Infrastructure, FFV expansions needed now, RFA study finds

By Kris Bevill | March 09, 2011

A recently released study commissioned by the Renewable Fuels Association confirms that a combination of rapid infrastructure expansion and increased production of flex-fuel vehicles (FFVs) is necessary if ethanol is to be a major source of compliance with the renewable fuel standard (RFS2).

Conducted by Michigan-based engineering and consulting firm Air Improvement Resource Inc., the study evaluates the average ethanol level and FFV refueling requirements necessary to achieve the U.S. EPA’s low, mid and high volume scenarios under the RFS2. Twenty-seven possible scenarios regarding available ethanol volumes, FFV availability, ethanol use in non-FFVs, and the availability and location of blender pumps and/or E85 pumps were considered.

The study concluded that without increased availability of E85 or blender pumps, the EPA’s mid and high volume consumption scenarios (22.2 billion gallons by 2022 and 33.2 billion gallons by 2022) will not be attainable. The study also determined that a significant amount of FFVs will need to be produced in order to meet the goals of the RFS2. The three largest U.S. automakers—General Motors Co., Ford Motor Co. and Chrysler—have already agreed to make half of their vehicles produced flex-fuel capable beginning in 2012, but more will be needed in order to consume the increasing amount of ethanol entering the market. That particular finding was the most notable for Geoff Cooper, RFA’s vice president of research and analysis. “Even with the commitment from the Detroit Three to produce 50 percent FFVs in 2012 and after, it would be physically enough to help meet the RFS, but only if they are filled with E85 every time they refuel,” he said. “It’s not likely that would happen. The commitment to FFVs is going to need to be well beyond that 50 percent commitment from the Big Three automakers to get us to where we need to be.”

The study concluded that if all vehicles sold beginning in 2015 are FFVs, and if E15 is used in all other vehicles 2001 and newer, FFVs would need to consume an average blend of E29 in order to meet the 22.2 billion gallon consumption target in 2022. It was noted in the study that this average translates to FFVs using E85 37 percent of the time, or E30 all of the time.

Expanding the use of E15 to include all vehicles could alleviate some of the pressure for greater increased FFV production. The study found that if all vehicles were allowed to use E15, non-FFVs could potentially consume 21 billion gallons of ethanol in 2022, compared to about 19 billion gallons consumed by vehicles 2001 and newer.

Regarding blender pump and E85 filling stations, the study made clear the inadequate number of current stations and immediate need for infrastructure expansion. It was noted that the EPA has determined that 25 percent of service stations should offer E85 in order to provide FFV drivers with reasonable access to the fuel. The study found that there are approximately 162,000 service stations in the U.S. About 2,200 of those stations offer E85, representing a miniscule 1.5 percent of total service stations. Unless infrastructure is expanded quickly, the study determined that the number of FFVs with reasonable access to E85 will continue to diminish as more FFVs are produced beginning next year.

While it was noted in one scenario that FFVs would need to use an average E29 blend to meet the RFS2, the number of blender pumps in the nation currently would make that goal impossible to obtain. The study found that there are currently only about 300 blender pumps in the U.S.

Cooper acknowledged that many of the general conclusions reached in the study have been previously known by ethanol industry members, but said the RFA commissioned the study in order to obtain thorough data and analysis to support those claims. “There’s broad agreement within the industry that ethanol policy moving forward is going to need to include measures to enhance and build out our infrastructure to handle larger volumes of ethanol,” he said. “While we all agree on that, we felt it made sense to drill down a little deeper to come up with some specific estimates.”

The results of the study will be used to influence the industry’s long-term ethanol policy, Cooper said. The RFA, Growth Energy, the American Coalition for Ethanol and the National Corn Growers Association are currently forming a long-term strategy recommendation for ethanol policy and plan to release it by April. Last year, Growth Energy released its own long-term strategy, dubbed the fueling freedom plan, which also calls for infrastructure expansion and increased production of FFVs. The fueling freedom plan would finance this build out by diverting current ethanol subsidies toward infrastructure expansion projects. Cooper pointed out that while the infrastructure and FFV expansions called for in the RFA study and Growth Energy’s plan are similar, the RFA study does not address policy issues and is not an endorsement of any particular strategy. “There’s never been any disagreement that we’re going to need to rapidly build out infrastructure to handle higher volumes of ethanol,” he said. “Whether you call that fueling freedom or whatever, there’s never been any disagreement that that has to happen. The mechanics of how that happens is another discussion.”

The complete RFA-sponsored study can be viewed here.