EPA is more than 15-months behind its statutory deadline (Nov. 30, 2013) for establishing Renewable Fuel Standard (RFS) blending targets for last year.
To recap, in Nov. 2013, EPA for the first time proposed to scale back the government’s overall biofuel blending target for the following year. EPA determined that the statutory target for 2014 would exceed the “blend wall” — the maximum quantity of ethanol that can be sold each year given legal or practical constraints on how much can be blended into each gallon of motor fuel.
The most common blend today is E10 — motor fuel with up to 10% ethanol. Although EPA approved the sale of E15 in October 2010, potentially increasing by 50% the total amount of ethanol sold annually, lack of compatible fueling infrastructure, warranty and liability concerns, and, most importantly, consumers’ natural aversion to paying more for a lower-value product effectively limit the standard blend to E10.
So in Nov. 2013, EPA proposed to trim the statutory target for 2014 from 18.15 billion gallons to 15.21 billion gallons — a 16% cutback. That ignited a firestorm of protest from biofuel interests, and EPA has been dithering ever since.
Biofuel lobbyists such as Renewable Fuels Association CEO Bob Dinneen claim the blend wall exists only because the oil industry has “steadfastly refused” to invest in blender pumps, storage tanks, and other infrastructure compatible with E15-and-higher ethanol blends. Weirdly unexplained is why it’s not up to the biofuel industry to pay for the infrastructure on which its success supposedly depends. The RFS forces the oil industry to buy biofuel, process and add value to it, and create a guaranteed retail market for it. Isn’t that enough?
Not for Dinneen and company. If they had their druthers, Congress would compel oil companies to build biofuel-compatible infrastructure and (as President Obama proposed during his first presidential campaign) mandate that all new cars be flex-fuel vehicles capable of running on blends up to E85 (motor fuel made with 85% ethanol).
But would even that policy wish-list eliminate the growing mismatch between market realities and the RFS production quota schedule, which requires 36 billion gallons of biofuel to be blended and sold by 2022? No.
Although ethanol is cheaper by the gallon than regular gasoline, ethanol has about one-third less energy than an equal volume of gasoline. On an energy-adjusted (bang-for-buck) basis, regular gasoline is almost always the better buy than ethanol. Consequently, the higher the ethanol blend, the worse mileage your car gets, and the more money you spend to drive a given distance.
FuelEconomy.Gov, a Web site jointly administered by EPA and the Department of Energy (DOE), calculates how much a typical motorist spends in a year to fill up a flex-fuel vehicle with either E85 or regular gasoline. The exact bottom line changes as gasoline and ethanol prices change. The big picture, though, is always the same: Ethanol is a net money loser for the consumer.
At today’s prices, depending on make and model, it costs an extra $900, $1,200, $1,600, or even $2,400 annually to run a flex-fuel vehicle on E85 rather than regular gasoline. Those hefty price differences — not oil company machinations or EPA indecision — are the principal barrier to market penetration of E85 and other high-ethanol blends.
Even if everybody owned a flex-fuel vehicle, and every service station installed E85 blender pumps, few willing customers would buy the fuel. Lower energy content, inferior fuel economy, and higher consumer cost are the root cause of the blend wall. The same factors also explain why the “choice” to buy ethanol must be mandated. After all, if ethanol were a great deal for consumers, why would we need a law to make us buy it?
EPA and DOE estimate the annual gas and E85 expenditures for 238 flex-fuel vehicle models. Here are the agencies’ estimates for eight of those models.