ozone-forming volatile organic compounds, toxic compounds, carbon monoxide and oxides of nitrogen. EPA estimates that the reduced emissions from the RFG program are equivalent to taking 16 million vehicles off the road annually. And as you can see from this chart, RFG will bring about a cumulative reduction of well over 400,000 tons of pollutants from 1995 through this year.

(Chart #1: Reductions of Pollutants from RFG)

Well, that is the air quality side of the story. Unfortunately, we all know about the water quality side of the story. The oil companies chose overwhelmingly to use MTBE as the oxygen additive in RFG. Currently, about 85 percent of RFG contains MTBE and only about 11% of RFG is made with ethanol. And now we have very extensive water quality problems from MTBE contamination. Frankly, I believe we could have avoided a lot of these problems if the we had been able to keep the higher level of oxygen in the RFG amendment that we started with back in 1990. That would have led to much more ethanol use, and less MTBE use. But we ended up with the 2 oxygen level in the law, widespread use of MTBE and consequent water quality problems.

Now we must move to solve the water quality problems caused by MTBE. However, in doing so, I hope that we will not miss the obvious lessons of the MTBE fiasco. We must avoid taking steps to protect water that will take us backwards with respect to air quality and the use of renewable fuels like ethanol.

There is another very important lesson from the MTBE crisis, and that has to do with how much trust we are willing to place in the hands of the oil companies. Remember, it is the same oil companies that brought us the MTBE debacle that are now calling for Congress to do away with the oxygen content requirement in RFG. Leave it up to us, they say. Give us the flexibility, they say, we will produce clean gasoline without the minimum oxygen content requirement.

Well, I am not about to stand by and allow the oil companies to fool us once again, and I hope this Congress will not let them do it.

Despite what the oil companies say, the oxygen content in RFG does have value in improving air quality. The Clean Air Act has both formula requirements and performance requirements for RFG. The oxygen content requirement is in the formula requirements. The performance requirements include reducing volatile organic compound and toxic emissions. The oil companies will say that if they meet the performance standards then they should not have to put oxygen into RFG.

That approach ignores the value of oxygen in RFG that goes beyond what is reflected in the performance standards. Adding oxygen to RFG reduces emissions of ozone-forming carbon monoxide, toxic compounds and fine particulate matter. Oxygen helps to boost octane and replaces aromatic compounds in gasoline that deteriorate air quality. In combination, the performance standards plus the formula requirements -- including oxygen content -- have led to greater improvements in air quality than would be the case if we just relied on performance standards alone.

In other words, there are inherent benefits to using oxygen in gasoline that are not reflected in the RFG performance standards. We will be giving up these air quality benefits if we eliminate the oxygen requirement and rely on the current performance standards alone. In addition, if we take oxygen out of RFG, we can fully expect the oil companies to start adding back in the aromatic compounds and other junk in order to maintain octane in the gasoline.

As I say, ethanol is the safe oxygen alternative to MTBE. Now, some are saying that ethanol cannot supply the RFG markets at acceptable prices. Analysis done by the Department of Agriculture refutes this claim. USDA concluded that ethanol can replace MTBE by 2004 without price spikes or supply shortages. Work by the Department of Energy also contradicts the suggestion that use of ethanol would substantially increase gasoline prices. The best evidence about gasoline prices is what is happening in the market right now. Ethanol is in fact less expensive in the market than gasoline. And a study looking at prices in California, found that ethanol blends would cost $0.03 per gallon less than MTBE blends if California were to switch to ethanol-blended RFG.

Chart # 2 on Gasoline and Ethanol Prices

Another important element of this debate is the need to promote much greater use of renewable fuels in our country. Renewable sources are only 3 percent of U.S. energy supplies. In the gasoline market only about 1.2 percent is renewable ethanol. Our reliance on foreign petroleum is growing dramatically. We are now far more reliant on foreign petroleum than we were back in the 1970s when disruptions in oil supplies caused tremendous shocks to our economy.

(Chart #3: U.S. Dependence on Foreign Oil)

In conclusion, I firmly believe that the oxygen content requirement continues to have real value in improving air quality. I also believe that any legislation regarding the RFG program should incorporate some key principles: 1) eliminating MTBE; 2) fully maintaining and preferably increasing the air quality benefits delivered by the RFG program, including its oxygen content requirement; 3) fully accounting for the environmental benefits of ethanol as an oxygen additive to gasoline, especially with respect to reducing emissions of carbon monoxide, toxic compounds and fine particulate matter and their precursors; and 4) fully maintaining and preferably increasing the opportunities for ethanol and renewable fuels in comparison to the current RFG program.

Mr. Chairman, again I appreciate the opportunity to appear before your Subcommittee.