The Pros and Cons of Mid-Level Ethanol Blends

By Jeff Lenard

In 2005, President George W. Bush signed into law the Energy Policy Act, establishing a nationwide renewable fuel standard (RFS) for ethanol and biodiesel production. The initial target was 7.5 billion gallons, then two years later that target increased to 36 billion gallons under the Energy Independence Security Act of 2007. Today, the annual required volume for ethanol is about 15 billion gallons.

In the January 2007 issue of NACS Magazine, we wrote that the RFS program was “only the beginning of a flurry of events that could combine to overwhelm convenience store operators who sell motor fuels.”

We even put a picture of an ear of corn on the cover of that issue that was meant to look like a train rolling down the tracks. To this day we affectionately call that cover “the corn train cover,” which—to our surprise—won a design award.

Today, most (99%) of the gasoline sold in the United States is blended with 10% ethanol. The U.S. Environmental Protection Agency considers E10 substantially similar to regular unleaded gasoline. so it’s fair to say there’s not much by way of discussion on E10.

That said, the conversation continues to have legs with higher ethanol blends like E15.

In 2011, the U.S. EPA approved E15 for use in light-duty conventional vehicles of model year 2001 and newer. “That’s about 95% of the fleet in operation, and in the last 15 years we've seen the E15 market grow from a handful of stations to 5,000 to 6,000 sites,” said John Eichberger, executive director of the Transportation Energy Institute.

“We have in the market flex fuel, which is labeled as E85. That can contain anywhere from 51% to 83% ethanol, but that's designed only for flex fuel vehicles, and there's only about 20 million” in the United States, he said, adding that only about five vehicle models sold last year are flex-fuel vehicles.

Eichberger explained that the CAFE benefit automakers received for producing flex-fuel models went away in 2019, which in turn removed the incentive to continue making these vehicles.

The Transportation Energy Institute’s Mid-Level Ethanol Blends: Opportunities and Constraints in the Move Beyond E15 report outlines the opportunities and challenges associated with ethanol blends ranging from 16% to 50%.

An impetus for the research is reduced fuel demand in the United States, which has yet to return to pre-pandemic levels. The U.S. also sells about 15 billion gallons of ethanol a year.

“If you look at the government's forecast for fuel efficiency improvements…the reduction in gasoline demand could be significant,” he said. “We're going to see gasoline demand go down. If you want to maintain the 15-billion-gallon ethanol market in the current forecast, we're going to need around 20% average blend in every gallon to sustain that market.”

So, what does that look like when not every vehicle can run on ethanol blends like E20 or E25, and not every fuel dispenser can sell it? What about consumer demand? What about other market and regulatory hurdles?

“When we start thinking about blending ethanol at 20% or higher, these are the questions we wanted to explore in our latest report,” said Eichberger.

During his tenure on the NACS government relations team, Eichberger recalled lobbying members of Congress, presenting potentially “scary scenarios” about E15, and urging caution about pushing a new fuel too hard. “And none of them came true. None of them happened,” he said.

“There haven’t been any high-profile issues with E15; it's a good fuel. That's why California has started the move to open up the doors to [allowing the sale of] it. I believe E15 would be in more than 6,000 stores if we didn't have a Clean Air Act provision that limits us from using it in summer months,” Eichberger said.

Beyond E15, conversations shift again regarding high octane fuel, which plays a role in engine performance and the ability to resist auto-ignition, or knock.

“When you have a higher-octane fuel, when you design an engine to benefit from the octane, you could boost the efficiency by 7.5%,” he said. One issue he said is that those optimized engines can only run on high-octane fuel or risk engine damage.

Availability is also an concern: retailers are less likely to sell a fuel that their customers aren’t asking for, especially when there are not enough vehicles on the road compatible with a particular fuel.

“It becomes a chicken and egg situation: On the retail side, we have an issue with equipment. Most modern underground storage tanks are probably OK because most are E100 compatible, but the dispensers may not be compatible,” Eichberger explained.

“You can get E25, E40 compatible dispensers, but you may have to replace the ones you have. We're seeing replacement of dispensers throughout the country as we go to E15, too. But, while there are infrastructure and compatibility hurdles, there are a lot of benefits,” he said.

Eichberger noted the recent Mid-Level Ethanol Blends report opens up these discussions so retailers can identify the potential opportunities.

“I believe we're going to get to a point in the market where we will have to have this conversation. I think it's better to do so now, or at least in the near term, before we get to a pinch point where we have to rush. Let's have a meaningful, thoughtful discussion,” he said.

His prediction for mid-level ethanol? It’s already been a slow roll, so don’t expect any seismic movements.

“For it to be widespread—we're 15 years in with E15 and we're only at 6,000 out of 150,000 sites—there is a long way to go. But I think there's an opportunity down the road for a mid-level ethanol blend to have market viability,” Eichberger said.

Listen to the full discussion on the Convenience Matters podcast, “Opportunities and Constraints in the Move Beyond E15.”

Jeff Lenard is the vice president of media and strategic communications and the host of the Convenience Matters podcast.