Infrastructure, cost blunt E85 adoption in the U.S.

  • 02-Jun-2008 08:15 EDT
In February, Sen. Jeff Bingaman (D-NM) called a hearing because of growing fears that the renewable-fuels mandate included in last year's energy bill is unworkable.

Alexander Karsner, an Assistant Secretary at the U.S. Department of Energy (DOE), was obviously ticked at what he perceives as the slow introduction of ethanol and E85-fueled vehicles when he appeared before the U.S. Senate Energy Committee on February 7. Sen. Jeff Bingaman (D-NM) had called the hearing because of growing fears that the renewable-fuels mandate included in last year’s energy bill is unworkable.

Both Bingaman and Sen. Pete Domenici (R-NM), the ranking Republican, indicated that the committee may write a “technical corrections” bill that would revise the renewable-fuels provision in the Energy Independence and Security Act (EISA) of 2007, which President Bush signed on December 19. That provision mandates the use of 9 billion gal of renewable fuel in U.S. autos by 2008 and 36 billion by 2022. That is quite an increase from the 2005 energy bill, which set a goal of 5.4 billion gal in 2008.

The EISA provision did not establish any numerical goals for the production of flexible-fuel vehicles (FFVs), which ostensibly will be needed to use the corn- and cellulose-based ethanol fuel that will be produced in large amounts. But there is certainly de facto political pressure on Detroit to step up its FFV production, and fast—a fact reflected in Karsner’s testimony.

But reaching 9 billion gal in 2008 depends on a heck of a lot more than the appearance of new FFV models from Detroit. Numerous witnesses at the Bingaman hearings—none of them from the auto industry—testified that the near-term ethanol production/use goals were probably unrealistic and that for the goals to be reached, many things will have to fall into place. They include a fueling infrastructure and certification by the U.S. EPA of fuels somewhere between E10 and E85 for use in conventional engines—actions that have nothing to do with the production rate of E85 vehicles.

Karsner noted the infrastructure problems: the shortage of fueling stations and the difficulty of getting ethanol to the East Coast. But he seemed to come down particularly hard on the auto industry on a day after General Motors Corp.'s North America President Troy Clarke said at the Chicago Auto Show that GM will have 11 ethanol-capable models on the market this year and 15 in 2009.

Karsner wasn’t impressed, apparently. Speaking to Bingaman and Domenici, he read from his prepared testimony, “Both [DOE Secretary Samuel Bodman] and I have been calling on automakers to make flex-fuel and hybrid vehicles ubiquitous across the fleet, for every make and model, for every manufacturer who services the U.S. market.” He then picked up his head from the paper he was reading and emphasized, departing from his prepared testimony, “They need to be made available not in the hundreds, not in the thousands, but in the millions,” implying that U.S. automakers are dragging their feet.

Going back to his prepared testimony, he read, “We do not see any technical reasons that at least the option of flex-fuel vehicles could not be offered to all consumers at a relatively low price.” Again, ad-libbing, he said, “And in short order.”

Asked after the hearings whether Karsner is annoyed with U.S. auto manufacturers, Julie Ruggiero, an Energy Department spokeswoman, said that isn’t the case. But, she said, Karsner believes “we need to move beyond prototypes and concept cars, and we need to do it with a sense of urgency.”

However, there is a real question about whether consumers would buy, in the short term, more flex-fuel vehicles than Detroit is producing. Charles Drevna, President of the National Petrochemical & Refiners Association, noted that FFVs get about 20-30% less miles per gallon when fueled with E85. And if that were not bad enough—especially given the new CAFE mandates the industry faces—he pointed out that a gallon of E85 can cost upwards of $0.80 a gallon more than a gallon of E10.

If mileage and price do not discourage consumers, lack of fuel pumps certainly will. There are only 1348 fueling stations in the U.S. offering E85.There are another 1350 terminals where ethanol can potentially be blended.

Maybe a solution to those problems would justify more aggressive production of FFVs. So would EPA certification of blends between E10 and E85 in conventional automotive engines. The DOE and the American Coalition for Ethanol (ACE) cosponsored an Optimal Ethanol Blend Level Investigation last year, and released the results in December 2007. “The investigation revealed unprecedented data that E20 and E30 blends can provide better fuel economy than regular gasoline in non-flex-fuel vehicles with fewer harmful tailpipe emissions,” said Brian Jennings, ACE Executive Vice President.

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