California Advanced Energy Coalition calls for E15 accommodation

By California Advanced Energy Coalition | October 10, 2012

The California Advanced Energy Coalition has proposed immediate action by the California Air Resources Board to adjust its fuel regulations to accommodate increased amounts of low cost clean burning fuels on the market. By implementing a recent ruling by the U.S. EPA allowing E15 into the market place, CARB could reduce California gasoline prices immediately as wholesale ethanol is selling at more than $1.00 per gallon below the price of gasoline.

An emergency update of the CARB compliance model to include levels of ethanol up to 15 percent will mitigate the need for such waivers in the future, while increasing the supply of the lowest cost fuel in the market, and enhancing California's air quality.

In spite of the EPA's approval for E15 nationwide in all vehicles built since 2001, as well as the California LCFS approved regulation that anticipates more than 25 percent ethanol fuel supply, current California gasoline regulations cap ethanol blending at only 10 percent.

According to the EPA and the U.S. DOE, E15 gasoline has been the most tested fuel in history. Before approving E15, the DOE conducted six years of testing at a cost in excess $42 million, operating engines for a distance equal to six trips to the moon. Since the EPA ruling, both Ford and GM have included E15 as an approved fuel for use in all new cars.

"We believe with focus and urgency, dictated by chronically high gasoline prices, California's regulations should be immediately amended to allow for increased ethanol, in a manner that enhances air quality and lowers gasoline prices," said Eric McAfee, chairman and CEO of Aemetis, Inc., an advanced biofuel producer in Cupertino, CA. "We fully support California's LCFS and the policy of increasing the supply of low cost, low carbon fuels into the marketplace. The testing data has been done. What is now needed is to add the EPA's new data to California's compliance model, which is a statistical task."

When at full capacity, California biofuels plants produce approximately 200 million gallons of lower carbon ethanol. However, the current ceiling of ethanol blending at only 10% effectively mandates 90% petroleum use in California, which has contributed to the state's biofuels plants operating well below capacity, in spite of producing a low carbon fuel that can immediately reduce gas prices.

"Clearly, gasoline regulations need to be updated with the LCFS state policy of adding new fuels into the market," said Neil Koehler, CEO of Pacific Ethanol, based in Sacramento, CA. "Ethanol is the most readily available alternative to gasoline, and is significantly cheaper than the gasoline components it replaces. The Brown administration should do everything possible to quickly increase the supply of this proven low carbon fuel, and align California's regulations with the EPA. We believe that ethanol can continue to be a key compliance fuel if allowed into the market at levels above 10 percent," said Koehler.

A recent study by Ford Motor Company showed the need for a 30% ethanol blend in gasoline in order to meet future fuel economy and clean air requirements in high-efficiency engines. Ethanol contains approximately 115 octane and 30 percent oxygen, which allows refiners to use lower cost petroleum while still meeting strict federal and California air quality and performance requirements.

"Why should California drivers pay more than $1.00 per gallon above the cost of a readily available, renewable, clean fuel produced in California?" asked Lyle Schlyer, CEO of Calgren Renewables, based in Pixley, Calif. Calgren's ownership group includes California fuel blenders.

On Sunday, Gov. Brown approved a waiver requested by the California Independent Oil Marketers Association to allow the production and sale off-season gasoline in California due to recent shortages and rising prices.