The Clean Air Act Amendments of 1990 target automobile emissions as a major source of air pollution. The Act mandates the use of cleaner burn­ing fuels in U. S. cities with smog and air pollution problems. The oxygen requirements of CAAA spurred a market for oxygenates and created new market opportunities for ethanol. The Oxygenated Fuels Program targets 39 cities that do not meet National Ambient Air Quality Standards (NAAQS) for carbon monoxide (CO). CAAA mandates the addition of oxygen to gaso­line to reduce CO emissions. It requires an oxygen level in gasoline of 2.7% by weight. Control periods vary by cities because most CO violations occur during the winter season. The average control period is about 4 months. The most widely used oxygenate in the market had been a methanol-derived ether, MTBE, which was made mostly from natural gas feedstock and was rapidly being phased out from the U. S. market in the twenty-first century, as explained in the previous section.

Most major gasoline refiners are using ethanol more and more to meet gasoline oxygenate content requirements. In 1993, about 300-350 million gallons of ethanol were blended with gasoline and sold in markets covered by the OFP. In 2004, fuel ethanol consumption reached 3.4 billion gallons in the United States. In about 10 years, the U. S. production of grain ethanol has seen a tenfold increase. In 2010, corn ethanol production in the United States reached 13.2 billion gallons, which is nearly a fourfold increase in the six — year period. The CAAA also requires the use of oxygenated fuels as part of the Reformulated Gasoline Program for controlling ground-level ozone for­mation. This program requires an oxygen level in gasoline of 2.0% by weight. Beginning in January 1995, reformulated gasoline was required to be sold in nine ozone nonattainment areas year-round. Other provisions in the act allow as many as 90 other cities with less severe ozone pollution to "opt-in" to the RFG program. Under a total opt-in scenario, as much as 70% of the nation’s gasoline could be reformulated.

An oxygen level of 2.0% by weight in gasoline means that at least 5.75% by weight of ethanol needs to be blended in gasoline, based on the stoichio­metric calculation of 2.0 x (46/16) = 5.75. Therefore, 2.7% oxygen requirement pushes the required level of ethanol in gasoline to 7.76 wt% as a minimum. Thus, 10% ethanol blended gasoline, E10, sold in gas stations is consistent with the result of such calculation. Even though ethanol is clean burning and has a relatively low Reid vapor pressure of blending, it has a substan­tially lower heating value than conventional gasoline. The higher heating value (HHV) and lower heating value (LHV) of gasoline are 47.3 and 44.4 kJ/g, respectively, whereas those for ethanol are 29.7 and 28.9 kJ/g, respec­tively. However, at a level of 10% ethanol blending, the reduced energy out­put is much less appreciable and could be compensated for by better engine performance.