ISU study: Investment in E85 Could Be Cheaper than Purchasing Ethanol Credits
by Christopher Doering (Des Moines Register) A study from Iowa State University said the cost of installing tanks to handle fuel with 85 percent ethanol could be cheaper than purchasing energy credits to avoid blending the fuel mostly made from corn.
Iowa State professor Bruce Babcock said ethanol demand would increase by between 800 million and 1 billion gallons per year for every 2,500 stations with E85 fueling capabilities. His study estimated that it could cost those stations about $87.5 million if new tanks do not need to be installed and at least $325 million if they do.
“With the price of the tradable ethanol credits trading between 60 cents and 70 cents per gallon, and with at least 14 billion credits needed under current mandates, it seems that the reduction in compliance costs could be greater than the costs of investing in E85 infrastructure, which would create an incentive for investment,” Babcock said in the report.
The study estimated that if the Environmental Protection Agency sets 2014 ethanol blending mandates at 13.9 billion gallons, then investment in 2,500 E85 stations would reduce oil company compliance costs from $2.84 billion to $1.09 billion. READ MORE and MORE (Renewable Fuels Association)