World Energy Blog

Renewable Fuel Standards, making your car obsolete and big business happy

7/28/2015 10:29:16 AM

The RFS, renewable fuel standard woes.

Recently I came across a term that has been widely used to punch holes in the renewable fuel standard, the “blend wall.” Having not paid too much attention to ethanol and its rules I hadn’t come across this before so I decided to take a closer look.

The “blend wall”, as they put it, is the amount of ethanol that can be blended to make E10, or 10% ethanol in gasoline.  Right now most of our gasoline in stations is E10; in fact I couldn’t find a pump for anything less.  Once we reach a total saturation of E10 in the market place the “blend wall” has been reached.  And when would we reach such a number…right around 2013.

So continuing to increase the amount of ethanol required to be produced and used as a transportation fuel becomes an obsolete rule, right.  Wrong, the EPA continues to raise the amount of ethanol required.  Recently at hearings on the RFS the EPA admitted that the standards are reflections of the way they would like to see the consumption of ethanol verse the reality that we find ourselves in.

I personally drive a 2004 Mazda sports car and after doing the research they highly recommend that no more than 10% ethanol be used in the engine.  Why, because it will damage the engine.  Effectively this means that if the refiners are required to make E15 or E20 my car will be obsolete, not the RFS.  This would give me an excuse to go buy a newer one, which I would but I happen to like this car.

So why are we setting the RFS high enough to make my car obsolete? 

“I would say it’s an optimistic goal but informed by our judgment, our understanding of the way the market has developed so far, what in our judgment it can do. EPA has regulated the fuel market for many, many years, and this is all laid out for people to agree or disagree with in the (RFS) proposal, and we welcome that. It was all those things that went into that, but with respecting Congress’ clear intent that volumes of these fuels (should) increase and that it was going to take a push in order for that to happen. Our understanding is that Congress meant for more renewable fuel to be used than would be used without the RFS.” Janet McCabe, acting assistant administrator for the office of air and radiation 

During the hearing it was pointed out that some cars can run on E85 and that an increase in those cars actually using the fuel alternative would increase the amount of ethanol being used and help the refiners make the standard.  

So why are car owners not choosing the fuel?  That answer comes from a simple review of car forum discussions. The fuel does cost less, but the mileage derived from using the fuel is 25% less.  Critics of that logic will argue that the fuel is priced in GGEs, gasoline gallon equivalents, and therefore that shouldn’t matter.  On the spreadsheet they are correct, however, the gas tank on the car didn’t change.  So the equivalent volume will still give 25% fewer driven miles. So to be competitive you need to start out 25% cheaper and discount from there.  The car owner has to get over the fact that they will be back at the pump 25% sooner.

This is true whatever blend you put in the car.  In my case I only have a 14-gallon tank, my car only gets 17 miles to the gallon.  With higher blends of ethanol that is only going to get worse, much worse when the engine gives up.

To my way of thinking, using an imaginary RFS really does need to be rethought.  If the standard induces the refiners to start upping the percentage of ethanol it will definitely help the auto industry, but it will hurt the consumer.  We will get fewer miles and we will need newer cars, at a time when 92 million of us are out of the workforce all together.  

Oh wait, this will help the big automotive companies move new more expensive dual fueled cars, it will help big agriculture sell more corn, it will help the refiners by reducing mileage by 25% (meaning we have to buy more), it will help the environmentalist by giving them a pseudo victory, it helps the big oil companies because they can sell lower grade of fuel to make up the needed supply for blending.  Yep, this is right up this administrations alley, business as usual the little guy gets squeezed.