the us Environmental Protection Agency ( epa ) has denied California's request to waive the federal requirement for oxygenates in its reformulated gasoline, leaving the state with no choice but to use ethanol as a blending stock for petrol. California's governor Gray Davis recently ordered a 90-day study regarding the use of ethanol, which is said to be ecofriendly.

California is mandated to blend oxygenates in petrol as per the provisions of the federal clean air act. It wanted a waiver after announcing a ban on the use of the oxygenate methyl tertiary butyl ether ( mtbe ), due to groundwater contamination problems. But epa decided not to grant the waiver due to legal constraints. The decision is good news for the us ethanol industry, which is already gearing up to meet the new demand. According to Renewable Fuels Association, an ethanol industry group, construction of two ethanol plants is already underway.