OPINION: HBIIP funds can ease transition to higher ethanol blends

By Cassie Mullen, director of market development at the Renewable Fuels Association | March 03, 2020

Late last week, the U.S. Department of Agriculture made two important announcements related to ethanol that will have a positive impact on the future of the industry. The moves will both help drive demand for renewable fuels and assist retailers in delivering higher ethanol blends to the market.

USDA announced it will offer $100 million in biofuel infrastructure grants under the Higher Blends Infrastructure Incentive Program (HBIIP). Transportation fueling and biodiesel distribution facilities will be able to apply for funds to help install, retrofit, and/or upgrade fuel storage, dispensers, related equipment and other related infrastructure to enable the sale of ethanol and biodiesel. Details and grant application deadlines will be announced this spring, and additional information can be found here.

In addition to the infrastructure funding announced, USDA Sec. Sonny Perdue has directed USDA to acquire alternative fueled vehicles when replacing conventionally fueled vehicles. Because USDA has one of the largest civilian fleets in the federal government this directive has the potential to increase USDA’s annual consumption of E15 by up to 9 million gallons and E85 by as much as 10 million gallons. Where renewable fuels are available at retail, the USDA fleet is required to use those fuels.

It’s easy to see why this is welcome news to retailers!  The Renewable Fuels Association has many tools available to help retailers make the switch to a variety of ethanol blends. The U.S. ethanol industry has worked hard to provide a consistent, high-quality fuel that blends seamlessly with traditional gasoline. As is the case with any fuel change, however, retailers and marketers will need to take basic preparatory steps to ensure a smooth transition to ethanol-blended fuels.

It's not just USDA’s announcement that makes the change to higher blends more worthy of consideration; it’s also market competition.  With major market influencers like Kum & Go, Casey’s and QuikTrip transitioning more and more locations to higher blends of ethanol the question of how others can take advantage of this opportunity continues to arise.

In making the move, there are several areas that need to be considered.

Retailers interested in offering higher ethanol blends should conduct a study of their current infrastructure capabilities. While ethanol has some similar properties to traditional unleaded fuels, there are some important differences in materials compatibility. A thorough review of the entire fuel delivery system must be performed to confirm compatibility prior to introducing ethanol or ethanol-blended fuels. This review must include tanks, tank liners, submersible pumps, gaskets, O rings, any metal fittings or system parts and Automatic Tank Gauge (ATG) system.

First, study your storage tank construction to ensure it is appropriate for use of ethanol-blended fuels. As part of this, review the storage tank’s history for water contamination and be aware that removal of all water and sludge from the storage tank is imperative for providing quality fuels.

Phase separation can be avoided by cleaning the storage tank and removing any water present. As part of this, ensure there are tight seals on the fill caps and proper water runoff from the storage covers, and check for tank tilt of underground storage tanks prior to introducing ethanol-blended fuels. Beyond your initial inspection, you will need to create a daily system for the monitoring of water in your system. Unfortunately, we don’t live in a perfect world and water does often make its way into typical UST fuel systems.

Phase separation is a complex issue related to water. It is important to note this is in no way related to ethanol content, as typically portrayed, but a water issue. As a matter of fact, ethanol blends can hold more water without phase separation than ethanol-free fuel, and more ethanol improves the fuel’s resistance to phase separation. This is an advantage that can help keep fuel systems “dry” by moving low levels of water out of the system.

Click here for more information on underground storage tank compatibility with ethanol.

E15 is approved for use in 2001 model year and newer cars and light-duty vehicles, therefore retail dispenses must display a notice to prevent introduction of E15 into non-approved vehicles and equipment. For specifics please review the RFA E15 Retailers Handbook

As with any change to your fueling infrastructure you should first consult your state and local authorities and always seek the support of a qualified petroleum equipment service provider. Click here for a full listing of qualified suppliers and service organizations.

The retail convenience store business is a highly competitive and ever-changing landscape, in order to succeed, marketers must continuously differentiate themselves. Adding higher blends of ethanol fits perfectly into that plan, and it’s no surprise that top marketers in the country have already joined the trend, seeing an average 20 percent overall sales increase.

A more complete checklist for transitioning to higher blends can be found at this link. The Renewable Fuels Association has a number of resources available for retailers here. For support on converting your existing equipment or guidance on how to participate in the USDA HBIIP Grant program in the months ahead, RFA is here to help. Feel free to email me at cmullen@ethanolrfa.org.