Patience. It’s nothing new in the world of farming. So when Growth Energy first planted the E15 seed back in March of 2009 in the form of the Green Jobs Waiver request, they knew it would take awhile for it to come into fruition. And today, it looks like that seed is just beginning to take root.
On October 13, 2010, the Environmental Protection Agency (EPA) announced approval for fuel that contains up to 15 percent ethanol (E15) for use in 2007 and newer vehicles. Previously only 10 percent of ethanol was allowed to be blended into gasoline. This 10 percent regulatory cap, which dates back to the 1970s, constrained the ethanol market creating the “blend wall.”
“While we’ve got a crack in the wall, we are not going to give up until we firmly tear down the wall,” says Tom Buis, CEO of Growth Energy. “You can look at it as the glass half full or half empty, we took it as a glass half full. We need to continue to push forward.”
The goal of the waiver was to include all vehicles.
The current landscape
Mandating that a minimum of 90 percent of our gasoline be crude oil based prevents the nation from complying with the Renewable Fuels Standard (RFS2) enacted in the 2007 Energy Independence and Security Act that set the mandate of 36 billion gallons of renewable fuel by 2022.
“There are two ways we can reach that mandate,” says Bob Whiteman, Chief Financial Officer of POET Ethanol Products headquartered in Wichita. “One would be an increasing reliance on Flex-Fuel Vehicles (FFV) and E85. And the other would be by allowing higher concentration of ethanol in our gasoline that could be consumed in many of our gasoline engines.”
The initial decision by the EPA for 2007 and newer vehicles affects approximately 43 million vehicles in our nation’s fleet, which is about 27 percent. The secondary decision the Department of Energy (DOE) is working with EPA is to finish up testing on vehicles that are year models 2001 to 2006.
“We anticipate that the testing is going to come out in favor of an E15 blend and that EPA will be able to grant a waiver which will allow the use of E15 in 2001 and newer vehicles,” states Erin Heupel, P.E., POET’s Director of Environment & Technology, Public Policy and Corporate Affairs.
The decision to include 2001 and newer vehicles in the waiver would impact another 90 million vehicles. So combined, if they grant the second waiver, the market available for E15 would reach approximately 55 percent of all vehicles.
Blending Optimism
Yes. There are some hurdles that need to be overcome in order to bring E15 to the marketplace.
But this is something Jeff Broin, POET CEO has seen before.
“The arguments being made right now against E15 are the same as those made about E10 back in the late 1980s, when I entered the ethanol industry,” says Broin. “Seventy billion gallons later, we have proven those arguments false, just as research on E15 is proving critics wrong today.”
While research is already proving the critics wrong, Heupel believes the consumer will prove them wrong as well. E15 is being offered to the consumer only as an option. It’s the consumer’s choice that will validate the fuel.
“The EPA is in no way mandating that someone has to use E15,” Heupel says. “And it’s not a mandate that a fuel station has to sell it. Over the long run, it’s going to become an economically desirable choice because people are going to see a price difference between E15 and E10. And consumers that have the vehicles that EPA allows it to be used in, are going to like that choice.”
Onward
E15 will create a larger market for today’s ethanol, but, more importantly, it is critical to the future of renewable fuels. By cracking the blend wall, E15 is on its way to making cellulosic ethanol a reality.
“Greater market access will help give investors the needed confidence to commit to bringing cellulosic ethanol to commercial scale,” says Broin. “Many projects, POET’s Project LIBERTY among them, are ready for commercialization but hindered by unnecessary limits on ethanol content in fuel.”
More than 300 million gallons of planned cellulosic ethanol production capacity is waiting to come online, but is stalled because of a lack of an available market.
Making sure E15 can thrive is also vital to job creation. E15 has the opportunity to help create as many as 136,000 new jobs in the United States. Plus eliminate as much as 8 million metric tons of GHG emissions from the air in a year — the equivalent of taking 1.35 million vehicles off the road.
E15 Implementation
“Anyone who ever thought that you get an EPA waiver decision on a Thursday and you‘ll be able to buy the fuel on Friday, is going to be surprised,” says Heupel. “There are several steps that have to be taken. And that is why we’ve pushed so hard and so early to file the waiver.”
Some of the obstacles can easily be addressed, while others are going to require the ethanol industry to roll up their sleeves and work together to overcome.
“Once EPA grants something, such as a waiver for a new fuel or a fuel additive, suppliers also have to register with the EPA,” says Heupel. “And part of the registration process is providing data to EPA to demonstrate what the health effects are from using that fuel or fuel additive.”
Health effects testing comparing E15 to E10 is well under way , and positive results are expected soon. But what additional steps need to be taken in order to make E15 an everyday occurrence at the pump?
Changes to State Laws
One bump in the road will come in the form of regulatory restrictions or statutory restrictions preventing higher blends of ethanol in certain states.
“We are going to have to find local authorities that are willing to put in place, or have in place, the regulatory framework that is necessary to allow E15 in that state,” says Heupel. “Some states appear to be very poised to do that and other states, well, we have a little more work to do there.”
The laws vary from state to state, but the majority have to do with fuel specifications. Some laws refer to specific fuel criteria that may need to be updated. It’s not necessarily that the states are unfriendly to E15, it’s that their regulations reference standards that did not envision higher concentrations of ethanol in gasoline.
Labeling Requirements
At the same time EPA announced the partial granting of the waiver, they also announced a proposed rule making process for determining what kind of labels go on the pump to notify the consumers.
Much like the current labeling in the form of stickers and yellow pump handles to distinguish E85 from unblended gasoline, consumers will be made aware of E15 in the same manner.
On November 16th, 2010, the EPA held a public hearing in Chicago that addressed E15 pump labeling. Buis voiced Growth Energy’s support of the use of informative labels on fuel pumps to provide information to consumers regarding their fuel choices.
He also urged that the purpose of the labels be to inform and educate the consumer rather than scare and alarm.
“Consumers are smart,” Buis confirms. “Informing them is the objective, the goal here.”
He also took the opportunity to remind everyone that this is not the first fuel change in history.
“In the three decades plus the EPA has been around, we’ve seen the introduction of ethanol and we’ve moved from leaded to unleaded gasoline. We’re also currently witnessing a bifurcated diesel fuel entering the market. Each of these probably had some challenges, but ultimately it all worked. We were able to enter these into commerce and I’m sure we can for E15.”
In addition to the pump labeling, the other conditions by the EPA to prevent misfueling include measures of tracking E15 through commerce through product-transfer documents and compliance surveys.
Retailer Concerns
At the retail level, pumps are put through a variety of tests to be certified for dispensing blends of fuel. The Underwriter’s Laboratories (UL) is the entity that many state safety officials and fire marshals look to for this certification of the dispensing equipment at the retail level.
“The UL recently made an announcement that their initial testing for E15 showed they would be unable to certify most of the existing legacy equipment in its present condition,” Whiteman says. “There are questions from the industry about whether the severity of the tests actually represented any real-world conditions, but from an infrastructure standpoint that’s probably going to be the biggest hurdle to overcome.”
Whiteman emphasizes, “It doesn’t change the EPA waiver. It doesn’t contradict any of their findings. It’s just saying that we have some additional work to do with the UL to make sure there is a consensus that we have a relevant and reasonable standard in place for the pumps that will ultimately dispense the E15 at the retail station.”
The First Step
At the end of the day, the announcement from the EPA allows ethanol to play a bigger, broader role in our nation’s efforts to reduce our dependence on foreign oil. It is the first step of many to come. The E15 seed has taken root and there are many ready to nurture it and protect it from damaging storms that may lie ahead because its growth is crucial.
“I am confident E15 can be entered into the commerce. It’s important for America. It reduces our dependence on foreign oil. So it’s important that we get this right for our nation. It strengthens our national security. It creates jobs right here in America and improves the environment,” declares Buis. “And in my personal opinion our future depends on it.”
