Where in the Northeast is E85

One can easily drive through the U.S. Midwest and run across an E85 station before it's time to refuel. There may even be a couple different stations to choose from. Ethanol marketers in the Northeast can only dream about that kind of distribution, but they're working hard to make it a reality.
By Kris Bevill | July 08, 2008
There are 345 gas stations in Minnesota that provide E85, according to the National Ethanol Vehicle Coalition. Minnesota leads the nation in the number of E85 stations per state.

Many other Midwest states have invested the time and energy to install E85 pumps for their flexible-fuel vehicle (FFV) driving customers, including Iowa with 90 E85 stations, South Dakota with 70 locations and even oil-rich Texas with 38. But there are other states where E85 pumps are not as abundant. If one took a drive out to the Northeast and tried to fill their tank with E85, a GPS system would come in handy. Once one got to Pennsylvania, with only 15 E85 stations, a person would have to do a little searching to find a station.

From there, one would want to reset their GPS system and head east or north until they reached the coast where they would have a choice of 31 stations to purchase E85 throughout 11 states. That means the odds of finding an E85 pump without GPS before the FFV's gas gauge hits the empty mark are not good.

That's not a good situation for the FFV driving public because as gas prices continue to rise, the spread between the cost of regular unleaded and E85 is also increasing, making E85 a better bargain than regular gasoline. So what's the hold-up in the Northeast? "We can't assume that because we've heard of ethanol and that because our political leadership has promoted ethanol for people here in the Midwest, where people have been using ethanol for the past 20 years, that the knowledge of others around the country is as accurate as ours," says NEVC Executive Director Phil Lampert.

A lack of education is one reason why the Northeast lags behind the Midwest in its use of E85. It's a long-term process to change opinions, Lampert says. "It takes awhile to increase education and awareness on these products. It's not going to happen overnight," he says.

The NEVC has been advocating ethanol use in all parts of the country for years and continues its efforts on a daily basis. Lampert knows what it takes to establish a market for E85 anywhere, but sometimes it requires more than educating the public and station owners to get E85 stations installed. Often the biggest hurdle to overcome is the federal and state governments.

Blame California
According to Lampert, problems for gas station owners interested in installing equipment for and selling E85 can be traced back to 2006 when the Underwriters Laboratory Inc. rescinded its certification for E85 pump equipment, which made little sense. "We had never had a leak, a failure of an E85 pump or any indication of exorbitant corrosion of an E85 pump, but nevertheless the UL rescinded the certification," he says. That move by the UL eliminated the possibility of federal regulations for E85 equipment, leaving it up to individual states to decide. Lampert says interested parties have been able, for the most part, to effectively deal with local weights and measures divisions and fire departments in order to acquire waivers for the installation of E85 pumps and storage equipment. Work at the local level has led many states to allow the sale of E85 today. And then there's
California.

Established by the state legislature in 1967, the California Air Resources Board governs all things related to emissions and vehicle standards in the state. According to its Web site, CARB was established to attain and maintain healthy air quality, conduct research into the causes of and solutions to air pollution, and systematically attack the serious problems caused by motor vehicles. It all sounds good, but well-meaning legislation can often have unintended consequences. "There are more flex-fuel vehicles on the road in California, than in any other state, and [California] has only 10 E85 fueling stations," Lampert says.

One reason is that California requires the use of stage 2 vapor recovery equipment. Stage 2 vapor recovery equipment is a sleeve on the outside of the pump nozzle designed to catch vapors that escape from the vehicle's gas tank. For gas station owners required to install the equipment, the expense can take quite a chunk out of their bottom line. The NEVC has been arguing that stage 2 vapor recovery systems are not really necessary because all vehicles manufactured in the United States since 2000 come equipped with onboard vapor recovery systems. And nearly all FFVs were manufactured after 2000. This is important because 12 other states have adopted California's emission standards, including almost every northern state on the Eastern seaboard. Connecticut, Maine, Maryland, Massachusetts, New York, New Jersey, Rhode Island, Vermont and Pennsylvania follow CARB rules, as do New Mexico, Oregon and Washington.

In February, CARB declared that stage 2 vapor recovery equipment was no longer necessary for E85 fueling stations. However, an executive order needs to be issued to rescind current regulations before the 12 other states can make the change. It remains to be seen whether that is all that's needed to jump-start the E85 movement in the Northeast. In early June, CARB spokesman Dimitri Stanich told EPM that an executive order was in the works and could be finalized any day, after which participatory states would have the opportunity to accept it as is or interpret it for their own best interests.

New York: The E85 Beacon
Perhaps the one shining example for the Northeast is a state that already sets the trends for the region. According to Lampert, New York has done wonders improving its biofuels programs and making alternative fuels available for the consumer. "They have bought into this," Lampert says. "They support it. They're not letting the bureaucracy get in the way of it. They've got millions of dollars that they're making available for grants and they've eliminated taxes on E85 for a number of years. New York is second to none in the country, as far as what they have done to promote E85."

The New York State Energy Research and Development Authority implements the states' biofuels programs. So far, public response to the increased availability of biofuels has been "well beyond our expectations," says Senior Project Manager Patrick Bolton. In his opinion, California emission standards have not significantly impacted NYSERDA's work to make biofuels incentives available.

Among the programs being implemented by NYSERDA is the Biofuel Station Initiative. The objective is to increase the number of E85 and biodiesel stations throughout the state by reimbursing 50 percent of station-owners' costs, up to $50,000 for each station, for the installation of biofuels dispensing equipment, storage tanks and associated piping equipment. Bolton says the program has been operating for about a year and has collected 73 applicants. Application processes are in various stages of completion. "Our hope is to do approximately 300 stations in the state with the funding that we have available," Bolton says. It is an open-enrollment program and has been renewed until May 2009.

NYSERDA also provides an incentive for terminal operators by supplying up to 50 percent of the cost for equipment to distribute E85 or biodiesel to retail stations and fleets across the state. Each terminal that applies can secure up to $150,000 to cover those costs.

For producers, the state offers a 15-cent-per-gallon tax credit for every gallon over 40,000 gallons of ethanol and biodiesel produced in the state. Also, there is no state tax on ethanol. The only tax that is applied is the federal excise tax on the sale of the fuel.

Bolton attributes the state's recent push to make E85 available to ample funding and forward-looking legislators. He says the governor's leadership has been important to not only set up the infrastructure for biofuels but also to set the stage for second-generation biofuels.

The success of the NYSERDA's work can easily be measured. According to Bolton, E85 stations in New York sell anywhere from 700 to 10,000 gallons of ethanol per day. "They are some of the top performing E85 stations in the country," he says. And consumers are seeing the economic benefits of using biofuels. In early June, an E85 station near NYSERDA's office was selling E85 for $2.99 per gallon, compared with $4.15 per gallon for regular unleaded, Bolton says. "That saves the consumer $10 on a 20-gallon fill up, so there's been significant interest by consumers, who are saving real dollars by using it," he says.

The Granite Island
New Hampshire is the lone Northeast state to refrain from adopting California emissions standards. One would assume that would make it easier to sell E85, but Liberty Energy LLC co-founders Scott Maltzie and Thomas Mann have found that's not the case.

Maltzie and Mann founded Liberty Energy in 2004 with the hopes of becoming a renewable fuels marketing company, and to help alleviate the United States' dependence on foreign oil, create domestic jobs and improve the environment. In 2006, the duo attempted to market ethanol in the southern half of New Hampshire and northern Massachusetts.

To date, they've managed to increase their personal knowledge on the difficulties of passing E85 legislation. However, their desire to keep trying to make E85 available to
consumers in their part of the country hasn't waned. But there are still no E85 stations.

"It's been a kind of good news, bad news situation," says Maltzie, who serves as the company's chief operations officer and chief financial officer. Since they began focusing on acquiring and marketing E85, he and Mann have been pleasantly surprised at the supply of ethanol in the area. It contradicted their original thought that acquiring a reliable supply would be the hard part about marketing ethanol. So the good news is that ethanol is there and ready to be used. However, because there is a lack of E85 stations, Mann says most of the local producers end up shipping much of their product to the Southeast, where ethanol has experienced a recent surge in demand.

The bad news for Maltzie and Mann has been state regulationsor a lack thereof. Ethanol hasn't been addressed in New Hampshire regulations at all, forcing officials to treat it essentially the same as gasoline. It's baffling to Mann who, as senior vice president of business development, spends much of his time talking to station owners and state representatives. "It's like they apparently didn't ever see this coming," he says.

Maltzie says the state has expressed interest in making regulatory changes, but the New Hampshire government is chronically short staffed and under budgeted so it takes a while for things to get done. New Hampshire is also historically conservative and leans more toward people helping themselves than heavily funding any one project. "People are not intentionally trying to stonewall us, but the end result is it makes this more difficult," Maltzie adds.

Maltzie and Mann say some owners have expressed a willingness to try E85, but they don't want to have to invest their own money to install equipment. At least not until there is proof that people will buy it. The closest E85 station to Liberty Energy is approximately four hours away in Albany, N.Y. "It's not like in the Midwest where a four-hour drive can be the norm," Maltzie says. "For people here, a day spent driving to check something out is not really appealing." Mann adds that station owners are currently making half the amount on gas sales than they have in the past so independent owners just don't have the money to invest in new equipment. Furthermore, corporate stations are afraid to install pumps at their locations because of lawsuits over the potential misuse of E85.

Another hurdle for E85 in New Hampshire is that many FFV owners don't even realize they can use E85 in their tanks. According to Mann there are 18,500 FFVs in New Hampshire. It is assumed that none are currently being fueled with E85.

Mann says they get frustrated at times because it often feels they are alone on an island trying to make changes to New Hampshire's fuel regulations. After several phone calls and e-mails they eventually found people willing to help and offer some advice, but ongoing education and a mentoring system would be useful in the future, Maltzie says. They also feel that ethanol promoters have simply forgotten about New Hampshire. "We're a different place than the middle of Iowa," Maltzie says.

Maltzie and Mann will continue to develop a market for E85 in New Hampshire as long as it is feasible. They hope to win a grant from the state's clean cities program that will help provide financial assistance to station owners who would like to sell E85. If they get the grant, Maltzie says their goal is to help fund 10 to 15 gas station ethanol projects. "We're also working to get a group of first adopters who are willing to boldly go where stations haven't gone before in the state of New Hampshire," he says. "Our primary focus has been to get those stations identified and to figure out what needs to happen to get those stations converted."

Kris Bevill is an Ethanol Producer Magazine staff writer. Reach her at kbevill@bbibiofuels.com or (701) 373-0636.