One of the big impending issues in the biofuels world right now is what’s called the “blend wall.” The ethanol industry currently sells most of its product as a result of federal and state regulations that require gas stations to sell E10 (10% ethanol/90% gasoline) at regular fuel pumps.
Under federal Renewable Fuel Standards, the industry is being increasingly required to make more and more ethanol. As the argument goes, unless the EPA approves the higher E15 blend for use in normal fuel pumps and existing vehicles the ethanol industry will run into the “blend wall,” wherein supply will far outstrip demand… resulting in mass bankruptcies of ethanol blenders, extreme financial hardship for farmers, and the potential death of the fledgling, next-generation cellulosic ethanol industry.
At the time it was implemented, it was hard enough to get all the stakeholders to agree to an E10 standard — so you can see why the plans to raise that standard to E15 have come under tough scrutiny from many, including the auto industry, who say that without further testing it is impossible to know if E15 will do untold harm to older cars that aren’t designed to handle it.
In a sentiment that is starting to echo at increasingly loud levels throughout the corn belt, scientists, economists, and industry insiders are saying that there are signs the ethanol industry has already hit the blend wall, and, unless EPA acts soon to provide more outlets for their products, the industry may be killed off before it even has a chance to get to non-food based cellulosic ethanol.
From my perspective there is no good answer to this conundrum. Both sides have their valid arguments… which is why the EPA has taken such a long time in coming to a decision on the issue. Since the government has been the one forcing the growth of the ethanol industry, it’s their duty to make sure that they don’t cause the industry to go bankrupt. But the auto industry, who’ve opposed the change from the beginning without more testing data, don’t deserve to be put into a situation that could cause their customers huge financial distress.
Given that the auto industry is really only asking for another half year to a year of testing to come to solid conclusions, it seems that perhaps the ethanol industry can wait for those results. If they’re so sure that E15 won’t create undue harm to existing vehicles then the tests that are being conducted right now should prove that, right? And if the tests come back and conclusively prove that E15 is going to harm vehicles of a certain age, then we’ve got to accept facts and create a different solution that doesn’t force the ethanol industry to go bankrupt and maintains the integrity of existing vehicles.
But then again, based on recent analysis of the ethanol industry, it may be that we’ve already breached the blend wall, and the industry doesn’t have 6 months to wait.
Source: The Farm Gate (via Biofuels Digest)
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I think the biggest issue is the lack of E-85 pumps. Chevy has been making E-85 compliant vehicles since I think at least 2005.
Art,
That’s what I feel too. In my last post on this topic I said exactly the same thing. There are now about 7 million flex fuel E85 capable vehicles on US roads, but only a small fraction of them have any kind of regular access to E85 pumps.
I think the biggest issue is the lack of E-85 pumps. Chevy has been making E-85 compliant vehicles since I think at least 2005.
Art,
That’s what I feel too. In my last post on this topic I said exactly the same thing. There are now about 7 million flex fuel E85 capable vehicles on US roads, but only a small fraction of them have any kind of regular access to E85 pumps.
Isn’t exporting ethanol another option? There must be more markets for the stuff in other countries. I hate to see corn ethanol production propped up if there’s no demand, just as a placeholder for cellulosic ethanol, but I understand the conundrum. I just can’t see why the corn ethanol people can’t find a market somewhere else.
Isn’t exporting ethanol another option? There must be more markets for the stuff in other countries. I hate to see corn ethanol production propped up if there’s no demand, just as a placeholder for cellulosic ethanol, but I understand the conundrum. I just can’t see why the corn ethanol people can’t find a market somewhere else.
I think the problem with trying to export corn based ethanol is that it isn’t really competitive with sugar-based ethanol from Brazil.
Seems like one option (but maybe this card has already been played?) would be for the federal government to move its fleet of cars to all e85, and have e85 pumps available at key locations to support that fleet. Incentives could be created for other fleet operators to do the same thing.
I definitely agree that it would be a huge mistake to rush e15 to market if it ends up damaging older cars. That would seriously damage the reputation of ethanol among consumers, which would do far more harm to the industry long term.
Carbon and John,
It’s true that U.S. corn ethanol couldn’t compete with Brazilian sugarcane ethanol on a cost basis. Our ability to export ethanol is also hampered by our crazy tariff and import setup. We charge any incoming Brazilian ethanol something like 45 cents for every gallon plus an extra tax on top of that in the amount of something like 6 percent. While we are doing this, the US corn ethanol industry is subsidized by something like 50 cents per gallon. As a result, Brazil has also put up huge tariffs on our ethanol. All around the world we see the same thing, as a way to make sure that any given country’s homegrown ethanol is what people in that country buy.
This year Brazil is having a sugarcane shortage and has temporarily halted the tariff to allow incoming U.S. ethanol imports. In many ways, this temporary lift is what is saving the U.S. ethanol industry from hitting the blend wall this year. But, unless we can correct our protectionist tariff setup, the Brazilians are sure as hell not going to leave the tariffs down when the sugarcane industry picks back up. Plus, even if they did leave it down, unless they have another shortage of their own ethanol, our corn ethanol just can’t compete on price.
I think the problem with trying to export corn based ethanol is that it isn’t really competitive with sugar-based ethanol from Brazil.
Seems like one option (but maybe this card has already been played?) would be for the federal government to move its fleet of cars to all e85, and have e85 pumps available at key locations to support that fleet. Incentives could be created for other fleet operators to do the same thing.
I definitely agree that it would be a huge mistake to rush e15 to market if it ends up damaging older cars. That would seriously damage the reputation of ethanol among consumers, which would do far more harm to the industry long term.
Carbon and John,
It’s true that U.S. corn ethanol couldn’t compete with Brazilian sugarcane ethanol on a cost basis. Our ability to export ethanol is also hampered by our crazy tariff and import setup. We charge any incoming Brazilian ethanol something like 45 cents for every gallon plus an extra tax on top of that in the amount of something like 6 percent. While we are doing this, the US corn ethanol industry is subsidized by something like 50 cents per gallon. As a result, Brazil has also put up huge tariffs on our ethanol. All around the world we see the same thing, as a way to make sure that any given country’s homegrown ethanol is what people in that country buy.
This year Brazil is having a sugarcane shortage and has temporarily halted the tariff to allow incoming U.S. ethanol imports. In many ways, this temporary lift is what is saving the U.S. ethanol industry from hitting the blend wall this year. But, unless we can correct our protectionist tariff setup, the Brazilians are sure as hell not going to leave the tariffs down when the sugarcane industry picks back up. Plus, even if they did leave it down, unless they have another shortage of their own ethanol, our corn ethanol just can’t compete on price.
Brazil went through 30 years of up and down until it got all the ducks in a row. The final piece was the introduction of the flex fuel vehicles in 2003 and I believe all or almost all cars there are flex.
50% of all the automobile fuel in Brazil is ethanol and in 2006 Brazil was a net energy exporter.
All US cars should be flex fuel but the big three continue to drag their feet as they do with any innovation.
Brazil went through 30 years of up and down until it got all the ducks in a row. The final piece was the introduction of the flex fuel vehicles in 2003 and I believe all or almost all cars there are flex.
50% of all the automobile fuel in Brazil is ethanol and in 2006 Brazil was a net energy exporter.
All US cars should be flex fuel but the big three continue to drag their feet as they do with any innovation.
The argument that six months won’t hurt seems fair, but whether or not more time is needed is what needs to be further analyzed. The same automakers that say American consumers will be harmed if the ethanol blend moves above 10% have been making and selling gasoline cars that run with a 25% ethanol blend for decades – often the same cars sold to Americans, with only minor changes. GM, Ford, VW, Fiat, Honda, Toyota, Nissan, Renault, Peugeot, Citroen and Mitsubishi are doing this in Brazil, where a 25% ethanol blend has been in place since 1970s. What further testing could be needed when all of these automakers have real life data, involving the same vhicles they sell to Americans? What else do they need to know when you have reality, involving hundreds of thousands of vehicles, and not ever a single case where anyone’s warranty was harmed because of excess ethanol in the gasoline? Every time an American visits Brazil and sees cars, lawnmowers, boats, small engines of all sorts, running on gasoline that includes 25% ethanol… they’re thrown for a loop and begin to wonder, what’s all the whining about back in America, where people keep saying their trimmer is ruined because of ethanol in the gasoline, etc… Maybe it’s time everyone got busy checking into who’s behind all that malarkey, and what the real objectives are behind scare tactics to make consumers worry about ethanol in their gasoline. Otherwise we’ll just have to accept that what can be done in Brazil (by American companies!) cannot be repeated in America… is that acceptable?
The argument that six months won’t hurt seems fair, but whether or not more time is needed is what needs to be further analyzed. The same automakers that say American consumers will be harmed if the ethanol blend moves above 10% have been making and selling gasoline cars that run with a 25% ethanol blend for decades – often the same cars sold to Americans, with only minor changes. GM, Ford, VW, Fiat, Honda, Toyota, Nissan, Renault, Peugeot, Citroen and Mitsubishi are doing this in Brazil, where a 25% ethanol blend has been in place since 1970s. What further testing could be needed when all of these automakers have real life data, involving the same vhicles they sell to Americans? What else do they need to know when you have reality, involving hundreds of thousands of vehicles, and not ever a single case where anyone’s warranty was harmed because of excess ethanol in the gasoline? Every time an American visits Brazil and sees cars, lawnmowers, boats, small engines of all sorts, running on gasoline that includes 25% ethanol… they’re thrown for a loop and begin to wonder, what’s all the whining about back in America, where people keep saying their trimmer is ruined because of ethanol in the gasoline, etc… Maybe it’s time everyone got busy checking into who’s behind all that malarkey, and what the real objectives are behind scare tactics to make consumers worry about ethanol in their gasoline. Otherwise we’ll just have to accept that what can be done in Brazil (by American companies!) cannot be repeated in America… is that acceptable?
We Americans have suffered at the hands of the Corn Ethanol lobby and I for one could not be happier to see these miserable welfare slime fall by the wayside. Good riddance to these leaches.
We Americans have suffered at the hands of the Corn Ethanol lobby and I for one could not be happier to see these miserable welfare slime fall by the wayside. Good riddance to these leaches.
The great spoiler in the game is petroleum. As it fluctuates wildly in price, no businessman can plan properly.
Ethanol does not harm older cars. I often run up to E-85 in my older car, and no harm is done. Yes, as my car is made and tuned for gasoline, ethanol preformance is not as good at the higher blends. My cruise does not work quite right for instance, but I can certainly use it.
This debate will end instantly when gasoline hits $4.00 a gallon, which it most certainly will sooner or later.
All ethanol distillers must develope multiple product lines, to not be solely dependent on the very unstable price of oil.
The great spoiler in the game is petroleum. As it fluctuates wildly in price, no businessman can plan properly.
Ethanol does not harm older cars. I often run up to E-85 in my older car, and no harm is done. Yes, as my car is made and tuned for gasoline, ethanol preformance is not as good at the higher blends. My cruise does not work quite right for instance, but I can certainly use it.
This debate will end instantly when gasoline hits $4.00 a gallon, which it most certainly will sooner or later.
All ethanol distillers must develope multiple product lines, to not be solely dependent on the very unstable price of oil.
Higher blends of E in cars can’t destroy them. I ran E85 in my 1994 Saturn SL2. I put in larger Fuel injectors so it would run smoother. Ran like crap when it was really cold due to E having hard time lighting when cold.
But when i tore the motor apart it was basically spotless. Motor had 150K on it, running E85 for 20K miles.
Only got 22-25 MPG with E85 vs 32-35, but at half the price I was better off.
Higher blends of E in cars can’t destroy them. I ran E85 in my 1994 Saturn SL2. I put in larger Fuel injectors so it would run smoother. Ran like crap when it was really cold due to E having hard time lighting when cold.
But when i tore the motor apart it was basically spotless. Motor had 150K on it, running E85 for 20K miles.
Only got 22-25 MPG with E85 vs 32-35, but at half the price I was better off.
“Since the government has been the one forcing the growth of the ethanol industry, it’s their duty to make sure that they don’t cause the industry to go bankrupt.”
Baloney.
The ethanol industry has had 30 years to become competitive, and has failed to do so. That’s primarily because the artificially high revenue for ethanol production simply goes to higher corn acreage rentals, not to profit margins for the ethanol producers.
Raising the “blend wall” would only futher increase acreage rentals.
“Since the government has been the one forcing the growth of the ethanol industry, it’s their duty to make sure that they don’t cause the industry to go bankrupt.”
Baloney.
The ethanol industry has had 30 years to become competitive, and has failed to do so. That’s primarily because the artificially high revenue for ethanol production simply goes to higher corn acreage rentals, not to profit margins for the ethanol producers.
Raising the “blend wall” would only futher increase acreage rentals.
Ethanol shut down a fleet of police cruisers last year:
http://biodiversivist.blogspot.com/2009/09/corn-ethanol-shuts-down-police-cruisers.html
According to Wikipedia, cars in Brazil where ethanol blends have been 22% since 1993 are all designed to run on that higher blend.
Corn ethanol needs a tariff to prevent consumers from gaining access to cheaper sources, bribes to the petroleum companies to blend it (the blending subsidy), and government mandates that force citizens to buy it in a country where the average citizen’s share of the national debt is about half a million dollars.
Corn ethanol is a shell game requiring bribes paid to oil companies to blend it (the blending subsidy), government mandated use forcing citizens to pay for it in a country where the average citizen’s share of the national debt is about half a million dollars, and tariffs that cause citizens to pay more for it.
This is a fuel where 3/4 of its energy content is derived from non-renewable fossil fuels that requires gargantuan expansion of industrial agriculture to produce:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
This is a fuel that has doubled the price of corn (a 100% increase).
If you want to use less oil, then use less oil. My family uses 80% less just by trading in gas hogs for high mileage alternatives. Attempts to replace oil with a liquid fuel derived from what remains of the biosphere are futile.
Brazil is energy independent because it produces a lot of oil, has half as many people, uses 6 times less oil per person than Americans, and because cane ethanol uses 8 times less energy to produce than corn ethanol.
Cellulosic ethanol is a myth.
http://www.consumerenergyreport.com/2009/07/07/cello-a-lesson-in-due-diligence/
The EPA was counting on getting most of its cellulosic from Cello, which was convicted of fraud and from Range fuels which has given up on it, producing methanol instead.
Corn ethanol is not a bridge to cellulosic, it’s a competitor. Do you people believe everything the big biofuel propaganda mill feeds you?
http://biodiversivist.blogspot.com/2009/12/question-for-arianna-huffington.html
Ethanol shut down a fleet of police cruisers last year:
http://biodiversivist.blogspot.com/2009/09/corn-ethanol-shuts-down-police-cruisers.html
According to Wikipedia, cars in Brazil where ethanol blends have been 22% since 1993 are all designed to run on that higher blend.
Corn ethanol needs a tariff to prevent consumers from gaining access to cheaper sources, bribes to the petroleum companies to blend it (the blending subsidy), and government mandates that force citizens to buy it in a country where the average citizen’s share of the national debt is about half a million dollars.
Corn ethanol is a shell game requiring bribes paid to oil companies to blend it (the blending subsidy), government mandated use forcing citizens to pay for it in a country where the average citizen’s share of the national debt is about half a million dollars, and tariffs that cause citizens to pay more for it.
This is a fuel where 3/4 of its energy content is derived from non-renewable fossil fuels that requires gargantuan expansion of industrial agriculture to produce:
http://biodiversivist.blogspot.com/2009/10/transgressing-identified-and-quantified.html
This is a fuel that has doubled the price of corn (a 100% increase).
If you want to use less oil, then use less oil. My family uses 80% less just by trading in gas hogs for high mileage alternatives. Attempts to replace oil with a liquid fuel derived from what remains of the biosphere are futile.
Brazil is energy independent because it produces a lot of oil, has half as many people, uses 6 times less oil per person than Americans, and because cane ethanol uses 8 times less energy to produce than corn ethanol.
Cellulosic ethanol is a myth.
http://www.consumerenergyreport.com/2009/07/07/cello-a-lesson-in-due-diligence/
The EPA was counting on getting most of its cellulosic from Cello, which was convicted of fraud and from Range fuels which has given up on it, producing methanol instead.
Corn ethanol is not a bridge to cellulosic, it’s a competitor. Do you people believe everything the big biofuel propaganda mill feeds you?
http://biodiversivist.blogspot.com/2009/12/question-for-arianna-huffington.html
Corn ethanol lobby vs. oil lobby? Farm lobby vs. oil lobby?
Tell you what. Get rid of all of them. We’ll have to put campaign spending caps on politicians, and convict half of congress for accepting bribes, take about a third of the people in the White House to jail for corruption and influence peddling, but we could do it.
Oil gets $4 billion or so every year in tax breaks that apply only to oil, ethanol gets billions in blender money, farmer money, ethanol plant money.
All based on the government’s good intentions.
The average voter drives in a gasoline car or rides a diesel bus or train.
[Some commuters are on electric subways, trains or buses, but electricity comes from cheap domestic coal - why oil and ethanol are not "energy" issues, but transportation issues.]
Anyway, with most commuters depending on gas or diesel, and our groceries and gas pumps supplied by diesel trucks and trains, and our imports riding the ocean fueled on petroleum bunker fuel, the government wants to be sure the nation runs smoothly, so they want to keep the oil flowing.
At the same time, the US gov’t knows that oil is getting harder to come by, much of it is in places we are not welcome. The solution is to scatter money to the many different technologies that might replace gasoline. For a long time, ethanol was the most promising replacement, electric is only beginning to catch up.
In the gold-and-marble back alleys of politics, corn became THE feedstock of ethanol. Populous states grew a lot of corn, like Illinois, where 1 in 4 people are employed in agriculture. Together, many of these middle states, with a lot of political power, voters, and representation, made corn – Illinois #1 crop – a major part of farm policy. Conveniently, making the populous corn states happy tied into the safety net against fuel shortages.
When those “miserable welfare slime” go, about 20% of our nation’s GDP will stumble.
We have been under the thumb of the scions of John D Rockefeller for 100 years, oil has been getting subsidies that long. You just don’t realize what lobby you’ve been suffering under. Probably a result of fifty years of leaded gasoline.
Corn ethanol lobby vs. oil lobby? Farm lobby vs. oil lobby?
Tell you what. Get rid of all of them. We’ll have to put campaign spending caps on politicians, and convict half of congress for accepting bribes, take about a third of the people in the White House to jail for corruption and influence peddling, but we could do it.
Oil gets $4 billion or so every year in tax breaks that apply only to oil, ethanol gets billions in blender money, farmer money, ethanol plant money.
All based on the government’s good intentions.
The average voter drives in a gasoline car or rides a diesel bus or train.
[Some commuters are on electric subways, trains or buses, but electricity comes from cheap domestic coal - why oil and ethanol are not "energy" issues, but transportation issues.]
Anyway, with most commuters depending on gas or diesel, and our groceries and gas pumps supplied by diesel trucks and trains, and our imports riding the ocean fueled on petroleum bunker fuel, the government wants to be sure the nation runs smoothly, so they want to keep the oil flowing.
At the same time, the US gov’t knows that oil is getting harder to come by, much of it is in places we are not welcome. The solution is to scatter money to the many different technologies that might replace gasoline. For a long time, ethanol was the most promising replacement, electric is only beginning to catch up.
In the gold-and-marble back alleys of politics, corn became THE feedstock of ethanol. Populous states grew a lot of corn, like Illinois, where 1 in 4 people are employed in agriculture. Together, many of these middle states, with a lot of political power, voters, and representation, made corn – Illinois #1 crop – a major part of farm policy. Conveniently, making the populous corn states happy tied into the safety net against fuel shortages.
When those “miserable welfare slime” go, about 20% of our nation’s GDP will stumble.
We have been under the thumb of the scions of John D Rockefeller for 100 years, oil has been getting subsidies that long. You just don’t realize what lobby you’ve been suffering under. Probably a result of fifty years of leaded gasoline.
The corn subsidy is welfare plain and simple.
For those of you who are so down on ethanol as being subsidized, consider this:
All of our energy sources have been subsidized for as long as we’ve had a modern democracy.
The oil industry is subsidized in tax breaks, lax regulatory oversight, favorable tariffs, and tons of other things to the tune of billions and billions of dollars every year. The coal industry is subsidized in the same way. Natural gas, same thing.
If you want to complain about things not being on a level playing field and the market being manipulated by government, the whole field has been warped and bumpy and holey since day one. If you’re not going to subsidize ethanol, then we shouldn’t subsidize oil, natural gas, or coal either. But then again, we want our energy sources to be stable and readily available, otherwise we’re in a shitty position economically… and that’s where government intervention helps, in the long run. Without it, people/business/government couldn’t plan appropriately for the future.
The corn subsidy is welfare plain and simple.
For those of you who are so down on ethanol as being subsidized, consider this:
All of our energy sources have been subsidized for as long as we’ve had a modern democracy.
The oil industry is subsidized in tax breaks, lax regulatory oversight, favorable tariffs, and tons of other things to the tune of billions and billions of dollars every year. The coal industry is subsidized in the same way. Natural gas, same thing.
If you want to complain about things not being on a level playing field and the market being manipulated by government, the whole field has been warped and bumpy and holey since day one. If you’re not going to subsidize ethanol, then we shouldn’t subsidize oil, natural gas, or coal either. But then again, we want our energy sources to be stable and readily available, otherwise we’re in a shitty position economically… and that’s where government intervention helps, in the long run. Without it, people/business/government couldn’t plan appropriately for the future.
Nick,
Good story.
There is an answer to the ethanol blend wall-it’s ETBE.
I gave a presentation titled The Holistic Approach to the Worldwide Transportation Future at the 2009 SAE Powertrains, Fuels and Lubricants Meeting in San Antonio last November. How to integrate ethanol into the gasoline pool was big part of my presentation-ETBE is the answer.
fuel guru
Nick,
Good story.
There is an answer to the ethanol blend wall-it’s ETBE.
I gave a presentation titled The Holistic Approach to the Worldwide Transportation Future at the 2009 SAE Powertrains, Fuels and Lubricants Meeting in San Antonio last November. How to integrate ethanol into the gasoline pool was big part of my presentation-ETBE is the answer.
fuel guru
“..For those of you who are so down on ethanol as being subsidized, consider this:
All of our energy sources have been subsidized for as long as we’ve had a modern democracy…”
It’s not that simple, Nick. It’s a matter of how much subsidization. Divide the subsidies given to corn ethanol by the amount of net energy from corn ethanol and you will find the ratio dwarfs by a few orders of magnitude that for oil. Remove all subsidies for both and one would disappear, and one would see an tiny increase in price, maybe.
And I realize it’s hard to hold more than one idea in one’s head at a time, but:
1) The corn ethanol lobby will be using $34 billion tax dollars over the next five years to bribe oil companies to mix ethanol into our fuel supplies.
2) Tax payers will pay more for ethanol because the corn ethanol lobby will not allow the removal of a tariff that would allow cheaper ethanol to be blended
3) Tax payers are being forced to use ethanol by government mandate.
4) The average annual price of corn has doubled since implementation of the fuel mandates and the number of hungry has crossed a billion for the first time in history
5) Corn ethanol is not renewable or sustainable because about 75% of its energy content came from fossil fuels
6) All environmental and wildlife conservation groups oppose offshore drilling …and corn ethanol because of its environmental destructiveness in the form of water eutrofication, pesticides, and displacement of ecosystems and wildlife habitat.
“..For those of you who are so down on ethanol as being subsidized, consider this:
All of our energy sources have been subsidized for as long as we’ve had a modern democracy…”
It’s not that simple, Nick. It’s a matter of how much subsidization. Divide the subsidies given to corn ethanol by the amount of net energy from corn ethanol and you will find the ratio dwarfs by a few orders of magnitude that for oil. Remove all subsidies for both and one would disappear, and one would see an tiny increase in price, maybe.
And I realize it’s hard to hold more than one idea in one’s head at a time, but:
1) The corn ethanol lobby will be using $34 billion tax dollars over the next five years to bribe oil companies to mix ethanol into our fuel supplies.
2) Tax payers will pay more for ethanol because the corn ethanol lobby will not allow the removal of a tariff that would allow cheaper ethanol to be blended
3) Tax payers are being forced to use ethanol by government mandate.
4) The average annual price of corn has doubled since implementation of the fuel mandates and the number of hungry has crossed a billion for the first time in history
5) Corn ethanol is not renewable or sustainable because about 75% of its energy content came from fossil fuels
6) All environmental and wildlife conservation groups oppose offshore drilling …and corn ethanol because of its environmental destructiveness in the form of water eutrofication, pesticides, and displacement of ecosystems and wildlife habitat.