Mexico’s Supreme Court blocks the use of higher ethanol levels in gasoline

The Court’s decision follows a modification of a gasoline regulation by Mexico’s Energy Regulatory Commission which sought to allow up to 10% ethanol in gasoline sales nationwide

Mexico’s Supreme Court blocks the use of higher ethanol levels in gasoline
The use of ethanol would reduced the cost of gas – Photo: Alejandra Leyva/EL UNIVERSAL
English 18/01/2020 12:06 Newsroom & Agencies Mexico City David Alire García, Sharay Angulo, Cynthia Osterman & Leslie Adler/REUTERS & Diana Lastiri/EL UNIVERSAL Actualizada 12:32

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On Wednesday, Mexico’s Supreme Court ruled against the modification of a fuel rule that would have allowed higher ethanol content in gasoline, similar to content rules in the United States, arguing that regulators exceeded their authority.

The court’s decision follows a three-year-old modification of a gasoline regulation by Mexico’s Energy Regulatory Commission, or CRE, which sought to allow up to 10% ethanol in gasoline sales nationwide, excluding in the country’s three biggest cities, where air pollution is a long-standing concern.

The pre-existing fuel rule allows a maximum of 5.8% ethanol content.

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Backers of the modification, including U.S. ethanol exporters, argued it would result in cleaner air and that the alternative additive MTBE, which is also used to oxygenate fuels, has been known to contaminate underground water supplies.

MTBE is banned in most of the United States, and besides national oil company Pemex, which produces the additive, other producers like Rotterdam-based LyondellBasell have sought to protect their market share in Mexico.

Both Pemex and LynondellBasell did not immediately respond to requests for comment on the ruling.

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The court described the CRE’s modified fuel rule as “unilateral,” called for a more rigorous science-based evaluation of higher ethanol content and even cited the risk of more air pollution under the regulation.

Kenneth Smith, a former Mexican trade negotiator, said the CRE can and should try again to craft a nationwide 10% ethanol rule.

“It’s a win-win for Mexico,” he said, arguing it would reduce emissions of greenhouse gases that contribute to global warming as well as help cushion fuel prices.

The Mexican Association for Sustainable Mobility (AMMS), a trade group that backs the 10% ethanol standard, said in a statement that MTBE producers have “systematically obstructed” the entry of ethanol as a competitor in Mexico’s fuel market.

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“Ethanol is part of the solution to reduce dependence on fossil fuels, use renewable energy, lower gasoline prices, create domestic jobs, boost the agricultural economy and improve the environment, it said.

Backers of ethanol like AMMS argue that Mexican sugar cane and sorghum farmers stand to benefit if 10% ethanol gasoline is permitted, as both commodities can be used to make it.

In a bid to ease disruptions for companies that already make or sell 10% ethanol gasoline in Mexico, the court said it would give them 180 days to continue marketing their supplies before the ruling goes into effect.

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The modification was made because with the commercial opening of fuels in the framework of the energy reform, Mexican gasolines, mainly in the northern border, were put at a disadvantage against those sold in the United States due to the ethanol levels they contain.

The more ethanol, the cheaper the fuel, but the Supreme Court’s resolution warns that this has a bigger ecological impact since ethanol adds oxygen to the mix, improving combustion and thus increasing the generation of ozone molecules.

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