Mid-level Blends Redux: It’s Not As Easy As It Seems
Wow! Our first substantive blog entry started off with a bang with a number of comments from industry and in particular our GBC members. I want to thank them for their insights and comments! Many are key stakeholders in the discussions in the U.S. surrounding mid-level blends. A couple of our members thought I was a bit bullish on E15. A great comment from Mike Leister, Fuels Technology Manager of Marathon and long-time GBC member noted that even assuming E15 approval from EPA, there would still be issues bringing those blends to market. He says:
“Don’t get too excited over mid-level ethanol blends. They will happen eventually but EPA approval isn’t the only hurdle. If EPA approved E15 tomorrow under a sub-sim waiver, it would still be illegal to blend above 10% in RFG and CBG, which make up 30% of the gasoline (incidentally, this is a part of the gasoline market that has all the needed ethanol infrastructure in place). New complex models have to be built and all the current RFG rules would have to be rewritten. EPA estimates this at two years, if this was their top priority, which it isn’t.
For the remainder of the gasoline pool, ASTM specs have to change and states have to adopt the new specs. Even after all of this takes place, many marketers will opt not to blend above 10 vol% until they can be assured that they can control their risk to vehicle damage. We already know that many small engine manufacturers predict unsafe conditions if their engine use gasoline with ethanol levels above 10 vol%. We also know that not a single car on the road today has an owner’s manual that recommends ethanol blends above 10 vol%. The current API/Auto/DOE/EPA research program will help define the potential problems for the existing highway fleet. Perhaps some portion of this fleet risks significant damage using E15. Only thorough research can answer these questions and that is still sometime away. Read the Orbital study on Australia’s experience with E20.
And finally, E15 will only appear in those markets where the cost of ethanol including subsidy and RIN value is below gasoline cost. Currently only the Midwest has those general conditions. The ethanol blenders actually need higher gasoline prices in most of the country. Given that EPA has 270 days to respond to the waiver request, it is doubtful that much E15 will appear in 2009 and probably only very limited amounts will appear in 2010.”
I don’t disagree, but I don’t see ethanol producers who are essentially fighting for their lives right now or Congress waiting around until the API/Auto/DOE/EPA technical work is completed. My guess is the ethanol industry will be looking to Congress looking for a solution (RFS part 3 in 2010??). On the other hand, Brian Jennings, Executive Vice President of the American Coalition for Ethanol, in a Q&A session following a Biofuels Journal webinar on the state of the ethanol industry, noted in response to a question about possible congressional resolution to the E15 issue that “no option is off the table.” However, he noted, if there’s a pathway to approval under existing regulations, that’s the path the industry will pursue as well.
Tags: E15, Ethanol, Marathon, Mid-Level Blends, renewable fuels standard, RFS
