Today, virtually all gasoline sold in the U.S. contains 10% ethanol (E10) thanks to the Renewable Fuel Standard (RFS) that came into effect in 2005. Between 2005 and 2010, ethanol sales more than tripled before leveling off as a result of increased vehicle fuel efficiency and the rise of hybrid and electric vehicles. With these trends expected to continue, the U.S. Energy Information Administration forecasts gasoline consumption will decline through 2050 by -19%. If E10 continues to be the standard blend, ethanol consumption will decline as well. USDA says ethanol use could continue to rise if E15 becomes the standard blend, while simultaneously helping to greenhouse gas emissions. While there is potential for expansion to higher blends, the United States Department of Agriculture (USDA) says there are also numerous technical, legal, and economic challenges. Below are some of the highlights from the report, which is available HERE.
Ethanol Blends
Of the gasoline sold in the United States, approximately 95% to 98% is E10. Historically, the second most common ethanol blend available at retail stations is E85, which is an ethanol-gasoline blend ranging from 51% to 83% ethanol by volume. However, in 2019, E15 sales surpassed those of E85 for the first time. Flex fuel vehicles (FFVs) are the only vehicles approved to safely operate on gasoline with any blend of ethanol up to E85. The use of FFVs is especially popular among fleets operated by State government agencies but, despite their popularity, offering from manufacturers have decreased by 80% since 2015, according to USDA.
As E85 is no longer stimulating the growth needed to increase ethanol consumption, attention has switched to the potential in mid-level blends, notably E15. It is estimated that 93% of the
vehicles on the road, consuming 97% of gasoline, are approved to use E15. Reluctance with offering mid-level blends has been more pronounced, with BMW the only manufacturer to approve ethanol blends up to E25 in their vehicles.
A 2019 ruling by the U.S. Environmental Protection Agency (EPA) that permitted the year-round sale of E15 was expected to encourage the growth of the E15 market going forward. However, a court ruling in July 2021 struck down EPA’s interpretation that would have expanded E15 sales. In response to tight energy markets, the White House has authorized a national emergency waiver to make E15 available in the summer but the long-term resolution of the issue remains.
Existing Infrastructure
Compared to the 150,000 public fueling stations in the United States that sell E10, there are 3,975 public E85 stations available in the country. Of all the stations that offer ethanol blends, over 1,300 sell both E15 and E85. Growth Energy estimates that between 2014 and 2020, the number of retail E15 stations in the United States grew from approximately 104 to over 2,300. Minnesota, Wisconsin, Iowa, Florida, and Texas account for over 50% of those E15 stations.
Many service stations appear to already have the basic equipment necessary for storing and dispensing ethanol blends above E10. The market for ethanol service station equipment is also well developed. However, time and costs associated with the replacement of infrastructure are the primary barriers stations face across all higher-level ethanol blends. USDA estimates if 20% of existing stations were upgraded to E11-E25 blending capacity with medium above ground modifications, the cost increase is $1.9 billion. The cost increases to $10.62 billion for extensive UST conversions. To move to E26-E85 blends, the costs rise to $5.7 billion and $14.44 billion respectively. Federal support to upgrade station infrastructure for storing and dispensing mid- and high-level ethanol blends up to now has been $200 million.
USDA concludes that the current structure of the RFS, combined with the commercialization stage of cellulosic fuels, does not serve to incentivize ethanol blends higher than E10. The report authors add that resolution and clarity surrounding the permissibility of E15 to be sold year-round is likely needed to expand E15, as gas stations are less likely to invest in infrastructure for a fuel that can only be sold for a portion of the year.
