Market expands for E15, but speed bumps remain

Source: Amanda Peterka, E&E reporter • Posted: Thursday, May 9, 2013

As the back and forth over ethanol continues on Capitol Hill, Wisconsin yesterday became the sixth state to offer gasoline containing 15 percent ethanol.

The fuel, known as E15, is being sold at eight gas pumps at a gas station in Platteville, Wis. The station in the southwest part of the state is owned by Badger State Ethanol, a renewable fuels company based in Wisconsin that produces nearly 60 million gallons of ethanol a year.

“We are honored to be Wisconsin’s first retailer to offer E15 to our customers who have been asking for it,” said Erik Hushitt, vice president of operations and commodities manager at Badger State Ethanol. “We hope other retailers follow our lead so that consumers around the state have an opportunity to gain access to a cleaner-burning fuel that contributes directly to the billion-dollar ethanol industry in Wisconsin.”

U.S. EPA last year gave final approval for the fuel to be sold in the United States to passenger vehicles with model years 2001 and newer. Proponents of the new fuel say it will help refiners meet their obligations under the renewable fuel standard, the national policy that mandates yearly levels of conventional ethanol and advanced biofuel use.

Renewable Fuels Association President and CEO Bob Dinneen touted the opening of the E15 pumps in Wisconsin yesterday as an “exciting day for drivers” in the state.

“They now have a choice at the pump,” Dinneen said. “They have the opportunity to choose a new renewable fuel mix that provides cost savings as well as engine and environmental benefits.”

EPA estimates that E15 will make up 50 percent of the motor fuel market by 2017, but in the year it’s been available, E15 has so far been slow to penetrate the market currently dominated by gasoline containing 10 percent ethanol, or E10. The 15 percent fuel blend was first offered in Kansas last summer (Greenwire, April 8) and has since been made available at a handful of gas stations in Iowa, Nebraska, South Dakota, Illinois and now Wisconsin, according to the Renewable Fuels Association.

Oil industry groups and automakers have warned that the fuel could damage car engines and fuel systems and have petitioned the Supreme Court to take up a challenge of EPA’s decision to approve the fuel (E&ENews PM, April 12). Several pieces of legislation have been filed in the House and the Senate to block the fuel.

Marcus Koblitz, a policy analyst at the American Petroleum Institute, said oil companies don’t see a market for E15.

“You look at the warranties for the new automobiles, they don’t hold the warranty for E15. It voids it. So at that point, who’s going to use this fuel?” he said.

As E15 is being rolled out in Wisconsin and other agricultural states, other regions of the country are taking steps to either actively block its introduction or eliminate state renewable fuel mandates.

A bill currently sitting on the desk of Florida Gov. Rick Scott (R), for example, would repeal a requirement that most gallons of gasoline sold in the state contain about 10 percent ethanol. Lawmakers in Maine have also introduced legislation that would limit the amount of ethanol in gasoline to 10 percent. California’s Air Resources Board has not yet authorized E15 for use and has said it will likely be several years before the fuel is sold in the state.

Even in Illinois, the nation’s second-largest corn producer, legislation that would transfer a 20 percent sales tax break from E10 to E15 to encourage the introduction of the fuel has run into fierce opposition from petroleum marketers. Opponents say the bill would add to the cost of gasoline in the summer months, when retailers will have to stop selling E15 to comply with EPA restrictions for ozone nonattainment areas.

“It will be a significant sales tax increase on Illinois consumers,” the Illinois Petroleum Marketers Association and Illinois Association of Convenience Stores said in a statement. “While a few members of the agricultural community will benefit, Illinois fuel retailers and consumers will realize none of the benefits while bearing all the cost and liability.”