California Air Resources Board

Most California gasoline in recent years has contained MTBE, even though there has never been any legal requirement for its use. In March 1999, Governor Gray Davis issued the first of two executive orders directing the elimination of this widely used fuel additive from California gasoline. This fact sheet contains information about the upcoming phase out of MTBE from California gasoline.

A Short History of MTBE

MTBE (methyl tert butyl ether) is an oxygenate – an oxygen-bearing additive used to reduce engine knocking and help gasoline burn more cleanly. MTBE was used as an anti-knock compound after the United States Environmental Protection Agency (U.S. EPA) certified it for use in gasoline in 1979. Refiners significantly increased MTBE use in the 1990s to help them comply with federal and state regulations for cleaner gasoline. Federal law currently requires all gasoline in areas with severe air pollution – including Southern California, the greater Sacramento area, and the San Joaquin Valley – to contain an  oxygenated additive such as MTBE or ethanol. California’s cleaner-burning gasoline regulation, enacted by the California Air Resources Board (CARB), allows but does not require the use of oxygenates.

MTBE has caused public concern because it can contaminate groundwater (along with other gasoline components) when underground fuel tanks leak. MTBE moves faster in water than other fuel components and, in small amounts, renders drinking water unusable. On March 25, 1999, Governor Davis declared that MTBE presents an environmental risk to California and directed California State agencies to take steps towards eliminating its use in California gasoline by December 31, 2002. The Governor’s actions were consistent with the findings and recommendations of an MTBE assessment performed by the University of California.  In March 2002, the Governor directed that the prohibition of the use of MTBE be postponed for one year. The Governor found that it was possible to eliminate use of MTBE on January 1, 2003 without significantly risking disruption of the availability of gasoline in California.

Cleaner-Burning Gasoline Can Be Made Without MTBE

There is a common misconception that MTBE is the primary reason for the reduced emissions from cleaner-burning gasoline. While MTBE does help gasoline burn more completely, other CARB requirements are more directly responsible for the reduced emissions. These requirements are explained in an accompanying fact sheet, "Cleaner-Burning Gasoline: An Update." Refiners typically use MTBE to help their gasoline meet these other requirements and to boost octane levels.

CARB allows refiners to reduce or eliminate oxygenates in their gasoline as long as they can demonstrate, using CARB-approved procedures, that the "non-oxygenated" gasoline will not increase emissions. At least three refiners have routinely produced non-oxygenated cleaner-burning gasoline that meets all CARB requirements. This gasoline has mostly been sold in the San Francisco Bay Area where federal law does not prohibit the sale of non-oxygenated gasoline.

Beginning in Autumn 1999, CARB has required that service stations post labels on pumps dispensing gasoline formulated with MTBE. The labels are intended to help motorists who want to choose whether or not to purchase gasoline that has been made with MTBE.

Federal Law Restricts Options For Non-MTBE Cleaner-Burning Gasoline

Refiners have two basic options for making cleaner-burning gasoline without MTBE. They can use another oxygenate, ethanol, or they can produce non-oxygenated gasoline formulations that do not result in increased emissions. Under current federal law, however, all gasoline sold in Southern California, the greater Sacramento area, and the San Joaquin Valley (about 80 percent of gasoline in California) would have to contain ethanol once MTBE is eliminated.

A gasoline marketplace with a wide range of formulations helps keep prices and supplies stable. The California Energy Commission estimates that average gasoline costs could increase by at least three (3) to six (6) cents per gallon if all gasoline were required to contain ethanol.

In April 1999, to help expedite the phase-out of MTBE, California petitioned the federal government to exempt the state from the federal oxygen requirement but this request was denied by the U.S. EPA on June 12, 2001. California is now pursuing a legal challenge of the U.S. EPA’s decision. In addition, several bills have been introduced in Congress that could exempt California from the requirement.

California Phase 3 Reformulated Gasoline Regulations

In December 1999, as directed by the Governor’s March 1999 Executive Order, the CARB adopted new gasoline requirements known as the Phase 3 reformulated gasoline regulations requiring the elimination of MTBE from California gasoline by December 31, 2002.  The Phase 3 regulations provided refiners with additional flexibility to produce non-oxygenated gasoline while fully preserving all air-quality benefits of the state’s Phase 2 reformulated gasoline which had been used since 1996.

In July, 2002, the CARB adopted amendments to the Phase 3 regulations to postpone the prohibition of the use of MTBE for one year, as directed by the Governor’s March 2002 Executive Order. The new mandated deadline for the elimination of MTBE from California gasoline is now December 31, 2003.

Ethanol Raises Questions But Also Represents Opportunity For California

Ethanol, a form of alcohol derived from corn and other biological sources, has been used as a gasoline additive for many years. CARB’s cleaner-burning gasoline regulation allows the use of  ethanol. Ethanol use in California is expected to increase significantly even if the federal oxygen requirement is eliminated. For this reason, the Governor directed the ARB, the State Water  Resources Control Board and the Office of Environmental Health Hazard Assessment to perform an analysis of the health and environmental effects of the use of ethanol as a fuel oxygenate. The analyses found that there will be no significant risk to public health or the environment.

While most ethanol currently is produced from corn, it can be produced from agricultural waste, forest waste and other types of "biomass." An increase in ethanol use in California could stimulate the formation of businesses that convert these waste products to ethanol. Because some agriculture and forest wastes are burned, air-quality improvements could occur in some areas if these wastes were instead converted to ethanol. The Governor directed the California Energy Commission (CEC) to conduct a study of the potential for a California-based "biomass-to-ethanol" industry by the end of 1999. This study indicated that ethanol could be produced from biomass resources with technologies that are available in the near term. The CEC has also published a report on the costs and benefits of a California biomass-to-ethanol production industry.

Refiners and Distributors Are On Schedule To Switch To Non-MTBE Gasoline

In the early 1990s, California refineries made significant changes to configure their plants to produce cleaner-burning gasoline with MTBE. Refineries have had to make further modifications to produce non-MTBE cleaner-burning gasoline. As of June 1, 2003, five refiners have announced that they will eliminate the use of MTBE in California gasoline before the mandated deadline. These five refiners operate eight of the 13 refineries that currently produce California cleaner burning gasoline. The remaining refineries are expected to be fully compliant with the requirements for non-MTBE gasoline by the December 2003 deadline. The additional time provided by the one-year postponement has allowed refiners and distributors of gasoline and ethanol to resolve issues concerning the adequacy of distribution and supply. The infrastructure for the transport and distribution of ethanol and gasoline in the state is also on schedule for the December 2003 deadline.