By John Auers and Elizabeth Hilbourn
The original Renewable Fuel Standard (first passed in 2005 and expanded in 2007) called for ever-increasing volumes of renewable fuels to be blended into U.S. transportation fuels. The most notable of these were, of course, traditional corn based ethanol and cellulosic ethanol (which is still yet to be produced in any meaningful quantity); however, these volumes were predicated on the assumption of ever-increasing U.S. transportation fuel demand – a trend that has not completely continued since 2007. While gasoline consumption in the U.S. did hit an all-time high last year, demand is well below the level forecasted back in 2007. As a result, we’ve seen the development of the so-called ethanol “blend wall,” since many auto manufacturers, retailers, and refiners have pushed back against ethanol blends containing more than 10% ethanol. At the same time, many on the other side of the argument have pushed for increased use of higher level ethanol blends, most notably E15 and E85, since widespread use of these (or similar blends) seems to be the only way to truly break through the “blend wall.” Despite this, E10 still (as sung by Tom Petty) “won’t back down,” as it still accounts for more than 95% of gasoline sold in the U.S.
“In a World that Keeps on Pushin’ Me Around”
While E10 is still the dominant gasoline blend sold in the U.S., other blends continue to attempt to challenge this dominance. It is, however, difficult to measure the amount of gasoline other than E10 which is actually consumed. This is because some volume of E0 that enters the market may have been blended with ethanol at small terminals or blended at the point of retail sale. The amount of E15, E20, E30 and E50 consumed is difficult to measure since these blends can all be produced at blender pumps. Also, E85 is not something that the EIA directly tracks. EIA tracks ethanol production, consumption, imports and exports and also petroleum gasoline refinery and blender production, imports and exports. The following table details the estimated percentage of vehicles that can safely run on, gas stations carrying, and actual consumption of various gasoline-ethanol blends in the U.S. Additionally, expected fuel economy (as compared to E0) for each fuel is shown in the far right-hand column. The most notable feature of the table is that E0 consumption still exceeds that of higher level ethanol blends by more than an order of magnitude, while its availability only exceeds that of E85 by a ratio of about 3:1.
Despite relatively low consumption of higher level blends, their availability has increased significantly over the past ten years. Furthermore, it is estimated that ~7% of vehicles on U.S. roads are so-called flex fuel vehicles (FFVs), suitable for higher level ethanol blends. Still, from the above table it is evident that the American consumer has not typically been choosing higher ethanol blends, even when they are available. The graph below shows the growth in the number of U.S. retail stations offering flex fuels (primarily E85) in the U.S. since 2000.
Additionally, public gasoline station locators are available for E0, E15, E85 and blender pumps, and the following maps show the locations of ethanol blender pumps and gas stations offering E85 and E0. Notice the regional concentration of stations offering specific fuels.
As a result of these regional concentrations of certain stations, many of these fuels remain relatively scarce in some parts of the country. As an example of this scarcity, the following are the closest locations to find gasoline fuel other than E10 from TM&C’s Dallas, TX office.
“There Ain’t no Easy Way Out” – Issues and Challenges Affecting Each Specific Blend
E85 is approved for use in FFVs, which have been around since the 1990s and currently make up ~7% of the U.S. vehicle fleet. Furthermore, this number continues to increase, as ~25% of new vehicles sold in the U.S. are FFVs. Despite this, the majority of flex fuel vehicle owners do not even realize that they own and FFV! If fact, a website, ffv-awareness.org, has been founded with the sole goal of increasing flex fuel vehicle awareness. The primary reason for the large increase in FFVs in the U.S. is a supposed loophole in the U.S. CAFE standards that allows a partial exemption for FFVs. This has changed, however, as starting with MY 2015 and newer automakers have to actually show that their flex fuel vehicles are in fact being fueled with E85 in order to claim the CAFE benefits.
E20, E30, E50
E20, E30 and E50 are sold at gas stations which have blender pumps. The blender pumps are heavily concentrated in the Midwest, even more-so than E85 stations which have moved into the Atlantic Coast, Texas and California areas. A blender pump draws two fuels from separate storage tanks and mixes them together in various percentages to form a variety of fuel choices for the station’s customers. This makes it possible for the consumer to purchase a wide variety of different blends. Typically, stations will have a tank of E85 and E10. With that combination, E50 would be comprised of 47% E10 and 53% E85.
E15 is approved by the EPA for all 2001 and newer cars; however, not all automakers have approved E15 for all of their models produced during these years. The E15 warning label states,
“Use Only In:
- 2001 and newer passenger vehicles
- Flex-fuel vehicles.”
E15 is not approved for nonroad vehicles and equipment such as boats, snowmobiles, lawnmowers, and chainsaws. About half of E15 is produced from blender pumps and the other half from terminal blending.
1 Psi RVP Waiver
The 1 psi waiver only applies to blends containing 9%-10% gasoline, or E10. Since most CBOB is made to be used in E10, retailers need to find specially tailored low-RVP gasoline blendstock to make E15 in the summertime, or avoid selling the fuel altogether. In additional, E15 actually has a slightly lower RVP than E10, providing a small benefit to evaporative emissions, relative to E10.
The introduction into commerce of fuels and fuel additives that are not substantially similar to any fuel or fuel additive used in vehicle or engine emissions certification is prohibited, unless granted a waiver pursuant to CAA section 211(f)(4). This substantially similar rule is what essentially regulates higher ethanol blends today.
E16–50 blends are considered gasoline under the EPA’s current regulations and are subject to all of the EPA regulatory requirements that apply to gasoline, even though such blends currently may only be used in FFVs; however, the EPA is proposing to change this. While there are no standards specified in EPA’s current regulations for E51–83, the historically approved practice of blending E51–83 from just denatured fuel ethanol (DFE) and certified gasoline and gasoline blendstocks for oxygenate blending (BOBs) virtually ensured the resulting blend met the gasoline fuel specifications.
The EPA tried to address flex fuel and E15 blender pump refineries in its Proposed Renewables Enhancement and Growth Support issued November 16, 2016; however, a final rule has not yet been published. Comments were due on February 16, 2017. The EPA considered allowing the use of natural gasoline blendstock to produce E85. The EPA believed that allowing natural gasoline could lower the cost and increase the use of E85.
The EPA believes that fuel retailers that make E15 at blender pumps using E85 as a parent blend are currently subject to all the requirements that apply to refiners producing gasoline from crude oil. This is due to the fact that blender pump operators are mixing nongasoline (E85) with gasoline (E0 or E10) to produce new finished gasoline. The EPA’s proposal allows several streamlined approaches whereby parties could demonstrate they met the affirmative defenses set forth.
State Regulations Regarding Ethanol Blends
States do not have specific rules related to E10, E15 or E85. They utilize ASTM D4814 for gasoline specifications.
TM&C constantly monitors changes and proposed changes in regulations which can impact all segments of the petroleum industry. Many of these are associated with transportation fuels, affecting not only demand, but also production costs, compliance challenges, and other aspects of petroleum refining. We include our independent analyses of these impacts in our semiannual Crude and Refined Products Outlook and our various other studies. TM&C also assists clients involved in all aspects of the production of transportation fuel, blending activities, planning and compliance-monitoring. Please contact us for our views on the latest developments and their potential impacts, or if we can assist in any way or answer any questions.