E15 Phases In

Source: By CSP Daily • Posted: Wednesday, March 30, 2016

NEW YORK — There’s room to grow with E15.

That’s the conclusion of a recent Reuters analysis of government and vehicle sales data that found nearly one-fifth of vehicles on the road today can safely run on E15, a blend of 15% ethanol and 85% gasoline. And this figure could grow to almost 25% by the end of 2016, should auto sales continue to charge ahead.

Compare this to a 2015 estimate by AAA, which suggested only 14% of vehicles on the road can safely use E15.

This finding challenges the “blend wall”—the idea that there is not enough gasoline consumption to safely handle the ever-increasing volumes of ethanol required under the Renewable Fuel Standard (RFS). Reuters estimated that oil companies would lose about $10 billion to ethanol producers if E15 replaced E10 in a gasoline market that totals about $290 billion (assuming average retail prices and 142 billion gallons in gasoline demand).

In 2015, for the first time, most new vehicles sold were approved to use E15 by their manufacturers. The last of these major manufacturers, Fiat Chrysler Automobiles, which has more than 10% share of the U.S. new vehicle market, approved E15 for 2016 models this year. The car manufacturer made the move because it anticipates “a potential proliferation of the fuel being available,” a company spokesman told Reuters.

Other automakers—Daimler AG and BMW Group among them—are choosing to invest in hybrid and electric vehicles instead. Nissan Motor Co. has also not made a shift toward E15, although the company is monitoring regulatory and marketplace developments.

It may take more than a decade to fully convert the U.S. vehicle fleet to E15, according to experts, and infrastructure still remains a big headwind to a faster transition. Out of the more than 100,000 gas stations in the United States, about 200 fueling sites now sell E15.

“It’s a chicken-and-egg thing,” John O’Dell, an independent automotive-industry specialist based in Orange County, Calif., told Reuters. “The manufacturers are starting to come around to redesigning fuel systems to handle E15, and that will slowly but surely see a growth of pumps that handle it.”

Most automakers are transitioning toward E15 without endorsing the fuel blend, citing regulatory factors rather than consumer demand for the move. Ford Motor Co. and General Motors were among the first to make the shift, as far back as their 2012 and 2013 model years, by integrating parts that can handle corrosive ethanol. This was after the Environmental Protection Agency (EPA) approved E15 for use in all vehicle models 2001 and newer.

“If anybody had any sense, they looked at [targets] and said: ‘We’re not going to get there with 10% ethanol’,” said Dominic DiCicco, environmental policy and fuel quality manager for Ford, referring to blending targets under the RFS. “Something has to change.”

Despite the EPA’s approval of E15, there is still lingering concern among vehicle owners that use of the fuel blend could void their warranties. But the major automakers’ own approval of E15 for their newest vehicle models may help.

“It certainly could transform the conversation,” said Scott Irwin, economist and biofuels expert at the University of Illinois.