Blending & Retailing Ethanol

Today the American Coalition for Ethanol (ACE), along with the Ethanol Promotion & Information Council (EPIC) presented a webinar that dealt with several of the key challenges facing ethanol retailers as they begin to offer increasing quantities of E85 (85% ethanol). Although the presentation was targeted at gasoline retailers, the information was of interest to anyone watching the emergence of ethanol in the U.S. as a significant transportation fuel. The presenter was Ron Lamberty, VP of Market Development for ACE, and himself an owner of gasoline retail establishments.

Currently there are just over 1,500 retail refueling stations offering E85 ethanol (85% ethanol), not quite 1% of the 160,000 total stations throughout the U.S. About 70% of the retail refueling stations in the U.S. offer ethanol blends, usually E10 (10% ethanol). There are 171 ethanol plants with a capacity of 10.4 billion gallons per year, and there are 28 plants under construction with the capacity to produce another 2.8 billion gallons per year. Ethanol now supplies 7% of the fuel for used in the U.S. for light vehicles.


The first topic covered regarded the question of food vs. fuel. This is a broad topic, of course, but Lamberty made the point that in the case of corn grown in the U.S., even though the corn allocated to ethanol distillation rose from 2.3 billion bushels in 2007 to 3.1 billion bushels in 2008, an increase of 35%, the total corn crop in the U.S. rose from 10.5 billion bushels to 12.9 billion bushels, an increase of 24%. Put another way, the quantity of corn grown for fuel in the U.S. between 2007 and 2008 increased by 800 million bushels, but the quantity of corn grown for food during those same two years increased by 1.7 billion bushels, more than twice as much.

In some respects the question of food vs. fuel is going to go away pretty soon anyway, both because crop yields continue to increase worldwide faster now than human population increase, and also because cellulosic ethanol is on the verge of being produced in commercial quantities. In the table below, it can be seen that the federal renewable fuel standard calls for corn ethanol production to peak at under 15 billion barrels per year, which they are fast approaching. The rest of the targeted 35 billion barrels, nearly 20 million barrels, is mandated to come from cellulosic feedstock. As we document in our feature “Cellulosic Ethanol,” there is feedstock in the U.S. sufficient to supply many times this 20 million barrel annual target.
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RENEWABLE FUEL STANDARD
The U.S. renewable fuel standard calls for 35 billion gallons per year
by 2022, with cellulosic ethanol taking over the primary share by then.
(Source: American Coalition for Ethanol)

One of the most interesting challenges to blending and retailing ethanol relates to the so-called “blend wall,” which refers to the gap between how much E10 consumers can absorb, and the supply of ethanol. Basically if the supply of vehicles who can utilize E85 doesn’t increase fast enough, too much of the ethanol being produced has nowhere to go but into the E10 mixes, and at current annual production of 10+ billion barrels per year, ethanol is already being mixed into 70% of all gasoline sold.

The table below shows the gap projected between the rise of E85 capable vehicles who can use up 8.5 times as much ethanol with every gallon they purchase, and the projected supply of ethanol. As can be seen, in the period beginning around 2010 and lasting about six years, there is a gap between line that depicts total supply of ethanol, and the solid light (E85) and dark (E10) green area that depicts the total consumption capacity of ethanol.
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THE ETHANOL BLEND WALL
Beginning in 2010 there is a projected gap where the supply of
ethanol could exceed the capacity of the U.S. vehicle fleet to aborb it.
(Source: American Coalition for Ethanol)

The solution to the challenge faced by the projected blend wall is to put more E85 flexfuel vehicles onto the road. But the U.S. automotive fleet only turns over once every 17 years, and out of 240 million cars on the road, only 7 million are currently E85 capable. U.S. automakers are moving quickly towards offering 50% of all new models in flexfuel mode, but it will take several more years before enough of these cars are on the road.

Along with flexfuel vehicles that are explicitly designed to run on E85, however, there is another solution to the blend wall, which is to adjust upwards what percentage of ethanol can be mixed into regular gasoline. Currently E10, 10% ethanol, 90% gasoline, is considered a safe fuel blend for any vehicle. But “mid-blend” fuels, such as E15, E20 and E30, containing 15%, 20%, and 30% ethanol respectively, according to Lamberty, can also run reliably in regular vehicles. Just moving the blend wall standard from E10 to E15 would solve the blend wall problem, and allow ethanol production to continue to increase without disruption.

There are studies now in progress that were noted by Lamberty, including a DOE Oak Ridge finding that E20 is fine in regular engines. Lamberty also cited recent University of North Dakota study which he said indicated non flexfuel cars can run well on E20 and E30 and even on E40. Lamberty also noted the retail stations who have been offering mid-blends have yet to receive a complaint or damage claim from a vehicle owner. Currently the question appears not whether or not a mid-blend ethanol fuel will immediately damage a regular vehicle, but what the long-term impact may be. One of the commenters during the presentation stated they had been fueling their car with E20 and E30 for 70,000 miles – on a car that already had over 200,000 miles logged – and had no problems to-date. Additional study of the long-term impact is going to be needed before, for example, major automakers are going to be comfortable providing warranty protection for regular cars that use mid-blend fuel.

Another barrier to adoption of ethanol fuel is the cost of the pumping systems at the retail outlets. To install a new tank, pipes, pumps, wiring, island, canopy, etc., in order to sell E85 can cost a retailer $100,000 or more. A terrific innovation that can greatly reduce this cost is to use what is called “blender pump” technology, where existing tanks are used. Since retailers offering E85 typically use the same underground tank they previously used to store premium gasoline, the blender pump can draw from an E85 tank as well as from an unleaded tank, and mix the fuel to whatever specification the retailer chooses.
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HOW AN ETHANOL BLENDING PUMP OPERATES
A blending pump can utilize two tanks, one with either E85 or E100,
one with unleaded gasoline, and blend any mixture the owner specifies.
(Source: American Coalition for Ethanol)

Blender pumps have a variety of benefits. Because they cost between $10,000 and $20,000, but take away the need to install a new underground tank, they greatly reduce the costs for a station to begin to offer E85. They also can blend E85 on demand, meaning the retailer can purchase 100% ethanol directly from the refinery if they wish. They also make it possible to vary the blend of E85 onsite – allowing the retailier to comply with state regulations that actually vary the percentage of ethanol in E85 from between 75% to 85% depending on the region and the time of year. Finally, blender pumps make it possible for retailers to use the same equipment to offer mid-blends whenever they choose.

The future of ethanol in the U.S. appears promising from several perspectives: If vehicles indeed can run on mid-blends, there is less pressure to precipitously introduce flexfuel vehicles. Using blender pump technology, retailers may be able to begin introducing ethanol at their stations at far less expense. It is already clear there is cellulosic feedstock in the U.S. – in the form of forest slash, municipal waste, flue gas, crop residue, as well as energy crops – to supply raw material for 100+ billion gallons of ethanol per year. The real remaining question is how fast cellulosic ethanol refining technologies can be commercialized and brought into production.


One Response to “Blending & Retailing Ethanol”
  1. Alan Adler says:

    As a spokesman for Biofuels at General Motors, I also listened with great interest to Mr. Lamberty’s presentation on Wednesday. He was very selective in his use of facts to make what seemed to be an overwhelming case for mid-level blends. First, he was off on several facts, which moderator Toni Nurenburg corrected in the few instances that Mr. Lamberty took a breath. There are more than 7 million flex-fuel vehicles in the US. The Detroit Three automakers – GM, Ford and Chrysler – have committed to making 50 percent of their vehicles flex-fuel capable by 2012, which would lead to about 18 million FFVs being available by then. If widely adopted and supported, E85 would offset a great deal more petroleum use than any incremental increase in the blend to meet the growing supply required by the Renewable Fuel Standard. When you add up all the ethanol required under the RFS (36 billion gallons a year by 2022), there is no midlevel blending that will reach that amount.

    More importantly — and largely overlooked by Mr. Lamberty — is the fact that ethanol blended beyond 10 percent can cause damage to non-FFVs. In tests conducted by Orbital Engine Corp. in Australia in 2003, four of 10 vehicles tested exhibited catalyst failure from overheating, leading to unchecked tailpipe emissions. The very Oak Ridge DOE tests Mr. Lamberty cited on Wednesday also showed similar catalyst overheating (29-35C higher than on E0) in six of the 13 vehicles tested. And the impact of higher blends of ethanol on the 200 million small engines – snowblowers, weed whackers, etc. – is unknown but predicted to be very damaging. As Coleman Jones, the manager of biofuels implementation at GM, was quoted in a recent issue of US News & World Report “The bottom line is that we need to test it. We need to test it thoroughly, because these guys are proposing to change gasoline for all of us, forever.” And if there is a change made to the blend of ethanol that causes problems for motorists, ethanol’s reputation will suffer potential irreparable damage. And then it won’t matter what blend it is because the public won’t want anything to do with it. We need to be careful to allow science to lead policy, not the other way around.

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