If ethanol is the US’ primary biofuel, it will be “essentially impossible” to achieve the federal Renewable Fuel Standard volume mandates because of the ethanol blending limit (the “blend wall”), regardless of whether it is the current 10% or raised to 15%, according to a study by researchers at Purdue University.
The constraint, the authors say, is not economic but infrastructural, and “it is highly unlikely that adequate infrastructure [i.e., flex-fuel vehicles and E85 fuel dispensers] can be put into place in time to achieve the RFS goals.” However, they concluded, the RFS could be met with a combination of ethanol from corn and sugarcane and renewable hydrocarbons from biomass.
The study was presented as an invited paper at the 2010 annual meeting of the Agricultural and Applied Economics Association in Denver, CO and published in the American Journal of Agricultural Economics.
Wally Tyner, the James and Lois Ackerman Professor of Agricultural Economics, and co-authors Frank Dooley, a Purdue professor of agricultural economics, and Daniela Viteri, a former Purdue graduate student, used US Department of Energy (DOE) and Environmental Protection Agency (EPA) data to conclude that the United States is at the saturation point for ethanol use.
The federal Renewable Fuel Standard requires an increase of renewable fuel production to 36 billion gallons per year by 2022. About 13 billion gallons of renewable fuel was required for 2010, the same amount Tyner predicts is the threshold for US infrastructure and consumption ability.
Total national consumption of gasoline in the United States has been about 140 billion gallons in 2010 and is expected to fall over time due to increasing fuel economy standards (Tyner and Viteri 2010). Thus, at present, if every drop of gasoline were blended as E10, the maximum ethanol that could be absorbed would be 14 billion gallons. In reality, 10% cannot be blended in all regions and seasons. Most experts consider an average blend of 9% to be the effective maximum, which amounts to about 12.6 billion gallons (Tyner et al. 2008). US ethanol production capacity already exceeds this level. Thus, our ability to consume ethanol has reached a limit called the blend wall.
This physical constraint is the biggest issue facing the US ethanol industry today. If the current blending limit of 10% is maintained, the ethanol industry cannot grow; indeed, it cannot even operate its existing productive capacity of over 13 billion gallons. That partially explains why about 2 billion gallons of capacity was shut down during much of 2009, and over 1 billion gallons of capacity remains inoperative. It also explains why ethanol prices during much of 2009 were driven mainly by corn instead of gasoline, as it had been previously.
...At present we face two opposing realities: first, the RFS requirements for production of more biofuels each year to 2022; and second, a physical blend wall that does not permit ethanol consumption to grow at all beyond present levels. An ethanol industry support and lobby group called Growth Energy petitioned the EPA to increase the blending limit from 10% to 15%.The EPA has indicated it will rule during the fall of 2010 whether this limit can be increased to 15% after additional vehicle tests are completed. But even increasing the blending limit to 15% will only buy some time (about four years) so long as ethanol remains the primary biofuel.—Tyner et al.
The team examined the consequences of six alternative pathways to reaching the RFS targets:
- The blend limit remains at 10% (E10), and all biofuel is ethanol.
- The blend limit is increased to 15% (E15), and all biofuel is ethanol.
- The blend limit is 10% (E10), and all cellulosic biofuel is thermochemically produced biogasoline or equivalent. The physical properties of thermochemical biofuel are identical with gasoline, and thus it can be similar to gasoline at any percentage.
- The blend limit is 15% (E15), and all cellulosic biofuel is thermochemically produced biogasoline or equivalent.
- The blend limit is 10% (E10), and cellulosic technology is so expensive that EPA waives the cellulosic part of the RFS.
- The blend limit is 15% (E15), and cellulosic technology is so expensive that EPA waives the cellulosic part of the RFS.
Tyner said there simply aren’t enough E85 flex-fuel vehicles or E85 stations to distribute more ethanol. According to EPA estimates, flex-fuel vehicles make up 7.3 million of the 240 million vehicles on the nation’s roads. Of those, about 3 million of flex-fuel vehicle owners aren’t even aware they can use E85 fuel.
Also, there are only about 2,000 E85 fuel pumps in the United States, and it took more than 20 years to install them.
Even if you could produce a whole bunch of E85, there is no way to distribute it. We would need to install about 2,000 pumps per year through 2022 to do it. You’re not going to go from 100 per year to 2,000 per year overnight. It’s just not going to happen.—Wally Tyner
Even if the fuel could be distributed, E85 would have to be substantially cheaper than gasoline to entice consumers to use it because E85 gets lower mileage, Tyner said. If gasoline were $3 per gallon, E85 would have to be $2.34 per gallon to break even on mileage.
In short, ethanol cannot be the only biofuel in the US market, given current and possible future blend levels and the low level of penetration of FFVs and E85 stations. The blend wall becomes an impenetrable barrier to meeting the RFS.—Tyner et al.
Wallace E. Tyner, Frank J. Dooley, and Daniela Viteri Alternative Pathways for Fulfilling the RFS Mandate (2010) Alternative Pathways for Fulfilling the RFS Mandate Amer. J. Agr. Econ. 1–8; doi: 10.1093/ajae/aaq117