3 -:.*4J g__ H _ F ‘ - ~v"’=‘-‘*5 ' W V “_‘“':'_ ‘I; 1 J _ Issue Brief ve sitir of M souri - lil mu if mm O10-103860 ‘iITI"\i’\{ 5 ulisuiiit‘ numu GASOHOL: THE ALCOHOL FUELS ISSUE BRIEF NUMBER IB74087 AUTHOR: Migdon R. Segal Science Policy Research Division THE LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH sERvIcE MAJOR ISSUES SYSTEM DATE ORIGINATED 05/30/74 DATE UPDATED Ol/O5/82 FOR ADDITIONAL INFORMATION CALL 287-5700 0107 ‘ o ._ . . . .. . . . - . . .o«’ \f. ' ‘v "1 F ~. - r . ' \v ..o . - .; ~‘ - 3 - - In -9 cf - A-7 o~. 1 0 .\ I ,~ u-._ uq &. < ’ .: .0 ’ ‘- o -. . -— . ; \ \ .""‘ (‘V ' “A-jH1.AP‘ "' ma" ~ - . pm .’ . ‘ '.» ’ .‘ af.‘ L1 ‘ a. ' . - ' ""‘ ' . - ...‘‘ _ A ¢-. ;y "7;~¢v v 1 s IWL . \ K s \ . / .. I - 0 r-_ --- . \ I H. . 'n'»v .’ . .. AK .'..ast¥ . \ ( ,.)’:,. ...A. ya, at - VI’ 7 - . ,_.. _ ‘ ‘ , - . 0.. . A --. -- x H‘ -’ ‘ .1 5" ' '. ' y : ‘at 1,.’ 7'5’; _a , ’ ‘ "' .1 , ,, l . I i . 0 , . . . V . ‘ r‘ ~ ‘ ~ 9; an ... ‘ ‘ _ ‘ 4.. .'.‘\i’.’..‘ C’?-‘;'.» . -and - .---‘uownn . sq 9-v ". - .«- - Q. 7 p #3 ‘rd fix ; .‘;‘..'._'.J‘.' ‘-*~' ‘*"~‘ ~ ' -’ . s 1 ;’'.o' .?o...".;-; f 4"‘ ~‘r\ ‘‘'’‘'FMHr'‘.--.,~-~ ' 1' . .qn- . 4 -.-- ..L -. ...‘._;-. v.v.L ~44“ ~2.. \. : . _ C" " "" ‘ .;.\) Lg _ _»_ _ 1 CRS— 1 IB74087 UPDATE-0l/O5/82 ISSUE DEFINITION Ethanol (grain alcohol) and methanol (wood alcohol), two related compounds that are chemically classified as alcohols, have attracted increasing attention as alternative automotive fuels. The use of either of these compounds in this manner is feasible, and ethanol, in a lo% blend with gasoline, known as "gasohol", is now available in thousands of gasoline stations in the United States. In Brazil, the national goal of replacing 20% of that nation's gasoline consumption with ethanol is said to have largely been achieved, and Brazil is now planning to operate much of its automotive fleet on pure alcohol. Ethanol is currently derived from grain. The use of grain-derived ethanol is most practical in specific regions where grain or other crops which can be distilled to produce ethanol are grown in large quantities. However, questions have been raised as to the economic feasibility and the energy balance with regard to the production of ethanol from grain. For the future, the prospect of converting cellulose to ethanol would open the way to obtaining this product from agricultural waste products such as cornstalks, or from wood or municipal wastes. Methanol may be derived from coal, wood, or municipal wastes, and supplies from these feedstocks would be ample. The questions to be resolved with regard to methanol are (1) whether this is the best possible use that could be made of our coal and wood reserves, and (2) whether the use of methanol in present-day automobiles is practical. As of this time these questions are unresolved, and methanol as an automotive fuel is not now available in the Jnited States. The term "gasohol" was first popularized by the State of Nebraska in its ethanol research and was used to denote a blend of 10% ethanol with 90% conventional gasoline. However, "gasohol" is how sometimes used as a generic term for alcohol fuels. BACKGROUND AND POLICY ANALYSIS Alcohol has been distilled from agricultural crops for thousands of years, and alcohol so created has been used as an automotive fuel as early as the beginning of this century. Interest in alcohol as a fuel reached a new peak beginning in the late 1970s, spurred by the energy shortage, by low prices for farm crops, and by the January l980 embargo on most U.S. grain shipments to the Soviet Union. Mixtures of alcohol and gasoline are popularly known as "gasohol." The gasohol blend currently in use, which contains l0% alcohol and 90% gasoline, is now on sale in over 1000 gasoline stations in the United States. The two major energy bills enacted into law in 1980, the "windfall profit" tax bill and the Energy Security Act, included important provisions intended to promote the use of alcohol fuels. However, in l98l the Reagan Administration reduced Federal support markedly for alcohol fuels in keeping with its philosophy of minimizing Federal involvement in energy supply decisions, which it believes should be made by the marketplace. Interest in alcohol fuels is not limited to this country; in Brazil, the national goal of replacing 20% of that nation's gasoline consumption with ethanol is said to have largely been achieved. Brazil is now planning to operate much of its automotive fleet on pure ethanol. CRS- 2 IB74087 UPDATE-Ol/O5/82 There are two alcohols that may be used as possible fuels. These arr methanol (chemical formula CH3OH), which can be derived from coal, wood, C urban wastes, and ethanol (formula C2H5OH), which can be derived from agricultural crops such as corn, wheat, or sugar cane. Methanol is commonly known as wood alcohol, while ethanol is commonly known as grain alcohol and is the source of alcoholic beverages. Ethanol can be blended with gasoline, in a mixture on the order of lO% alcohol to 90% gasoline, and the mixture can then be used as a fuel in existing automobiles with few if any difficulties. .This 90-10 blend is most commonly known as "gasohol." Gasohol from grain-derived ethanol is now on sale at thousands of gasoline stations around the country. From time to time, the possibility of using methanol or ethanol as an automotive fuel has been considered. Ethanol, in particular, was used in this way in a number of countries during the 19305 and 1940s. However, the idea of using the alcohols as a substitute for gasoline faded away in the late l940s, because of the availability of inexpensive crude oil with which they could not compete economically. From a technical point of view, the use of either methanol or ethanol as an automotive fuel is completely feasible. The only major restrictions on their use for fuel are those of economics and supply. The following sections described the potential of both methanol and ethanol as automotive fuels, and discuss some of the problems associated with their use in this manner. METHANOL Background. Methanol is the lightest of the chemical compounds known as alcohols. It should not be confused with methane, which has received som attention as a possible alternative fuel source. Methane is a gas at normal conditions, while methanol is a liquid--a difference that gives a considerable advantage to methanol as a potential automotive fuel. Methanol is a widely used and well known chemical, with current annual U.S. production running at roughly one billion gallons per year. Currently, methanol is produced almost entirely from natural gas. Since natural gas is a petroleum-related product, methanol derived in this way would not be helpful, given the desire to move away from dependency on petroleum-based fuels. However, methanol may also be produced from coal, wood, or urban wastes. It is the potential use of methanol from these nonpetroleum sources that has attracted attention to methanol. As an Automotive Fuel. The first serious work on methanol as an automotive fuel was performed by Drs. Reed and Lerner at M.I.T., and published in an article in Science magazine. (Dec. 28, 1973: l299-l304). Reed and Lerner proposed using methanol in a blend with gasoline, with 10-15% methanol in the mixture. Their test data indicate that the gaosline-methanol mixture provides more power than does gasoline alone, although theoretically methanol is a less powerful fuel than gasoline and power should therefore be reduced for a given volume of fuel. other researchers have questioned this power increase. It is possible, however, for such an increase in power as a result of methanol causing a more efficient engine operation. Reductions in pollution emissions are also claimed as a result of blending methanol wit’ gasoline. The work done by Reed and Lerner and others shows that methanol ik compatible with gasoline, can be added to gasoline in amounts up to l5%, and can be used in existing automobiles without engine modification. Blends containing more than l5% methanol are possible, but would require carburetor CRS- 3 IB74087 UPDATE-Ol/O5/82 adjustment. While methanol is WOI'th serious consideration as an alternative fuel .source, there are a number of problems which must be evaluated and overcome before it could enter large—scale use. These include the following: (l) 'starting difficulties--the latent heat of vaporization of methanol is higher than that of gasoline, and methanol is therefore slow to vaporize in a cold engine; ((2) phase separation-—methanol hasy only limiteda solubility in gasoline, and the methanol-gasoline mixture may therefore separate into two layers, particularly if water is present; (3) materials problems--methanol will chemically attack certain plating compounds used in automobile fuel tanks; (4) toxicity--methanol is a toxic chemical, and measures would have to be taken to educate the public about its toxic properties if methanol were to be introduced into general use. Methanol has been discussed as a possible form for the low-cost movement of natural gas. The natural gas would be converted to methanol and shipped by pipeline or tanker. It has been suggested that this might be cheaper than moving natural gas in its original form, for example, from the North Slope of Alaska to the continental United States. POTENTIAL SUPPLY SOURCES OF METHANOL Coal. Of the nonpetroleum sources of methanol, the one closest to practical development is coal. The technology for obtaining methanol from coal is well known, and the nation's coal resources are ample to support obtaining significant quantities of methanol in this way. The original Reed and Lerner paper assumed that methanol would be obtained from coal. The adequacy of the supply of methanol from coal is shown in thee follwing approximate calculation. The United States consumes about 100 billion gallons of gasoline per year in private automobiles. Assume that 10% methanol were to be used, and that this consumption rate remained constant. Ten billion gallons of methanol would then be required. This is about 60 billion pounds, or 30 million tons of methanol that would be required. The efficiency of converting coal to methanol has been recently estimated by DOE at 79%. Therefore, in order to obtain 30 million tons of methanol, 38 million tons of coal per year, 6% of our present coal output would have to be converted to methanol to obtain enough to provide a 10% mixture for all American automotive needs. This would involved expanding methanol production in. this country by a factor of ten, which would require a considerable effort in terms of plant construction. The Department of Energy estimated in l979 that methanol from coal could be produced at 30 to 60 cents per gallon. some experts today believe that these estimates are unrealistically low. If methanol could be produced at this price, this would make methanol more than competitive with gasoline on a price basis (although the lower energy value per gallon of methanol, as compared to gasoline, is an important factor). The capital cost of construction of methanol plants would also be an important factor. DOE estimates that, to produce enough methanol to meet 8 to 9% of the gasoline demand, 20 coal conversion plants would have to be constructed, at a total cost of about $lO billion. More recent estimates have suggested that‘ the capital cost of a coal-to-methanol facility of this magnitude (500 million gallons per year capacity) would be on the order of $1 to $3 billion per plant. This would make the total cost of facilities for producing a nationwide gasohol mixture CRS- 4 IB74087 UPDATE-Ol/O5/82 from methanol perhaps $20 to $60 billion. Estimates for the cost of obtaining methanol fI'OITI WOOG or urban wastes are sketchy, .bUt fall iI'1 ‘Ch?’ same general price range as methanol from coal. A new concept involving methanol made from coal, called "methacoal," is now being proposed. Methacoal would consist of a slurry of coal particles suspended in methanol, which is made from coal. As the coal is in suspension, the methacoal mixture can be pumped through pipelines or shipped by tankers. It therefore represents a way to transport coal, iwithout using=5" the large quantities of water required by a coal slurry pipeline. Wood. Estimates here are more speculative than for coal, since wood-to-methanol conversion plants have not yet been built, and the amount of wood that can be produced per acre per year is a highly controversial figure. A recent estimate by DOE has a wood—to-methanol plant processing 1,480 tons per day of wood, and producing 50 _million gallons per year of methanol. (There are 6.59 pounds per gallon of methanol.) Converting these figures to pounds per year in both cases, one arrives at the ratio of 30.5% methanol produced for each pound of wood consumed. If one then assumes that an acre of forest land can produce 5 tons of wood per year (a DOE estimate, assuming good forest management techniques are used), then 460 'gallons‘ of methanol could be produced per acre of forest land. In order to obtain 10 billion gallons, then, roughly 21.7 million acres of forest would be required per ‘year. This is about 4% of the total national forest acreage. It would appear, then, that the demand for enough methanol to provide a 10% blend with automotive gasoline could be met from U.S. forest resources. ‘Such a large-scale use of wood for methanol might strain those resources, when added to the present requirements for paper, timber, anf other wood products. However, proper forest management (replacing the land thus "harvested") would help to alleviate this problem. Municipal Wastes. Estimates here are even more speculative than those for wood. A recent DOE estimate has a municipal solid waste (MSW)-to-methanol plant processing 600 tons per day of MSW, and producing l2.2 million gallons per year of methanol. This represents a ratio of 18.4% methanol produced to MSW consumed. This also represents 55.7 gallons of methanol per ton of MSW. In order to obtain 10 billion gallons, then, about l8O million tons of MSW would be required. This is slightly less than the projected national total of 200 million tons of MSW by l985. CONCLUSION It appears that methanol as an automotive fuel could make a significant contribution toward relieving the "energy crisis" and reducing this country's dependence upon foreign sources of petroleum. However, this is a tentative conclusion pending further analysis as regards technological problems and the economics of the processes by which methanol would be obtained from coal, wood, or urban wastes. If 10-15% of our gasoline requirements could, in fact, be replaced by methanol, without signficant increases in price or decreases in engine performance, this would be a valuable contribution to this Nation's energy independence. The Department of Energy states in its "Alcohol Fuels Policy Review" that in the long run, methanol "could be produced in much larger quantities than ethanol and should be less expensive." However, methanol production plants must be large to be economically attractive, and the difficulties involved in the siting and construction of such large plants will probably delay any CRS- 5 IB74087 UPDATE-Ol/O5/82 significant use of methanol until beyond l985, according to DOE, and beyond V1990, according to less optimistic sources. ETHANOL The idea of using ethanol as an automobile fuel is not a new one. During the l930s, the use of grain alcohol inta blend with gasoline as an automobile fuel was widespread in a number of countries around the world where petroleum was in short supply. During world war II, the disruption caused by the war led to gasoline shortages around the world, and many countries turned in desperation to various alternatives to gasoline. Not only alcohol, but other substances such as wood, charcoal, cow manure, and the like, were used in many areas. Germany,\which was particularly in need of fuel for its war machine, developed an entire industry for producing gasoline from coal. Within a few years after the end of .the war, practically all these substitute materials had been dropped in favor of gasoline produced from crude oil.’ The reason for this change was basically an economic one. Neither alcohol nor any of the other alternative fuels could compete with the flood of cheap, readily available crude oil that entered the world market at that time. The possibility of using grain alcohol as an automobile fuel was discussed periodically during the l950s and l960s, when the intent was to dispose of the enormous grain surpluses then existing in this manner. In recent years the oil shortage has once again spurred interest in ethanol as a fuel. However, during that time the idea appeared to suffer from serious flaws. The problems were: (I) the high price of fuel produced in this way, and (2) the immense quantities of grain that must be consumed to fill even a small portion of the energy needs currently provided by petroleum. Gasohol blends containing 10% ethanol and 90% gasoline have gone on sale at thousands of gasoline stations in the United States. The rate of consumption of alcohol fuel in the United States in 1980 was estimated at l2O million gallons, of which 62 million gallons were produced in the United States and 58 million gallons were imported. This is slightly more than 1% of the ll billion gallons that would be necessary for a 10% gasohol blend nationwide. Price. Until the economic dislocations caused by the oil price increases, there was no question that grain alcohol, as a fuel, was far more expensive than gasoline. The oil price rises have somewhat narrowed the gap between grain alcohol and petroleum products, but not enough to erase the advantage the oil-based products have. DOE estimates that ethanol could be produced from grain to sell at around $1.00 per gallon. This would make ethanol competitive with gasoline on a price-peregallon basis. Ethanol has only 2/3 the energy value per gallon that gasoline has. However, automotive miles per gallon depend on the combustion characteristics of the fuel as well as the energy value, and advocates of alcohol fuel claim that it burns more efficiently, thus compensating for its lower inherent lenergy value. This question must be resolved in order to obtain a cost comparison of ethanol with gasoline on the basis of dollars per automotive mile. CRS- 6 IB74087 UPDATE-Ol/O5/82 The capital cost of construction would have to be considered here, as with methanol, since only 7% of ethanol produced today in this country comes fro’ fermentation plants, with the remaining 93% now obtained from petrochemicals. Energy Cost. _ Another cost to be.considered mist the net energy qcost. Jqopponents. of "gasohol" claim that the energy required to produce it (growing the crops, operatiing the fermentation plants,, etc.) is greater than the energy obtainable from the alcohol once produced. Gasohol advocates seem to concede the point if the energy from the alcohol alone is considered, but contend that the additional energy obtainable by burning the stalks and other grain residues would make the "energy balance" positive. The opponents then counter that, if these products are to be burned rather than left on the land, additional fertilizer would have to be purchased so as not to deplete the soil, which would make the energy balance negative once again. The energy balance question is a complex one and appears to need further study. In its "Alcohol Fuels Policy Review" report dated June l979, DOE states the following with regard to energy balance: New ethanol conversion facilities can have much greater energy efficiency than existing facilities, which were built when energy costs were much lower than they are now. Indeed, a modern facility could have a clearly positive (though small) net energy balance even if all the fuel used were oil and gas, taking credit for the "free" solar energy stored in the raw materials. This is the most positive statement made thus far by a government agency with respect to the energy balance question. Supply. The following calculation illustrates the supply problem associated with the alcohol fuels. Nearly 110 billion gallons of gasoline are used in the United States annually. Assuming a 10% alcohol mixture, ll billion gallons of alcohol would then be required. At 2.55 gallons per bushel, 4.3 billion bushels of grain would be needed for this amount of alcohol. The total U.S. grain harvest is on the order of lo billion bushels. J Therefore, in order to provide a lo% contribution to the automotive fuel problem, the United States would have to use over 40% of its grain harvest. Putting it another way, all our grain harvest, if burned as fuel, would only fill about 25% of our automotive needs. Thus, even if the cost situation were to change dramatically, the supply problem would make the use of grain-derived ethanol impractical on a nationwide scale. However, ethanol from grain could be highly useful in grain-producing areas, and could become part of a nationwide strategy in which fuel would be produced from the biomass source most appropriate in each region, i.e., grain in the Midwest, sugar cane in Southern states and Hawaii, wood in upper New England and the Northwest, municipal wastes near large cities, and so on. The supply problem still exists even if idled lands are used for fuel CRS- 7 IB74087 UPDATE-Ol/O5/82 production purposes. This year, about 22 million acres are being idled under supply control programs. These acres might be expected to produce about, 900 million bushels of grain, which could be converted ~to about 2.3 billion gallons of alcohol. Therefore, using all the available surplus land to ,produce alcohol fuel would only add about another 2% of the national fuel supply to the 25% available from all of the existing grain harvest. The capability for obtaining alcohol fuels from sugar ’crops (sugars canei and sugar beets) in the United States is substantially less than “that for * obtaining alcohol fuels from grain. The national total for sugar produced in the United States in l977 was estimated at 6.26 million tons. The Department of Agriculture estimates that 164 gallons of alcohol could be obtained per ton of sugar produced. Therefore, if the entire sugar crop were used for this purpose, l,O27 million, or roughly 1 billion gallons of alcohol would be produced. This would only be enough to fill l% of the national automotive need. Another concern about supply was raised in March 1980, in a report by worldwatch Institute. In a study entitled "Food or Fuel: New Competition for the world's cropland," worldwatch raised the possibility that a large gasohol program would pull agricultural resources away from food production and into energy production. This action would raise grain prices on a worldwide basis, and would work particular hardships on Third World countries where malnutrition is a problem. Gasohol advocates have replied that all that is lost in alcohol production is the starch, and that the distillers' dried grains, which are the byproduct of the alcohol distillation process, are rich in protein and can be used as animal feed. Brazil The situation may perhaps be different in Brazil, which has begun an active program intended to obtain fuel from crops. Brazil has an enormous land area, most of which supports the growth of vegetation in great profusion. Also, as a developing country, its fuel needs are considerably less than those of the United States. Brazil has an estimated 8 million automobiles for a country of ll5 million people. By comparison, the United States has l5O million automobiles for 220 million people. The total automotive fuel consumption in Brazil is on the order of 4 billion gallons per year, while in the United States, it is llO billion gallons per year. Brazil has established a national policy of replacing gasoline with "home—grown" alcohol as an automative fuel to the maximum extent feasible. This decision was made by the Government in 1975 with the purpose of reducing the balance of payments deficit resulting from the need to import petroleum by taking advantage of Brazil's enormous land area and tropical climate to grow crops specifically for fuel purposes. Sugar cane is the energy-producing crop, as of now, although Brazil is also experimenting with manioc, a tropical root crop, for future use. The Brazilian Government has spent $2.5 billion on this effort, and has budgeted twice that amount for the next five years. The national goal of replacing 20% of Brazil's gasoline consumption with ethanol by 1980 has been net with alcohol production now running at 4 billion liters (1.05 billion gallons) per year. This amount is considered to be the maximum percentage of ethanol which can be used in existing automobiles without the need for engine CRS- 8 IB74087 UPDATE-Ol/O5/82 modification. A new goal has now been set, of increasing the alcohol production capacit" to l0.7 billion liters per year (2.82 billion gallons per year) by l985. This involves operating a major part of Brazil's automotive fleet on pure alcohol. In keeping with this goal, the Government has recently signed an agreement with Brazilian automobile manufacturers calling for the tproduction of 250,000 alcohol-powered vehicles a year over the next five years. pAnother 500,000 existing automobiles are to be converted to be able to run on pure~ alcohol. Press reports in late 1980 indicated a further surge in alcohol fuels activity in Brazil, spurred by the Iran—Iraq war and the resulting cutoff of oil imports from Iraq, Brazil's major supplier. Brazil was said to be in the midst of an "effort to convert its seven million cars from gasoline and gasohol to pure alcohol" (according to a New York Times article "Brazil's Shift to Alcohol Fuel," see REFERENCES). By mid-1982 it was planned that a million Brazilian automobiles would be running on pure alcohol. Volkswagen of Brazil, the leading auto maker, announced that 80% of its 1981 models would run on pure alcohol; and Fiat, Ford, and General Motors would turn out 60% pure alcohol-powered models. Alcohol and gasoline cars cost the same, and the government was encouraging the purchase of alcohol cars by such measures as maintaining the price of alcohol below that of gasoline, cutting road taxes for alcohol cars, and permitting alcohol to be sold on Saturdays while banning gasoline sales throughout the weekend. Conversions of gasoline engines to alcohol use were performed by government-certified mechanics at a cost of $250 each, according to the New York Times article. Reports in mid-l98l indicated a setback in the Brazilian alcohol fuels program. According to these reports, sales of alcohol-powered automobile. dropped from 40,000 in January 1981, to 12,000 in May, and only 5,000 in June. Reasons for the setback were said to include increases in the cost of alcohol, rumors of alcohol shortages, and poor automotive performance (including rapid engine corrosion, cold-weather starting problems, and poor mileage). The Brazilian government states that the drop in sales is the result of a general economic recession in that nation, and not because of consumer dissatisfaction with alcohol fuel. The government claims that illegal "backyard" conversions of gasoline vehicles to run on alcohol, which are improperly done, are the cause of the reported performance problems. The government intends to stand by its alcohol fuels program. In 1980, imports of alcohol fuel from Brazil began to have a significant impact on the United States. Brazilian imports rose to 7.7 million gallons in April l980 alone, compared with 2.7 million gallons in the first quarter of 1980, 2.5 million in all of 1979, and zero in 1978. The apparent reasons for this increase were a surplus of alcohol fuel in Brazil due to a slowdown in production of alcohol-powered cars there, coupled with a great demand for the fuel in the United States whichs could not be met immediately from domestic sources. This development has aroused concern among advocates of domestically produced alcohol fuel in the United States. The imported alcohol fuel benefits from the tax advantage which was intended to stimulate domestic alcohol fuel production, and the Brazilian fuel, made from sugar cane, is produced less expensively than American fuel made from corn. The National Alcohol Fuels Commission requested the Treasury Department tr examine methods of denying gasohol made with imported alcohol the benefits of gasohol's exemption from the Federal tax on gasoline. In its preliminary report, delivered in October 1980, the Treasury CRS~ 9 IB74087 UPDATE-Ol/O5/82 Department indicated its belief that no direct action should be taken to eliminate imported alcohol fuel from the American market. Treasury's findings were that imports were now trending down from their earlier high levels; that the domestic alcohol fuel industry had not been harmed; that in fact imported alcohol had been used to help build a distribution network at a time when not enough domestically produced alcohol was available to meet the need, and thus had helped the growth of the alcohol fuel industry; and that to levy a tariff on imported alcohol would violate the General Agreement yon»; Tariffs and Trade (GATT). The Congress disregarded this recommendation and took action to curb imports of alcohol fuel, as part of the budget reconciliation bill which was enacted in Dec. l980. A provision was included in this bill which establishes a tariff on imported alcohol of 10 cents per gallon in l98l, 20 cents in 1982, and 40 cents thereafter. The 40 cent tariff, when in effect, will nullify the tax advantage enjoyed by alcohol fuel used in gasohol under the Energy Tax Act and the Windfall Profit Tax Act. It was the consensus of the Congress that, despite the considerations mentioned by the Treasury Department, energy policy considerations should weigh against the United States subsidizing an energy source imported from another nation. U.S. Production Capacity During the year l980, domestically produced ethanol from the four major U.S. manufacturers -— Archer Daniels Midland, of Decatur and Peoria, Illinois; Midwest Solvents, of Atchison, Kansas and Pekin, Illinois; Georgia Pacific, of Bellington, Washington; and Milbrew, of Juneau, Wisconsin -- totalled 8l million gallons. Of this total, the Bureau of Alcohol, Tobacco, and Firearms (BATF) recorded 62 million gallons of denatured alcohol leaving xthe facilities of these producers. The 62 million gallon figure is the best estimate of the total of ethanol produced for fuel in the United States in l980, with the remaining l9 million gallons presumably not denatured and used for beverage purposes. In its "Alcohol Fuels Policy Review," the Department of Energy declares that ethanol production is likely to increase to 300 million gallons per year by 1982. This is equivalent to 20,000 barrels per day. Using the l0% gasohol blend, 3 billion gallons of gasohol would then be available. This would be roughly 3% of the total national gasoline consumption. By l985, biomass alcohol fuel production could reach 500 to 600 million gallons per year (according to DOE in the same study). This would provide sufficient gasohol for 5 to 6% of the national gasoline total, and would .substitute for 30,000 to 40,000 barrels per day of petroleum. The Davy McKee Corporation, under contract to the National Alcohol Fuels Commission, estimated the U.S. national potential for converting existing plants to the production of fuel alcohol. Their study indicated that, if all available excess or idle capacity in the relevant industries were to be converted to alcohol fuel production, approximately 581 million gallons per year of fuel alcohol could be in production by December of 1985. The estimated construction cost would be $755 million. The largest potential source of alcohol fuels capacity would be the breweries, which could provide 215 million gallons per year by 1985. Other important facilities would be distilleries, sugar beet plants, and corn wet milling facilities, which have potential capacities of 95, l00, and 93 million gallons per year. The Energy Security Act establishes as national goals production rates for CRS-lO »IB74087 UPDATE-Ol/O5/82 alcohol fuel of 920 million gallons per year by the end of 1982, and lO% of gasoline consumption (ll billion gallons per year at current rates) by l99O4 These are ambitious goals, in excess of earlier estimates, and reaching then will entail a major national effort. GASOHOL AND THE BATF Ethanol, of course, is well known as the source of intoxicating beverages.s As such, its manufacture is tightly regulated by the Department of the Treasury's Bureau of Alcohol, Tobacco, and Firearms (BATF). The taxation of beverage alcohol returns $5.5 billion per year in revenue to the Federal Government, and producing beverage alcohol without obtaining the appropriate permits and paying the associated taxes is a felony. The possibility of large quantities of ethyl alcohol being produced for use as an automotive fuel, therefore, has understandably aroused the concern of the BATF. They do not wish to put unnecessary obstacles in the way of developing a possible energy source; but on the other hand, the BATF is concerned that a twenty-fold increase in the production of alcohol (which would be necessary to have a 10% gasohol blend nationwide) would increase the possibilities for illegal diversion of alcohol to make untaxed "moonshine" liquor. Alcohol when mixed with gasoline is of course not potable. It is therefore considered to be "denatured," with gasoline as the denaturant. However, according to BATF, "Gasoline per se is not a good denaturant," since the alcohol and gasoline can readily be separated by the addition of water to the mixture. (A "good" denaturant is one which cannot be separated from the alcohol without great difficulty and expense. BATF calls alcohol ,treated with such a denaturant "completely denatured," while alcohol treated with a less effective substance is "specially denatured".) i BATF formed a special task force for the purpose of) studying possible amendments to its regulations for alcohol fuel manufacturing facilities. Their conclusion was that many of the strict regulations which apply to producers of alcoholic beverages and industrial alcohol can be waived for the manufacture of gasohol, to encourage gasohol development. The simplifying procedural steps they advocated were incorporated into Public Law 96-223, the Crude Oil Windfall Profit Tax Act of 1980. GASOHOL AND AIR POLLUTION While gasohol advocates claim that alcohol fuels are less polluting than gasoline, these claims have yet to be proven by an impartial source. Data, thus far, is not totally conclusive, but the Department of Energy sees no significant advantage or disadvantage for-gasohol as opposed to gasoline. Nox (nitrogen oxide) emissions are probably reduced by using alcohol fuels, while CO(carbon monoxide) and unburned hydrocarbons are unchanged. There is a possibility that unburned alcohol and aldehydes would be a new pollution problem unique to alcohol combustion; A particular problem regarding gasohol as a fuel was raised by the Environmental Protection Agency. EPA believed that any use of alcohol fuels after Sept. 15, l978, might violate section 2ll(f) of the Clean Air Act, as amended by the Congress in 1977. The section prohibits the use of fuels or fuel additives beyond that date which are not similar to the fuels used in CRS-ll IB74087 UPDATE-Ol/O5/82 the certification of the vehicles under EPA's emissions control program. It may be waived by the EPA Administrator upon finding that the new fuel will not contribute to the failure of vehicles to meet emissions standards. In December l978, EPA did waive the application of this law, stating that the very small amount of gasohol now being sold could not pose a serious pollution problem at this time. The State of California has concluded that gasohol tends to, increase air pollution, and should only be used under special circumstances in that State. The State Energy Commission's findings, following testing, were that gasohol does not increase exhaust emissions, but does increase evaporative emissions from the carburetor after the vehicle has stopped. The Commission believes‘ that pure alcohol would be less of a pollution problem than the gasohol, blend. For the time being, the State's Air Resources Board will not impose any restrictions on the use of gasohol, since the fuel is relatively little used. However, if its use becomes more widespread, the ARB may take some action to require new evaporative emission standards. ALCOHOL FUELS AND THE REAGAN ADMINISTRATION According to its Feb. l8, l98l, budget submission, the Reagan Administration intended to terminate the entire program of feasibility studies, cooperative agreements, and loan guarantees for alcohol fuels and biomass energy development which was to have been operated by the Department of Energy. The similar program operated by the Department of Agriculture, oriented more toward small, on-the-farm energy projects, would have been severely cut back but not completely terminated. The Administration stated that the cutback in the DOE program is "part of the general effort to adopt market principles to achieve national energy goals," and the USDA cutback is "part of a general effort to reduce dependence on the Federal Government as a supplier of credit." The provision in the tax code by which fuel containing 10% or more of alcohol is exempted from the 4 cent per gallon Federal excise tax on gasoline in being left intact in present Reagan Administration plans. Earlier, press reports and rumors had suggested that this exemption might be repealed. Alcohol fuel advocates claim that the Administration's cutbacks would be a mistake. They call attention to the Nation’s continued dependence on foreign countries for petroleum, and point out that alcohol is the only alternative automotive fuel commercially available today. The Administration's position, on the other hand, is that alcohol fuels represent an existing technology, not in need of extensive research and development, and that Government support for such a program is inappropriate. They have not publicly stated their reasons for Lretaining the excise tax exemption for alcohol fuels. However, the Administration may regard this as a concession to alcohol fuel manufacturers and distributors who have expanded operations because of their expectations that this tax advantage would continue to exist. ALCOHOL FUELS BUDGET AND RROPOSED RESCISSIONS The Reagan Administration proposed the rescission of over a billion dollars in funding for loan programs, most of it under provisions of the Energy Security Act. A separate package of loans under the Agriculture CRS-l2 IB74087 UPDATE-Ol/O5/82 Department's "Business and Industry" program, temporarily frozen because of allegations of irregular procedure on USDA's part, was not rescinded; thesl loans were considered on a case-by—case basis, and most of them wer subsequently awarded. The budget for DOE's alcohol fuels research and development program was sharply cut. The following table shows the budget for FY81 and FY82 for alcohol"fuels, as proposed by the Carter and Reagan Administrations. ALCOHOL FUELS PROGRAM--DEPARTMENTS OF (BA in millions) DOE R&D USDA R&D DOE Loans under ESA DOE Loans under PL 96-126 USDA Loans under BSA USDA Loans under FMHA TOTAL (l) Funding under the Energy Security Act and under P.L. would be rescinded under the Reagan $20 million of the $525 million appropriated for USDA would remain. (2) Loans for alcohol fuel purposes under the Industrial Loan Program" appropriated earlier, initiative. CRS-l3 Carter FY81 20.9 ENERGY AND AGRICULTURE Reagan FY81 18.0 4.4 -525(1) —22o(1) -505(1) 342(2) ~885.6 IB74087 carter FY82 32.6 6.2 [O 38.8 UPDATE-Ol/O5/82 D Reagan FY82‘ l0.0 |o l6.2 I "Business and of USDA's Farmers Home Administration. CRS-l4 IB74087 UPDATE-Ol/O5/82 The Congress took final action on the proposed rescissions in June l98? as part of its action on the comprehensive bill providing supplementa_ appropriations and rescissions for FY81 (P.L. 97-12). The Congress rescinded 58% of the funds proposed for rescission, and retained 42%, as shown in the following table: CONGRESSIONAL ACTION ON ALCOHbL FUELS RESCISSIONS Proposed for Rescission Rescinded Retained DOE Loans under ESA % and 96-126 740 % 469.52 270.5 USDA Loans under ESA ‘S05 255 250 Total ‘ 1,245 724.5 520.5 Of the loan program funding retained by the Congress, the $270.5 million under DOE's jurisdiction was "leveraged" three times, i.e. this funding could be used to guarantee as much as $811.5 million in loans. On Aug. 14, 1981, the DOE awarded loan guarantees to eleven companies for projects that would be capable of producing 365 million gallons of ethanol annually, with the total in loan guarantee funding for these projects at $635 million. Thus most of the funding appropriated by the Congress for this purpose has now been obligated. The following table lists the awards made: ' DOE Funding Awards for Alcohol Fuel Projects -- Company Agrifuelsbp pp Refining Corp. Circle Energy Corp. D.w. Small & SOHS Eastern Ethanol Energy Con- version Corp. Gulf Coast Re- sources, Inc. Michigan Sugar Co. Minnesota AICO‘ hOl Producers New Energy Corp. Tennol, Inc. U.S. Ethanol Corp. Total capacity and funding, (Note: CRS-l5 Headquarters New lberia, Ea. Garden City, Kan. Ellsworth, Maine Greenville, S.C. ADGEFSOD, S.C. Houston, Tex. Saginaw, Mich. Minneapolis, Minn. South Bend, Ind. Nashville, Tenn. Englewood, Colo. Federal funding would guarantee 90% ll projects IB74087 Capacity, Plant Location m gals./yr. New Iberia, La.‘ 55 35“ Garden City, Kan. l5 Auburn, Maine 25 Lane, S.C. 8 20 Miley, S.C. 20 Keokuk, Iowa 20 Croswell, Mich. 20 Mankato, Minn. 15 South Bend, Ind. 50 Jasper, Tenn. 25 East Baton Rouge, La. l2O 365 Of the funding, total of $635.2 million in federally guaranteed funds.) August 1981 or a UPDATE-Ol/O5/82 Funding, millions ‘37’* 22 75 45 54.6 58.8 34.4 36 123 60 l6O 705.8 CRS-16 IB74087 UPDATE-Ol/O5/82 The funding allocated to USDA for alcohol fuels loans is in dispute. The Office of Management and Budget originally announced that the $250 millio earmarked for this purpose will not be spent. OMB did not ask Congress for a second rescission to cover this funding, under the theory that loan guarantees are not covered by the Budget Impoundment and Control Act, and hence congressional action was not necessarysq 7 1 9. v T - The congress emphasized its intent that USDA alcohol fuels loans "be "madé5“ by including an amendment to the first continuing resolution for FY82 (P.L. 97-51) directing that USDA allocate $250 million in alcohol fuels loan guarantees for FY82. Recent indications are that the Administration will comply and the funds will be used. As shown by the earlier table, the alcohol fuels R&D program within DOE was cut from $32.6 million in the Carter budget for FY82 to $10 million in the Reagan budget, which was enacted into law at that level. Press reports indicate that the Administration will propose $3 million for this purpose in FY83, and will propose that the program be terminated at the end of FY83. FEDERAL STUDIES ON ALCOHOL FUELS The U.s. Department of Energy began its more extensive look at the alcohol fuels issue with the publication of its "Position Paper on Alcohol Fuels", dated March 1978. This paper summarized (in 5 pages) the state of knowledge with regard to alcohol fuels and DOE's plans for further investigation of the subject. Shortly thereafter, DOE published a more detailed document entitlet "Alcohol Fuels Program Plan." This paper discussed the alcohol fuels situation in more detail, and included plans for a series of studies intended to enable a decision on commercialization of alcohol fuels to be made. In June 1979, DOE concluded its l-year "Alcohol Fuels Policy Review"% and published its report. The results of this comprehensive study‘ are referred to in a number of locations elsewhere in this Issue Brief. A controversy arose within DOE in May and June, 1980, over a report by the Gasohol Study Group of DOE's Energy Research Advisory Board. The report questioned the contribution that ethanol from grain could make to energy supplies, and favored the production of methanol from coal. The director of DOE's alcohol fuels program attacked the report and charged that two members of the study group were biased because of ties to Mobil Oil, which is actively involved in the coal—to-methanol process development. Secretary of Energy Duncan expressed his confidence in the integrity and technical expertise of the members of the study group, but did not indicate that any change in DOE's policies would be made as a result of its findings. Two congressional agencies, the Office of Technology Assessment and the General Accounting Office, have published major studies on alcohol fuels. OTA's study, entitled "Gasohol: A Technical Memorandum", was published in September, 1979. The report was cautiously optimistic as to the potential of gasohol, addressing such questions as energy balance, production capacity and feedstock supplies. The report addresses the question of "food V. fuel". declaring that 1 to 2 billion gallons of ethanol per year could be produced from agricultural crops without significant impact, but higher production levels could lead to inflationary trends in food and feed markets. CRS-l7 IB74087 UPDATE—Ol/O5/82 The GAO study, entitled "Potential of Ethanol as a Motor Vehicle Fuel", ‘June 3, l980) declares that operating the Nation's automobile fleet on a lO% gasohol blend by the year 2000 appears feasible- It also. states that a national gasohol program could cut U.S. oil imports by over $8 billion per year. As for "food vs. fuel", the report states that up to 5 billion gallons of ethanol could be produced from agriculturalt sources~-without ‘significant aw disruption, and even greater levels of ethanol production could be yachieved from conversion of cellulose. According to the study, DOE is taking steps to pull together previously fragmented efforts, and the oil industry's position is characterized as one of reluctant acceptance. ’ The Surface Transportation Assistance Act of 1978, (H.R. ll733, P.L. 95-599), called for a l9-member National Alcohol Fuels Commission to conduct a l-year study of the alcohol fuels question. The Commission began its activities in the summer of l979. Senator Birch Bayh was selected as its chairman, and Representative Robert A. Roe as its vice chairman. The Commission subsequently received a 6-month extension beyond its original l-year charter. It released its final report entitled VFuel Alcohol: An Energy Alternative for the l980s" on Feb. 2, l98l, and was expected to end its activities shortly thereafter. ° In its final report, the Commission advocated "a major national move toward alcohol fuels in transportation uses," with the goal of having a large number of vehicles operating on pure alcohol. ‘According to the Commission, feedstock supplies and production capacity are believed to be sufficient to support a large alcohol fuel industry, and Brazil has shown that operating a sizable portion of the automobile fleet on pure alcohol- is feasible. In order to achieve this goal, the Commission recommends a program of Federal purchase guarantees to encourage automakers to build vehicles designed to run on pure alcohol. The vehicles would be used in public and private fleet operations as a first step, since the central location for fueling typical of fleet operations would simplify the introduction of a new fuel. The Commission made a number of other recommendations, including: (1) priority consideration to methanol from coal projects by the Synthetic Fuels Corporation, (2) full implementation of those portions of the Energy Security Act and the Windfall Profit Tax Act relating to alcohol fuels which have not yet been made effective, (3) a high priority cellulose to ethanol demonstration program with a target date of l985 for commercial operation, (4) exemptions for alcohol fuels from some of the provisions of the Clean Air Act, (5) measuring motor vehicle economy in miles per million BTU instead of miles per gallon, a rating system which would be advantageous to alcohol E fuels, and (6) finding alternative means for financing the Highway Trust Fund, since the exemption from the Federal excise tax for alcohol fuels would be harmful to that fund if the sale of these fuels continues to increase. The Commission's recommendations, coming in early l98l, were diametrically opposed to the Reagan Administration plan for ending Federal involvement in the development and commercialization of alcohol fuels. The Commission's findings may provide a rallying point for congressional supporters of alcohol fuels, who may plan to fight in the Congress to keep a large-scale Federal alcohol fuels program in existence. 95TH CONGRESS LEGISLATION The Energy Tax Act (P.L. 95-618) includes a portion which exempts CRS—18 IB74087 UPDATE-01/05/82 automotive fuels composed of at least 10% alcohol (not derived from petroleum or coal) from the Federal excise tax of 4 cents per gallon. This provisic amounts to a tax advantage of 40 cents per gallon for alcohol used i- gasohol. It is generally believed that this tax advantage launched the "gasohol boom" that began in 1979. The tax benefit under this law would have expired in 1984, but it has been extended to 1992 by a provision of the windfall profits tax bill enacted in l980,__W. The Food and Agriculture Act of 1977 (P.L. 954113) includes provisions for research grants and pilot projects on "the production and marketing of alcohols and industrial hydrocarbons from agricultural commodities and forest products." For the research grants, a total of $24 million was authorized over a 5-year period, with $3 million allocated for FY78. For the pilot projects, four were authorized, with the Department of Agriculture guaranteeing loans up to $15 million for each of the four projects, or $60 million in all. Public Law 95-238, the DOE authorization bill for FY78, provided a loan guarantee program for producing alternative fuels from coal, oil shale, biomass, and other domestic resources. This legislation remained inactive for some time, due to the lack of implementing actions. In P.L. 96-126, the Interior Department appropriations bill for FY80 (which includes portions of DOE's funding), an Energy Security Reserve fund was created, and DOE was provided with $2.2 billion from this reserve for the development of synfuels, including alcohol fuels. DOE is now taking steps to implement this legislation. LEGISLATION ENACTED BY THE 96th CONGRESS The Energy Security Act, S. 932, was signed into law on June 30, 1980 as P.L. 965294. Title II of this Act is called the "Biomass Energy and Alcohol Fuels Act of 1980". It includes the authorization of $1.45 billion in funds from the Energy Security Reserve. Of this funding, $600 million is allotted to the Department of Agriculture for biomass energy programs, with up to one-third of this amount earmarked for small-scale biomass ‘energy projects. Another $600 million is allotted to the Department of Energy for biomass energy programs, with $500 million of this funding earmarked for DOE's Office of Alcohol Fuels. The remaining $250 million is for a municipal waste biomass energy program, to be administered by DOE. $1270 million of this amount was appropriated in P.L. 96-304, the supplemental appropriations bill enacted shortly after passage of the Energy Security Act (on July 8, 1980). Of this funding. $525 million was allotted to USDA, $525 million to DOE for biomass energy programs, and $220 million to DOE for the municipal waste energy program. Within 6 months after enactment of this legislation, USDA and DOE jointly are to prepare and transmit to the President and the Congress a plan for achieving a production level of at least 60,000 barrels per day (920 million gallons per year) by the end of 1982. By Jan. 1, 1982, this plan is to be extended to 1990, with the goal of achieving a level of alcohol production equal to at least 10% of gasoline consumption by 1990 (at current consumption levels, this would be 11 billion gallons per year). As for program responsibility, USDA would have jurisdiction over alcohol production facilities with a capacity of less than 15 million gallons. DOE CRS-19 IB74087 UPDATE-Ol/O5/82 would oversee larger facilities. The two agencies would share jurisdiction over large alcohol production facilities which use forest products or the products of agricultural cooperatives as feedstock. The funding in this program is to be available for insured loans, loan guarantees, price guarantees, and purchase agreements for biomass energy projects. Priorities are to be given to projects that use a primary.,fuelyi other than petroleum or natural gas in fuel production, and to projects_ that _ apply new technologies to biomass fuel production. iFunding for at project”‘ will only be available if the agency concerned finds that the BTU content of the fuels used in the facility in question does not exceed the BTU content of the fuels produced, taking into account the displacement of petroleum products which might result from the use of this fuel. Also, funding will only be available if the agency finds that the process will extract the protein content of the feedstock for use as human food or animal feed (if this is practicable). No funding is to be available after Sept. 30, 1984. The bill establishes an Office of Alcohol Fuels within the Department of Energy, which will carry out DOE's functions relating to alcohol fuels. The director of this office will be directly responsible to the Secretary of Energy, and will be appointed by the President and confirmed by the Senate. The funding requests for this office will be a separate "line item" in DOE's annual budget requests. The bill provides for expanding several existing USDA cooperative extension and teaching programs to include measures to stimulate research on the use of agricultural commodities for making alcohol. USDA is to allow set-aside acreage, which is diverted from production under the agriculture programs, to be used for the production of commodities to be converted to fuel. The President is directed to require, by executive order, that Federal motor vehicles shall use gasohol where it is available at reasonable prices and in reasonable quantities. Exceptions to this requirement may be provided where necessary. DOE, in consultation with the Department of Transportation (DOT), is to report within 9 months after enactment of this bill on the use of alcohol as a fuel in motor vehicles, both as a blend with gasoline and as a pure fuel. The conference report specifies that the Environmental Protection Agency (EPA) shall be consulted on the environmental effects of alcohol fuel in the preparation of this report. Alcohol fuel production will be considered a priority use under the Natural Gas Policy Act, so that natural gas will be allocated for alcohol fuel production in times of shortage. The President is authorized to allocate crude oil to refineries engaged in the production of gasoline to be mixed with alcohol, and to allocate gasoline to marketers of gasohol, if he finds that alcohol is not being used as a fuel because not enough gasoline is available for blending into gasohol. In making these allocations, he is directed to seek to avoid disruption of oil and gasoline markets and to avoid causing unreasonable increases in the price of alcohol. The conference report specifies that, for the purposes of this section, "alcohol" includes any alcohol produced from any source, e.g., it includes methanol produced from coal. CRS-20 IB74087 UPDATE-Ol/O5/82 Early steps taken to implement the Energy Security Act include: (l) creation of the Office of Alcohol Fuels within the Department of Energy, (2) commencement of the study on motor vehicle usage mandated by the Act, (3 allocation of funds, first for feasibility studies and cooperative agreements under P.L. 96-l26 authorization, then under the authority of the Energy Security Act and supplemental appropriations legislation, and (4) issuance in January l98l of the executive order directing Federal motor vehicles» to ruse -2 gasohol where this is feasible. (For more_details on Energy Security _Act,f_ (funding, see IB 79245,'Synthetic Fuels Corporation and Technology.)’ 2‘ ”"**’“ The windfall profits tax bill (H.R. 3919) was signed into law (P.L. 96-223) on Apr. 2, 1980. This legislation includes extensive provisions regarding alcohol fuels. These provisions include: (l) extension of the 4 cents per gallon Federal excise tax exemption for gasohol through the year l992 (it would otherwise end in l984); (2) a tax credit of 40 cents per gallon for alcohol fuels of above l9O proof (95% alcohol), and 30 cents per gallon for alcohol fuels of between l5O and 190 proof (75% to 95% alcohol); (3) simplification of the BATF regulations as they apply to alcohol fuels productionr (4) a specification that a person purchasing gasoline for use in production of gasohol may obtain a refundable income tax credit in an amount equal to the Federal excise tax paid on the gasoline; (5) a requirement that the Treasury Department recommend methods for denying these tax advantages to fuels containing imported alcohol, within 180 days after the date of enactment; (6) a requirement for an annual report by the Secretary of Energy on alcohol fuels, required each year from l98l to l992; and (7) an extension of the lO% investment credit, which would have expired at the end of l982, through l985, but only if the alcohol-producing equipment uses a primary energy source other than oil or natural gas. The Defense Department authorization bill (P.L. 96-107) includes a provision which directs DOD to buy and use gasohol in its vehicles to the maximum extent feasible. The Gasohol Competition Act, P.L. 96-493, signed into law on Dec. 2, 1980, is intended to prevent the oil companies from discriminating against or unreasonably limiting the sale of gasohol or other synthetic motor fuels. The budget reconciliation bill, signed into law on Dec. 5, l980, as P.L. 96-499, includes a provision which establishes a tariff on imported alcohol of lo cents per gallon in l98l, 20 cents in l982, and 40 cents thereafter. The purpose of the tariff is to offset the 40 cents per gallon subsidy on alcohol fuel provided by the tax laws, which applies to imported as well as domestic alcohol. In enacting this provision, Congress was reacting to the substantial flow of imported alcohol from Brazilh during l980. Despite Treasury Department advice -to the contrary (based on overall trade considerations), it was the judgment of the Congress that this nation should not subsidize an energy source imported from another country. LEGISLATION H.R. 493 (Roe) Authorizes facilities for converting garbage and solid wastes to alcohol for fuel. Introduced Jan. 5, l98l; referred to Committee on Science and Technology. CRS-21 fl IB74087 UPDATE-O1/O5/82 H.R. 496 (Roe) Amends the Clean Air Act relative to alcohol fuels. Introduced Jan. 5, l98l; referred to Committee on Energy and Commerce. H-R. l46O (Whitehurst) Provides for amortization of methanol production facilities. Introduced Jan. 28, l98l; referred to Committee on Ways and Means. H.R. 1507 (Petri) Repeals the tax on manufacture of alcohol "stills". Introduced Jan. 29, l98l; referred to Committee on Ways and Means. H.R. l989 (Frenzel) Repeals the duty on imports of alcohol fuel. Introduced Feb. 23, 1981; referred to Committee on Ways and Means. H.R. 2246 (Bedell) ‘Promotes the use of the byproducts from the alcohol distillation process. Introduced Mar. 3, l98l; referred to Committees on Agriculture and Foreign Affairs. H.R. 2317 (Mottl) Repeals the duty on imports of alcohol fuel. Introduced Mar. 4, l98l; referred to Committee on Ways and Means. H.R. 2348 (Glickman) Amends the fuel economy law to credit nonpetroleum fuels. H.R. 4321 (Bedell) Directs the Federal Government to acquire alcohol fueled vehicles. \Introduced July 29, 1981; referred to Committee on Government Operations. S. 328 (Percy) Repeals the tax on manufacture of alcohol "stills." Introduced Jan. 29, l98l; referred to Committee on Finance. S. 876 (Baucus) Encourages use of protein byproducts. Introduced Apr. 3, 1981; referred to Committee on Agriculture. S. ll9O (Lang) Provides tax credit for fuel from biomass. Introduced May 14, l98l; referred to Committee on Finance. A S. 1843 (Dodd) Repeals the duty on imports of alcohol fuel. CRS-22_ IB74087 UPDATE-O1/O5/82 Introduced Nov. 12, 1981; referred to Committee on Finance. S. l952 Directs USDA to sell surplus grain for alcohol use. referred to Committee on_Agriculture.g ‘ ~ l98l7 HEARINGS U.S. REPORTS (Zorinsky) Introduced Dec. Committee on Agriculture. Subcommittees on Conservation and Credit, Department Investigations, Oversight, and Research, and Livestock and Grains. National fuel alcohol and farm commodity production act of 1979. Hearings, 96th Congress, lst session, on H.R. 3905. May 15 and 16, 1979. Washington, U.S. Govt. Print. Off., 1979. 407 p. Congress. HOUSE. Congress. House. Committee on Science and Technology. Subcommittee on Advanced Energy Technologies and Energy Conservation Research, Development, and Demonstration. Alcohol fuels. Hearings, 95th Congress, 2d session. No. 101. July 11, 12, and 13, 1978. Washington, U.S. Govt. Print. Off., 1978. 705 p. Congress. House. Committee on Science and Technology. Subcommittee on Energy Development and Applications. Oversight: Alcohol fuel options and Federal policies. Hearings, 96th Congress, lst session. May 4, June 12, Washington, U.S. Govt. Print. Off., 1979. 292 p. 1979. Committees on Science and Technology and on Alcohol fuels. Hearing, 96th 1980, 105 p. House. (Joint hearing). Oct. 2, Congress. Agriculture. Congress, 2d session. Committee on Appropriations. Alcohol 95th Congress, 2d session. U.S. GOVt. Print. Off., Congress. Senate. fuels. Special hearing, Jan. 31, 1978. Washington, 1978. 706 p. Committee on Governmental Affairs. Alcohol fuels. Hearing, 12, 1980. 86 p. Congress. Senate. Subcommittee on Investigations. 96th Congress, 2d session. Aug. AND CONGRESSIONAL DOCUMENTS Congress. House. Committee on Science and Technology. Subcommittee on Energy Development and Applications. Venezuela and Brazil visit--Jan. 13-21, 1980. Washington. U.S. Govt. Print. Off., 1980. 64 p. At head of title: Committee print. 14, cns-23 IB74087 UPDATE-01/O5/82 \DDITIONAL REFERENCE SOURCES Alcohol: A Brazilian answer to the energy crisis. Science magazine, V. 195, Feb. 11, 1977. p. 564-566. Alcohol fuels: an annotated bibliography., National Center for Appropriate Technology. Butte, Montana, 1979. 8 p. Alcohol fuels and ATP. ATF fact sheet #79-56, July 27, 1979. Alcohols and motor fuels: the promises and the problems. Paper published by Chevron Research Company, Dec. 15, 1977. 7gp. The Brazilian experiment. Mears, Leon G. Environment, v. 20, no. 10, Dec. 1978: 17-20. Brazil's CPI shifts from oil to alcohol. Chemical Week, Nov. 28, 1979. 49-50. Brazil's shift to alcohol as fuel. New York Times. Oct. 13, l980:Dl. Brown, Lester R. Food or fuel: new competition for the world's cropland. Worldwatch Paper 35. Worldwatch Institute, Washington, D.C., March 1980. 44 p. O The Energy daily. Washington, D.C., Feb. 19, 1980. 1979 Legislative review--96th congress, first session. Report by the U.S. National Alcohol Fuels Commission. Washington, D.C., January 1980, 17 p. Fuel from farms: a guide to small scale ethanol production. Solar Energy Information Data Bank, Solar Energy Research Institute, operated for the U.S. Department of Energy by the Midwest Research Institute. February 1980, 89 p., plus appendices. Report no. SERI/SP-451-519. Gasohol: does it or doesn't it produce positive net energy? Chambers, R.S. et al. Science, Nov. 16, 1979: 789-795. Gasohol production capacity by Migdon R. Segal. Report of the Congressional Research Service, Library of Congress. Jan 15, 1980. 6 p. Making the product on a small scale. Gasohol U.S.A., June 1979, pp. 14-17. Mother's Wood-burning Still. The Mother earth news, July-August, 1979: 76-80. Reed, T.B., and R. M. Lerner. Methanol: a versatile fuel for immediate use. Science magazine, v. 182, Dec. 28, 1973. cns-24 IB74087 UPDATE-O1/O5/82 1299-1304. Congress. Office of Technology Assessment. Gasohol: a technical memorandum. Washington, Sept., 1979, 71 p. Department of Energy. Assistant Secretary for Policy Evaluation.p The report of the Alcohol Fuels Policy Review. Washington, June 1979. 119 p. Federal financial aid for alternative energy sources. Fact sheet, August 1979. Office of the Under Secretary, Task Force on Alcohol Fuels. Alcohol fuels program plan. March 1978, various pagings. Washington, Department of Energy position paper on alcohol fuels. Washington, March 1978. 5 p. Department of the Treasury. Bureau of Alcohol, Tobacco, and Firearms. Ethylalcohol for fuel use. 1978 ATF P 5000.1 (9-78) General Accounting Office. Potential of ethanol as a motor vehicle fuel. Washington, June 3, 1980, 28 p. Library of Congress. Congressional Research Service. The alcohol fuels: a study of technical and supply factors by Migdon R. Segal et al. 1980. Washington, 1980. 189 p. Multilith 80-123 SPR July 18, Energy from solid wastes and bioconversion, by Paul Rothberg and Migdon Segal. (continuously updated) Issue Brief 74064 Fact book on non-conventional energy technologies. Prepared for a seminar energy technologies: policies and problems. 1979. Washington, 1979. 198 p. (Rept. no. on new Feb. 79-47 21, (SPR) National Alcohol Fuels Commission. Alcohol fuels and the Energy security Act. August 1980., 44 p. alcohol fuels provisions April 1980. I8 p. Alcohol fuels tax incentives; a summary: Of the Crude Oil Windfall Profit Tax Act. Legislative compendium: alcohol fuels. Washington, Feb. 27, 1980. (Prepared by Schnittker August 1980, 119 p. farm and fuel issues. Washington, D.C.). .Ethano1: Associates, Federal funding for 7 alcohol production development as of February 1980. Washington, February 1980, 10 p. What CRS-25 IB74087 UPDATE—Ol/O5/82 an energy l98l, Fuel alcohol: February, National Alcohol Fuels Commission. alternative for the l980's. (Final report). l46 p. report and analysis of plant conversion potential production. (Prepared by Davy McKee Corporation, September l980, l23 p. Fuel alcohol: to fuel alcohol Chicago, Illinois). State initiatives on alcohol fuels; a state-by—state compendium of laws, regulations, and other activities involving alcohol fuels. August 1980, 99 p. precautions you need to take when handling gasohol. National petroleum news, March l980: 58, 62.