Barriers to E15 sales falling

Source: By Argus Media • Posted: Friday, May 29, 2015

Higher ethanol blends that are key to the debate over US biofuel policy will become easier to sell this year but will likely remain discouragingly complex for most US retailers.

Biofuel supporters need retailer support to break through infrastructure hurdles limiting ethanol’s market access and threatening to unravel federal blending requirements for the alternative fuel, called the Renewable Fuel Standard.

But blends of ethanol above the current 10pc standard that is most common still pose risks for smaller retailers asked to invest in a fuel with untested demand and the potential to void insurance coverage.

“The hurdles have gotten smaller,” National Association of Convenience Stores vice president of government relations John Eichberger said. “The caveat is, ‘but is the law going to allow you to use it?'”

Major retailers have begun to feature gasoline blends that include ethanol content of 15pc, or E15, higher than the current standard but still well below the volume requiring vehicles with special fuel systems. Retailers Sheetz and Kum & Go have this year reported plans to offer the fuel at more than 120 stores.

Those companies boast the scale and sophistication to both afford new dispensing equipment and source a proper, legal blend. Costs for smaller retailers interested in offering the fuel under current law have seemed staggering.

Federal law requires retailers to use equipment that is laboratory-certified for the fuels they sell. But retailers whose equipment meets manufacturer and local and state regulatory assurances still risk violating businessinsurance policies and inciting lawsuits. The rule also effectively requires stores to purchase new, certified equipment because the major testing laboratory will not retroactively certify equipment.

A federal rule currently under review and expected to take effect this year would allow the use of underground equipment carrying a manufacturer’s guarantee. Easing the rule on underground equipment helps eliminate the costliest burden to offering the fuel. A National Renewable Energy Laboratory study on retail equipment released today reported that much of the equipment in use could meet such federal requirements.

The change would not extend to above-ground equipment. But new retrofitting kits for the most common fuel dispensers have substantially cut the cost of converting that equipment for proper use to sell E15, Eichberger said.