BioFuels Journal

by Myke Feinman, BioFuels Journal Editor

The biggest challenge facing the ethanol industry today is not a financial crises precipitated by low profit margins nor a bad public relations image foisted on it by the food vs. fuel arguments peppering media reports.

The biggest challenge the ethanol industry faces is the so-called blend wall.

Very soon, perhaps by the end of 2009, the ethanol industry will be producing the equivalent of 10 percent of the nation’s gasoline fuel needs, approximately 13 billion gallons.

According to Environmental Protection Agency (EPA) regulation, 10% is the highest level of ethanol that can be blended into gasoline for non flex-fuel vehicles.

This means that when total U.S. ethanol production reaches 10% of the annual U.S. gasoline usage, the industry’s growth will stall.

So what happens when the industry reaches this regulatory cap of 10% which could happen in 2009?

The solution to this pending blend wall predicament has to be both regulatory and done with the support of the auto manufacturers.

Solution?

So a possible regulatory solution to the blend wall could be an EPA approval to increase the amount of ethanol blended into gasoline—to say 15%.

At press conference Nov. 11 in Washington D.C., POET's CEO Jeff Broin noted that the 10% cap should be waived for energy security reasons.

"If our country is truly serious about energy independence, ethanol is the only way we are going to get there in the short-term," Broin stated.

"Multiple studies have been conducted to show higher blends work fine in automobiles," he continued. "Blends up to E20 do not affect automobiles."

For the E10 blend wall to be overcome, the EPA and the automobile manufacturers would have to agree that the legacy fleet of automobiles (non-flex fuel) would be capable of operating with more than 10% ethanol.

Did the auto manufacturers actually over-engineer their cars for 15% ethanol since they knew methyl tertiary butyl ether MTBE (now banned as an oxygenate in gasoline in most states) was already blended at 15%?

Officially, auto manufacturers say they will not warrant any non-FFV vehicles for anything more than 10% ethanol.

However, GM is currently supporting E85 pump installations and the big three auto makers are converting their fleet slowly to flex-fuel vehicles (FFVs), expecting half of their auto fleets to be FFV by 2012.

So the auto companies seem to be interested in making sure consumers have a choice in their fuels and want to strengthen the nation’s energy security by using domestically produced renewable fuels.

If the ethanol industry was able to secure a new minimum blend of 15%, that would mean at least a total of 20 billion gallons of ethanol would be needed each year, stretching out the blend wall long enough into the future to allow the country’s E85 and blender pump installations to catch up with the increasing production of FFVs coming off Detroit’s assembly lines.

Sounds like a win-win to me. Let’s up the blend wall to E15 as soon as possible.

Let’s increase E85 and blender pumps across the country, giving consumers a choice.

And let’s continue to put a dent in the foreign oil industry’s market share in the United States.

Thanks for listening, biofuels buffs. For more information, call 800-728-7511.