A rollback of the Renewable Fuel Standard as proposed by the Environmental Protection Agency late last year may not be needed, argue Iowa State University Center for Agricultural and Rural Development researchers. Especially if E85 gets cheaper, and more available.
Researchers Bruce Babcock and Sebastien Pouliot propose in a Jan. 3 report that changes in infrastructure and pricing could make E85 more attractive to drivers, thus pushing demand for ethanol higher.
"Our model shows that if existing E85 stations could sell as much E85 as demanded by consumers, and if E85 were priced at fuel-cost parity with E10, then ethanol consumption in E85 would be 1.65 billion gallons," Babcock and Pouliot write. And, if E85 were priced to generate a 20% reduction in fuel costs to consumers, they estimate that ethanol consumption would increase by 3.6 billion gallons per year.
That would likely help meet the overall biofuels requirement previously charted for 2014 – 14.4 billion gallons. However, the EPA's proposal suggests lowering the corn ethanol requirement to 13 billion gallons on "blend wall" concerns.
The blend wall refers to the point at which consumption of ethanol will be forced past levels that can easily be met using 10% ethanol blends.
While the authors admit that existing stations cannot realistically sell unlimited amounts of E85, the gap between demand and amount that can be sold at existing stations "shows that both price and the number of gasoline stations selling E85 constrain consumption."
Report authors review the impact of adding E85 stations in urban areas – where flex-fuel vehicles are concentrated – by calculating the different amount combinations and costs of new sales outlets and E85 retail prices needed to achieve ethanol consumption targets beyond E10.
"Our results demonstrate that the number of stations that sell E85 will not increase until EPA sets ethanol mandates beyond E10 levels," the authors explain. "If increased mandates wait for the stations to be built, mandates will never increase."
But the results also show that 800 million gallons of ethanol can be consumed as E85 in 2014, even with no additional investment in E85 stations, providing one way out of the policy dilemma.
"Combining this additional consumption of ethanol in E85 with consumption of ethanol in E10 and available banked RINs would facilitate meeting a 14.4 billion gallon mandate in 2014," they concluded.
The two previously wrote more in depth in an August paper regarding E85's potential to reach three billion gallons of consumption if it's priced low enough – therefore breaking the "blend wall."
Read the full Jan. 3 paper here.