U.S. Department of Agriculture (USDA) has recently released an informative report, U.S. Ethanol: An Examination of Policy, Production, Use, Distribution, and Market Interactions. It includes chapters authored by staff at the Energy Information Administration and Iowa State University, as well as USDA staff.

This report is very broad, as shown in the foreword:

“Inquiries concerning ethanol from a broad spectrum of people, including U.S. policymakers, international leaders, and various interest groups, led to the commissioning of this report. It intends to bring clarity to the complex interaction of ethanol production with agricultural markets and government policies. While there are many other ethanol studies available, this report is unique in that it centers on the pivotal role that ethanol plays in the crop and feed markets. In addition, it provides detailed and current analyses on ethanol production costs, profitability, processing technology, and the infrastructure that supports the industry. Also examined are the economics of blending ethanol into gasoline for octane enhancement and to meet clean air regulations. Federal and State policies are described to illustrate the importance of energy legislation, environmental regulation, and farm policy to the development of the ethanol industry.”

It summarizes many of the issues associated with a significant increase in volumes of higher ethanol blends (see page 59), including:

• The one psi summer Reid vapor pressure waiver (RVP) available for E10 conventional gasoline, but not for E15;
• “Many State and local laws require gasoline to be dispensed from pumps listed by Underwriters’ Laboratories (UL) or a similar entity. With the exception of pumps designed for use with E85, most gasoline pumps are only certified to 10 percent ethanol. Upgrades to pumps or revised certification of existing pumps are needed in many cases. Gas station owners are concerned about legal liability if a customer uses E15 in an unapproved application and suffers equipment damage or injury.” 
• automobile warranties;
• “Also, many retailers are resistant to adding E15 to their product line because it may require an additional expense.”

In addition, issues with the implementation of the Renewable Fuel Standard are discussed on page 66:

“As discussed Chapters 6 and 7, due to the E10-blend wall, the amount of ethanol that can be absorbed into the domestic gasoline pool is currently limited to about 13 billion gallons—well below the 2015 conventional biofuels requirement, which is capped at 15 billion gallons. To exacerbate the problem, the E10-blend wall may become more constraining over time, since gasoline consumption began a declining trend in 2008, due to more efficient motor vehicles, higher prices, weak economic and job growth over the past several years, and fewer miles driven (Figure 8.2). In addition, motor vehicles will continue to become more fuel efficient, as increasingly aggressive corporate average fuel economy (CAFE) standards are implemented. Passenger cars and light trucks are expected to have, on average, a combined fleet-wide fuel economy of about 40 miles per gallon (MPG) in 2021, compared to about 30 MPG in 2013 (National Highway Traffic Safety Administration).”

Tim Hogan

Posted by Tim Hogan

Tim Hogan is the Director of Motor Fuels for AFPM. To learn more about AFPM, visit AFPM.org