EPA: E15 keeps growing in the US, but not fast enough to raise mandates

Government and industry investment in new equipment will dramatically increase access to higher-ethanol blends but not fast enough to raise mandates to use the fuel next year, according to the US Environmental Protection Agency (EPA).

Grants supporting the installation of pumps and tanks able to dispense a 15% ethanol-petrol blend (E15) will help drop a significant barrier to spreading a fuel biofuel producers hope will spur a fresh wave of new market share.

But the fuel still faces legal and practical hurdles keeping regulators from assuming a looming surge in consumption, the EPA said.

Ethanol producers insist the agency has undersold the US' ability to consume greater volumes of their fuel.

The companies say the EPA slashed penalties that would compel the fuels industry to offer it in blending mandates it has proposed refiners, importers, and other companies must meet in 2017.

A hearing on the new proposed renewable volume obligations under the Renewable Fuel Standard (RFS) begins 9 June in Kansas City, Kansas.

E15 meets retailer resistance

The chief US gasoline blend, a 10% ethanol blend or E10, achieved natural saturation as a replacement for the banned petroleum fuel additive MTBE and for its easy use, and the petroleum industry's need for a US-approved oxygenate helped spur its spread.

Ease of adoption — drivers could use the mix in most existing vehicles without fretting about voiding warranties — further cemented its hold.

High ethanol blends called E85 met a more sluggish response as they require special dispensers and vehicle fuel systems, and struggled to compete amid cheap crude prices.

Car manufacturers have begun approving more new vehicles to use E15, but retailers have little incentive to invest in equipment needed to offer the fuel.

Refiners largely divested their ownership of retail stations over the past decade, and so stores have no direct obligation to sell biofuels under federal mandates.

Though E15 can work in new vehicles, it requires potentially costly investments by stores to legally dispense the fuel through properly certified equipment.

The EPA has also bemoaned fuel distributors who keep credits or cost savings created by blending more ethanol instead of passing those savings on to retailers and customers to entice consumption.

Only about 200 stores sell E15 in the US according to the EPA, but the US Department of Agriculture's Biofuels Infrastructure Partnership (BIP) could spread the fuel to up to 1,700 stations by 2017.

The BIP programme attracted $210 million (€184.8m) in 21 states for blending pump and fuel tank installation.

Texas, Florida and Illinois receive the largest outlays, funding a combined 348 stations to add almost 2,100 pumps.

‘The only Washington energy policy that’s worked’

But biofuels producers and politicians dissatisfied with EPA’s blending limits are still repeating the complaint that the RFS falls far behind what the US Congress originally planned.

Now the chorus is joined by former Missouri Senator Jim Talent, who said that the current limit, which is 200 million gallons short in corn ethanol, “is bad both in the short term and as a precedent from the longer term”.

“We are producing … ethanol and we can distribute it as well. In fact, it’s about the only energy policy Washington has had in the last 30 years that’s actually worked,” Talent said.

“We have every reason to believe that it’s going to continue to grow and get even greater efficiencies there.

“That’s an aspect of the standard where we do understand that we need to fine tune it year to year because it’s a harder thing to do. In the meantime, we need to support the corn ethanol standard because that’s the basis in which the whole thing works,” concluded Talent