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Ethanol Industry Eyes E15

Nearly all of the gasoline sold in the U.S. is blended with 10% ethanol, a mixture called E10. Almost a decade after the EPA approved the sale of a higher 15% blend of ethanol in gasoline, or E15, the industry hopes to push beyond that 10% so-called blend wall by promoting E15 at the pump and lobbying EPA to ease its sale.

The good news for the industry is that consumers seem to like the combination of higher octane and lower price they get when buying E15. “When we give consumers the option, they choose E15 again and again,” Emily Skor, CEO of the ethanol promotion group, Growth Energy, said in a speech at the Iowa Renewable Fuels Summit this winter.

In an interview with Successful Farming magazine, Skor says E15 is now sold at more than 1,300 gas stations in 29 states, including many in the East that are outside of rural areas in the Corn Belt.

“That number has doubled four years in a row,” she says. Growth Energy works with a nonprofit industry fund, Prime the Pump, which offers financial incentives to gasoline retailers to help cover costs of adding the higher blend fuel. The fund can’t afford to work with all sellers, but the popularity of E15 is already pushing competitors to sell the fuel, as well.

“We need to see a market flip, and we’re starting to see that in the Twin Cities,” she says.

Skor drew applause when she told the Renewable Fuels Summit that the Holiday gas chain in Minnesota added E15 at 26 stations when it started losing sales to competitors who were already offering the higher blend fuel.

Still, the industry has a long way to go. Even though EPA in 2011 approved E15 for use in model year 2001 cars and newer, the higher-blend fuel is offered in less than 1% of some 150,000 stations nationwide. A major barrier is that, in many  markets, EPA bans the sale of E15 during the summer, except to flex-fuel vehicles.

Ethanol itself isn’t a volatile fuel, but the ban is based on the fact that when 10% ethanol is blended with gasoline, it makes the combined fuel more volatile, as measured by Reid vapor pressure (RVP). This is why E10 was given a waiver from the RVP restriction by Congress.

As the concentration of ethanol in a fuel is raised, the RVP goes down, but until recently, neither Congress nor the EPA had allowed a waiver for the higher blend.

Changing that rule could almost flood the domestic market with more ethanol, some analysts believe.

“If we can get the E15 waiver, I see consumption rising to 19 billion gallons,” Mike Blackford, an analyst with INTL FC Stone told listeners at the winter Summit. That would be well above the current level of about 14 billion gallons sold in the U.S., as well as the 15-billion-gallon mandate for corn ethanol blending under the federal Renewable Fuel Standard.

Lobbyists speaking at the Summit took heart from testimony going at the same time at a Senate hearing in Washington, D.C.

Speaking to the Environment and Public Works Committee, EPA Administrator Scott Pruitt pledged that his agency would soon determine if it has the administrative authority to raise the waiver for E15.

In Sioux Falls, South Dakota, another ethanol promotion group, the American Coalition for Ethanol (ACE), saw Pruitt’s testimony as a sign of possible support for E15. Yet, Pruitt has also publicly criticized the ethanol blending mandate, the Renewable Fuel Standard, that’s part of a 2007 energy law and has resisted increasing the mandate.

EPA hasn’t reached a decision on a vapor pressure waiver for E15. Even if it paves the way for the fuel’s year-round sales, the oil industry is likely to seek other ways to resist giving up gasoline’s market share to ethanol.

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