The 2005 Energy Bill requires refiners to use 7.5 billion gallons of ethanol per year by 2012. Combined with the existing 51 cents-per-gallon tax credit and soaring oil prices, that provision has triggered an ethanol investment boom. Production leapt to 5 billion gallons in 2006, and the industry will have the capacity to make more than 11 billion gallons by 2008.
The problem: That capacity bumps up against the so-called blend wall. Auto fuel that contains more than 10% ethanol is too corrosive to use in existing gas station pumps. Without new pumps, and cars capable of running on high-ethanol fuel, the U.S. can't use more than 8 billion to 10 billion gallons of ethanol a year.
~ BW, "Memo To Congress: First, Do No Harm; Capitol Hill's rush to promote alternative fuel could yield some damaging legislation," January 29, 2007, by John Carey and Eamon Javers