E15 faces hurdles

Mar 9, 2012
by DTN

Ethanol producers want to expand the market for ethanol in the U.S. by promoting the use of motor gasoline with a 15 percent ethanol ratio, or E15. But their efforts are being frustrated by many hurdles that might delay the fuel’s commercialization for some time, attendees at an ethanol conference held last week were told.

Commercialization of E15 and other higher blends has become the single most important project for ethanol supporters after the expiration at the end of 2011 of a 45-cent-per-gallon blender’s credit formally known as the Volumetric Ethanol Excise Tax Credit. That’s because ethanol already makes up 10 percent of U.S. motor gasoline, driven by mandated demand through the Renewable Fuels Standard, closing in on the saturation point referred to as the “blend-wall.”

Ahead of recent action, traditional vehicles were prohibited from using a gasoline blend with an ethanol concentration level above 10 percent. So, to increase demand for ethanol, the Renewable Fuels Association (RFA) and other industry stakeholders have embarked on two efforts—expanding the exports market and pushing for E15 at retail outlets countrywide.

On exports, these stakeholders said they are making sure U.S. companies have access to markets in Brazil and Europe. Last year, the U.S. exported about 1.19 billion gallons of ethanol, of which the majority went to Brazil, Canada, Holland and the United Kingdom, in that order.

Second, RFA and its partner advocacy groups are working to get federal and state authorities to approve the use of E15, RFA officials said during their annual conference.

The U.S. Environmental Protection Agency (EPA), at the request of the industry, has taken two major steps toward commercializing E15. The first step was granting an E15 waiver request for model year 2001 and newer vehicles. Second, EPA on Feb. 17 approved tests regarding the health effects of E15, which allows the fuel blendstock to be registered.

EPA’s waiver decisions are important because they will ensure that E15 has access to 65 percent of all vehicles on the road across the U.S. today, which could represent a huge leap in ethanol’s market share, said Kristi Moore, RFA’s vice president for technical services.

However, E15 may not get to the gas pump in a large part of the country for a while because EPA cannot waive the Reid vapor pressure (RVP) limit for E15 without further action by Congress, according to Graham Noyes, an ethanol expert and law partner with Stoel Rives LLP in Seattle, WA.

RVP measures the volatility of gasoline, which refers to its evaporation characteristics, with the evaporation rate increasing during the warmer summer months. EPA regulates RVP levels, which vary through the year while lowest during the summer months. Ethanol increases RVP ratings. E10 currently has a 1-pound RVP waiver.

Also, state regulators will need to approve the use of E15 before it can be offered for sale, a process that could take years, according to RFA officials and petroleum marketers who offer higher ethanol blended gasoline at their gas stations.

Moore said she’s starting to work with state regulators, particularly in the Midwest region, because they understand the ethanol industry well enough and are more likely to approve E15’s use much faster than other parts of the country.

Any approval by state regulators will have to deal with a number of issues, including insurance coverage for cars and underground storage tanks as well as how to educate consumers on the benefits of higher-blend ethanol and also how to avoid misfueling at the gas pump. — George Orwel, DTN