Mexican Court Overturns Ethanol Blending Injunction

by Josh Pedrick (Platts) A federal tribunal in Mexico Thursday overturned an injunction blocking ethanol blending from climbing to 10% from 5.8%, two sources connected to the case told S&P Global Platts.

"Effectively, today the collegiate court decided to revoke the suspension," said Juan Machado, a partner in the law firm SOLCARGO and the attorney who led the case in favor of the suspension.

Machado's (Juan Machado, a partner in the law firm SOLCARGO) case argued that increasing the amount of ethanol in gasoline would cause harm that cannot be immediately seen.

Increasing the amount of ethanol in gasoline increases the Reid Vapor Pressure of the fuel, meaning it will evaporate more easily. In the US, gasoline with 10% ethanol received a waiver as it would have lower emissions despite the easier evaporation.

Mexico uses MTBE as its primary oxygenate in gasoline, which is why ethanol has not been a consideration.

Machado argued that a higher ethanol blend would increase particulate emissions, something Mexico has been trying to combat.

US groups have argued that research shows ethanol results in lower carbon and particulate emissions, helping improve air quality.

The initial injunction followed a new fuel specification, released by the Mexican Energy Regulatory Commission.

In 2016, the CRE said it would allow ethanol blending to increase to 5.8% from zero in all areas except Mexico City, Guadalajara and Monterrey, as part of NOM-016, a broader measure to update its fuel specifications.

Shortly after the blend level was raised to 10%, a judge granted an injunction that rolled the level back to 5.8%. READ MORE

Excerpt from Ethanol Producer Magazine: This meeting is part of U.S. Grains Council’s series of technical workshops that ACE has been participating in to address questions from local station owners about how to utilize and profit from using ethanol, and it’s the first workshop being held since a Mexican tribunal overturned an injunction which applied to state-owned oil company Pemex blocking ethanol blending from climbing to 10 percent from 5.8 percent.

“Like we’ve seen as ethanol expanded in the U.S., ethanol’s competitors in Mexico have created roadblocks to higher ethanol use,” Lamberty said. “Those roadblocks cause uncertainty for fuel marketers, delaying their decision to add ethanol. One of those roadblocks was removed last week, when a Mexican court overturned the injunction on Pemex.”

The two workshops Lamberty spoke at this spring took place in Monterrey and Tijuana. The sessions focus on questions that have emerged about using ethanol following changes in Mexican law that took effect in June 2017 and allow up to an E10 blend outside of three major cities (Monterrey, Mexico City and Guadalajara).

“Now that E10 is a real possibility in most of Mexico, and “the math” of adding ethanol is so attractive, I explained to these station owners how they can differentiate themselves from competitors and still make better margins,” Lamberty added. “Interest seems to increase each time one of these events is held and it looks like the León workshop has higher attendance than any of the previous events.”

Last year at the request of USGC, Lamberty traveled to Guadalajara, Mexico, to meet with members of Association Mexicana De Empresarios Gasolineros (AMEGAS), Mexico’s largest group of gasoline station owners, to discuss challenges and opportunities with offering ethanol blended gasoline. Based on data from the Mexican government, a nationwide E10 blend could create a 1.16 billion gallon per year market for ethanol. ACE will continue to work with USGC to provide information to retailers and others who want to sell more ethanol. READ MORE