Ethanol & Automakers—Time for a New Collaboration

by Doug Duante (Clean Fuels Development Coalition/Governors' Biofuels Coalition) ... (N)ame a federal program or policy that costs taxpayers nothing, costs consumers nothing, provides value and regulatory relief to a heavily regulated business, provides value to the consumer in the way of lower fuels cost, strengthens American energy security, provides new demand for American agricultural products and provides environmental and public health benefits. Give up? How about flex-fuel, also known as dual fuel, vehicle credits. I would argue that the incentive of providing credits to automakers was the most successful energy policy ever enacted by Congress, based on a cost benefit: No cost, and lots of benefit.

Following oil embargoes by Iran (sound familiar?) that served as a wakeup call as to our dependence on imported oil, in 1975 the Corporate Average Fuel Economy (CAFÉ) program was established. Cars now had to meet certain mileage requirements to save American consumers from themselves and their insatiable appetite for cheap gasoline, regardless of where it came from. Then in 1988 as interest in alternatives to gasoline grew, Congress passed the Alternative Motor Fuels Act (AMFA) that established credits for vehicles using alternative fuels that automakers could use to meet their corporate average.

Methanol and natural gas met the definition of dual fuel vehicles, but it was ethanol that stole the show. Over the next decade, 20 million flex-fuel vehicles capable of operating on any combination of ethanol and gasoline up to 85 percent rolled out of Detroit. Bill Ford himself was pictured in ads with a Ford Explorer standing in a cornfield touting the benefits of ethanol. General Motors launched an ambitious “Live Green, Go Yellow” campaign including a Super Bowl commercial. GM gave members of the Governors’ Ethanol Coalition and advocates like CFDC fully wrapped FFVs to further promote ethanol. Chrysler got in on the act as well, offering a variety of E85 capable vehicles.

Keeping in mind the absolute objective was to use less oil, in some respects it was easy math. If a car got 20 miles to the gallon of gasoline, but went that same 20 miles with E85, that car is only using 15 percent of the gasoline. Assuming a slight mileage loss for ethanol’s lower energy content and any other considerations, this vehicle now should be rated as getting the gasoline equivalent of well more than 60 miles per gallon.

There are several caveats to this, no one could argue that a FFV operated on E85 all the time so a usage, or utility factor had to be applied. Ultimately the credits automakers could claim were capped at 1.2 miles per gallon which may not sound like much but it was sufficient to continue to produce FFVs. So what happened?

By late 2007 and into 2008, many in the environmental community felt emboldened due to the democratic majority in Congress. Driven by their hatred of agriculture, fueled by ignorance and being just plain obnoxious, they mounted a successful campaign to repeal the credits, arguing these vehicles were not using ethanol and rather than try to make the system work – after all, it did displace oil – they refused. At CFDC, working with our automaker members and the auto manufacturers alliance, we offered numerous proposals to accurately calculate ethanol usage and adjust the credits accordingly. At that time, the extension of the RFS was on the table and defending the FFV credits took a back seat. It was a slow phaseout but by 2019 they were completely gone.

So how effective was the credit program in terms of achieving its objectives? By 2014 nearly half of Ford, GM and Chrysler vehicles were FFVs, with 100 models available resulting in more than 20 million flex vehicles on the road. Today an embarrassing total of just 8 vehicles according to the Department of Energy’s Alternative Fuel Data Center offer flex capability, and one of them is a cargo van. Pretty hard to argue against the fact that with the credits you get flex vehicles – without the credits you don’t.

Sadly, there is no national movement to reduce oil consumption. In fact, the Trump administration seems determined to use as much oil as possible, even in the face of constant turmoil in the Middle East. So, before we naively set our value proposition as reducing oil, lets base our value proposition on what seems to drive everything these days, which is money.

Consumers should be educated to view fuels as to the cost per mile. Ethanol wins that metric every time, regardless of the blend level. While E85 always offers a lower price than regular gasoline, ethanol’s value is even higher in a 30 percent blend due to the significant octane rating. If regular vehicles were optimized, which is to say tuned to a higher octane and adjusted to a higher compression, it completely negates any mileage loss due to ethanol’s lower BTU. In fact, industry and DOE data indicate we could see a 7 percent efficiency gain!

So the ag and ethanol industries would be wise to get behind a campaign when the next round of mileage requirements comes up to not only reinstate credits for vehicles that use alternative fuels but to prorate them so E10, E15, E30 and E85 can all benefit, and automakers have an easy tool to meet future emission and mileage requirements. READ MORE