USDA Publishes Report on E15 Challenges, Opportunities
by Erin Voegele (Ethanol Producer Magazine) A report published by the USDA’s Office of Chief Economist in May assesses the future market opportunities and challenges for E15 and higher blends of ethanol, including a discussion of technical, regulatory, consumer acceptance, and economic challenges.
Virtually all gasoline sold in the U.S. today contains 10 percent ethanol. Due to vehicles with improved fuel efficiency and the growing popularity of hybrid and electric vehicles, U.S. gasoline consumption is expected to decline 19 percent by 2050, according to the report. If E10 continues to be the standard gasoline blend, ethanol consumption will decrease as well. However, if the standard blend increases to 15 or higher, ethanol consumption could continue to rise while simultaneously reducing greenhouse gas (GHG) emissions. The report stresses that higher ethanol blends can also support energy independence.
Approximately 93 percent of all light-duty vehicles on the road today can safety refuel with E15, making the fuel blend a viable option for the vast majority of vehicles. While there is great potential for the expanded use of E15, there are also technical, legal, and economic challenges that must be evaluated and addressed. The report specifically discusses challenges related to consumer acceptance, legal and contractual considerations for retail fueling stations, vehicle warranties, and investments in wholesale and retail distribution infrastructure.
The report cites a 2018 study from the Center for Agriculture and Rural Development at Iowa State University that determined a move to E15 will likely require a price discount relative to E10 on an energy parity basis. Given the fact that E15 has an energy content approximately 1.75 percent less than E10, that study found that at 2018 prices, E15 would have to be priced 4.3 cents lower per gallon than E10 to make it equal on a per mile-driven basis.
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Regarding economic considerations for station owners, the USDA notes that difference ownership structures create different challenges. More than half of the fueling stations in the U.S. have single-station ownership. These stations are more sensitive to the size of financial investments, particularly with respect to equipment upgrades, according to the USDA. When compared to multi-station owners, single station owners are in a less optimal position to bargain with equipment manufacturers and have less sources and personnel to take advantage grant programs. Multi-station owners, in general, also have larger stations with more tanks, making it easier to repurpose an existing tank for E15. “It will be important during policy design to recognize that smaller ownership entities (with less than 10 stations) face more significant financial barriers relative to larger multi-station ownership entities,” the USDA said in the report.
A full copy of the report can be downloaded from the USDA website. READ MORE
Assessing Future Market Opportunities and Challenges for E15 and Higher Ethanol Blends (U.S. Department of Agriculture)
Excerpt from U.S. Department of Agriculture: As E85 is no longer stimulating the growth needed to increase ethanol consumption, attention has switched to the potential in mid-level blends, notably E15. It is estimated that 93 percent of the vehicles on the road, consuming 97 percent of gasoline, are approved to use E15. This estimate includes light-duty vehicles built for MY 2001 or newer, along with FFVs (RFA, 2020a). Table 1 identifies the auto manufacturers that have approved E15 in their vehicles over time, based on the auto manufacturer’s owner’s manuals. Automakers were initially cautious with offering relevant warranties (only GM approved E15 in all models starting in 2013). However, by 2020, automakers that warrant all models for E15 use sold 83 percent of new cars in the United States. Reluctance with offering mid-level blends has been more pronounced; BMW is the only manufacturer to approve ethanol blends up to E25 in their vehicles(RFA, 2021). Nonetheless non-flex fuel vehicles have been shown to adapt up to 30 percent ethanol blended (E30) gasoline without compromising engine performance or fuel efficiency (Alsiyabi, Stroh, & Saha, 2021).
