New economic analysis by the Center for Agricultural and Rural Development at Iowa State University finds that the so-called ethanol blend wall can be overcome and Renewable Fuel Standard requirements can be met in 2014 and beyond through increased use of attractively-priced E85. According to the study’s authors – Professors Bruce Babcock and Sebastian Pouliot – pricing E85 low enough to generate fuel cost savings has the potential to quickly increase ethanol consumption – perhaps by three-billion gallons over the next year or two. Rather than being a physical barrier to increased ethanol consumption – they say the E10 blend wall is an economic barrier that can be overcome by increasing the incentive for drivers to use E85 to fuel their vehicles. The report finds that current Renewable Identification Number prices are high enough to achieve modest increases in ethanol consumption above 13-billion gallons and to create incentives to increase the ability to consume lower-carbon ethanol in 2016 and beyond. The authors also find that it would be less expensive for oil companies to invest in E85 infrastructure than it would be to continue paying high RIN prices.
Regarding the current fleet of flex-fuel vehicles – the report points out that it has the capacity to conservatively consume 6.6-billion gallons of ethanol annually and more of these vehicles are on the way. More than one-third of current flex-fuel vehicle owners have access to E85 within five-miles of their home. But the report is careful to note that RINs will only encourage increased ethanol consumption if the Environmental Protection Agency resists pressure from the oil industry to dramatically reduce RFS requirements in 2014. The authors write that EPA’s final RFS requirements for 2014 and beyond must be significantly above the E10 blend wall in order for RINs to sufficiently drive E85 demand.
Renewable Fuels Association President and CEO Bob Dinneen says this study underscores the fact that there are workable and economic pathways around the so-called E10 blend wall. He says the study exposes the absurdity of Big Oil’s contention that RFS requirements in 2014 and beyond can’t be met. Other recent third-party analyses – according to RFA – have also concluded that E85 offers a workable solution to RFS compliance and the blend wall.
Source: NAFB News service