Tearing Down Barriers, Building Up Trust

By Tom Bryan | January 16, 2013

Until it approved E15 for use in contemporary vehicles in late 2011, the U.S. EPA hadn’t demonstrably changed its regulatory position on ethanol since the arrival of E10 in 1978. As we learn this month, it’s not easy to change a fuel regulation that’s been on the books for 35 years, but our industry made it happen in 2012.

Today, thanks to the diligent efforts of our industry associations, there are no significant federal regulatory barriers standing in the way of E15, but as Holly Jessen reports in our page-30 cover story, “Choice at the Pump,” the monumental task of bringing E15 to market has shifted to other critical fronts. The industry is now working feverishly to remove state-level regulatory barriers to E15 while, at the same time, convincing retailers to sell the product when they can. Since E15 is now approved for use in all 2001 and newer vehicles, 62 percent of all the cars and trucks on America’s roads (using more than 80 percent of all fuel) can now use this higher blend of ethanol, if and when it’s available.

In this month’s page-40 Q&A, Kristy Moore of the Renewable Fuels Association tells us the industry is now focused on removing state-level obstacles to E15 implementation and moving this industry toward a future where E15 enjoys coast-to-coast market penetration. That would open up the U.S. market to more than 7 billion new gallons of ethanol made from a wide variety of feedstocks. And for that to happen—for the industry to grow by 50 percent—America would need to build the equivalent of 140 new 50 MMgy ethanol plants, spurring years of new construction and job creation.  

The industry is taking things in stride, though, building trust with one retailer at a time. Our industry needs more relationships like the one it has with Scott Zaremba, owner of several Zarco 66 convenience stores in Kansas that were the first in the nation to offer E15. Jessen reports that the cost advantage, higher octane and locality of E15 are big selling points with station owners. Coincidentally, Zaremba usually purchases ethanol direct from ethanol plants within 100 miles of his gas stations, blending his own E15 at optimal cost. We learn in Jessen’s page-52 feature, “Direct Connection,” that selling higher ethanol blends direct from ethanol facilities is paying off for some plants. Producers like Michigan’s Carbon Green BioEnergy have invested in onsite blending equipment to capitalize on retailer demand for discounted E85 in close proximity to the plant. The returns have been good.  

Finally, be sure to check out the ethanol and gasoline data presented throughout our page-45 feature on the domestic and global ethanol market. In “Optimistic Bearing,” Sue Retka Schill reports that ethanol marketers anticipate that the favorable blend economics of ethanol and the growing mandated volume for conventional renewable fuels will drive the adoption of E15. But as Jason Searl of Poet Ethanol Products says, “The full saturation of E15 will be in the course of years.”

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Tom Bryan, PRESIDENT & EDITOR IN CHIEF
tbryan@bbiinternational.com