Opportunities, challenges in boosting E85, higher blend sales

By Holly Jessen | February 20, 2015

Different gasoline retailers are having very different experiences with E85 sales, said John Eichberger, executive director of the Fuels Institute and vice president of government relations for the National Association of Convenience Stores. One retailer in California told him 25 percent of his total sales are E85 while other retailers say drivers aren’t buying the fuel at all.

Eichberger told this story Feb. 20, the last day of the National Ethanol Conference, during a presentation called “The Road Ahead for Higher Blends.”  Wanting to know why this was happening, the Fuels Institute decided to gather information on price and gallons sold, and published  a 37-page market performance analysis and forecast on E85.

There is a huge amount of market growth potential in E85 sales and flex-fuel vehicles (FFVs), Eichberger said. However, there are some big challenges as well. Retailers that have had the most success with selling E85 price the fuel 60 cents cheaper than unleaded fuel. Fuels Institute found that top-performing stations sold an average of 727 gallons of E85 daily, which made up 8 percent of sales. If every station that sold E85 replicated that, annual E85 sales could increase to 4.4 billion gallons by 2023. However, if retailers only matched the average performance of E85 sales, as calculated by Fuels Institute, E85 sales would only reach 1.125 billion gallons by 2023, he said.

Pricing is a key strategy for increasing E85 sales. Another way E85 could be promoted to consumers is as an octane booster that provides more horsepower, Eichberger said, calling that a potentially powerful marketing tool.

Another speaker, Kristi Moriarty, senior analyst for the National Renewable Energy Laboratory, gave attendees more information about the challenges of the changing fuel landscape. She touched on the various regulatory agencies that govern the different equipment at retails stations, including pumps, pipes and tanks. She said upgrades to handle up to E25 appear to cost the same or only slightly less than other materials but that E85 does make the project more expensive, due to the metals required.

Moderator Robert White, vice president of industry relations for the Renewable Fuels Association, commented after Moriarty’s presentation that it was clear there were some infrastructure challenges in upgrading infrastructure to handle mid- and high-level ethanol blends. “I don’t think anybody thought it was easy,” he commented.

It’s true that the challenges facing ethanol expanding its marketplace reach are not trivial, said Brian West, deputy director of the Fuels, Engines and Emissions Research Center at Oak Ridge National Laboratory. However, he countered that offering consumers more ethanol is clearly much easier than, for example, increasing the infrastructure needed to offer more consumers hydrogen as a transportation fuel.

He spoke about opportunities for E25 to E30, which could be marketed to flex-fuel drivers as a new-high octane fuel, as a way to expand infastructure for these fuels. If ethanol is blended with regular gasoline, the high octane can enable future engines to be more efficient, resulting in one gallon of ethanol displacing one gallon of gas, something he said he was very excited about. Although he said it may need a different name for marketing purposes, he referred to this new E25 to E30 as renewable super premium.

He also touched on several different projects using modeling as well as actual vehicle demonstrations, which are examining different ethanol blends, various engine compression ratios and more. Drivers using the new E30 would get a speed boost from ethanol’s octane. “I think you are going to feel the difference,” he said.

Later in his presentation West added that it’s important to remember that corn-ethanol is a greenhouse gas (GHG) win even when one gallon of ethanol only displaces two-thirds a gallon of gasoline. Cellulosic ethanol is, of course, an even better at reducing GHG emissions by displacing petroleum.