Is ethanol on its way out?

When the U.S. Energy Independence and Security Act was passed in 2007, ethanol was viewed as a way to cut gasoline consumption and reduce dependence on foreign oil. Seven years later, times have changed.

Carolyn Kaster/AP
People wait in line outside the Supreme Court in Washington Monday, June 24, 2013, awaiting announcements of key decisions. Renewable fuel advocates praised the Supreme Court's decision Monday not to hear the oil industry's challenge to higher ethanol blends of gasoline.
Patrick Kane/The Progress-Index/AP
The Osage Bio Energy ethanol plant in Hopewell, Va., is reportedly being sold to Future Fuels LLP. The plant, completed in 2010, never opened. Refiners are also struggling with federal rules that require them to buy ethanol that they can't use.
Nati Harnik/AP/File
A filed of corn is shown near Council Bluffs, Iowa. The general consensus seems to be that we just aren’t ready for this great leap of faith in ethanol, Alic writes.
Dirk Lammers/AP/File
A dump wagon adds freshly gathered corn cobs to a pile on a farm near Hurley, S.D. Less than a week after the court ruled that the EPA had based their cellulosic ethanol projections on wishful thinking, Rapier writes, the EPA set the 2013 cellulosic ethanol mandate at 14 million gallons.

When the U.S. Energy Independence and Security Act was passed in 2007, ethanol was viewed as a way to cut gasoline consumption and reduce dependence on foreign oil.

Seven years later, times have changed.

The Environmental Protection Agency is set to cut the amount of ethanol required under the act's Renewable Fuels Standard by 1.4 billion gallons, reducing the target amount for 2014 from 14.1 billion gallons to 12.7 billion.

A recent Navigant Research blog post argues that the Act's original volume mandates no longer match the reality that consumers have little interest in the alcohol fuel--but that regulators still risk making too deep a cut.

Changing times

The 2007 Act was meant to wean the U.S. off foreign oil, but several factors have now suggest that introducing more ethanol to the fuel supply may be unnecessary.

U.S. gasoline usage peaked in 2006--the year before the Act was passed--and the decrease is expected to continue in the future.

In addition, Americans are buying fewer cars, and driving them less.

The fuel economy of new cars has never been higher, and the average efficiency of all U.S.vehicles will only increase--for decades--as the impact of Corporate Average Fuel Economy (CAFE) standards covering vehicles through the 2025 model year ripples through the fleet.

That may be good news for consumers--but it arguably makes ethanol a victim of change.

That's because the targets under the Renewable Fuels Standard targets are specified by volume, not percentage of fuel sold--and consequently they can't be adjusted to account for the reduction in demand.

When the rules were drafted, it was assumed that gasoline usage would continue to rise. Since it hasn't, ethanol already makes up a much larger percentage of the total fuel supply than it would have at 2007 levels.

Solution: More ethanol?

Despite recent attempts to kill the ethanol mandate altogether and the seemingly inevitable EPA cut, ethanol producers still feel blending more ethanol with gasoline could help meet the original target.

U.S. drivers already pump E10--a blend of 10 percent ethanol and 90 percent gasoline--into their tanks, and have done for two decades now.

But E85--an 85-percent ethanol blend--has been available only in very limited quantities since launching in the early 2000s.

Navigant cites 2,400 E85 refueling stations in the U.S., and the number of Flex-Fuel Vehicles--which can run on E85 or blends with less ethanol--is expected to reach 13 million in 2014.

However, that's still not enough.

To meet the 14.1-billion gallon target, E85 consumption would have to grow by a factor of three: from the current 4 percent of eligible vehicles to 14.5 percent, or 900 million gallons.

For that to happen, the price has to get lower. Ethanol blends are less energy-dense than pure gasoline, so each gallon provides less distance traveled and drivers have to fill up more.

The EPA has approved E15 fuel for use vehicles from 2001 or later, but implementation has been slow.

The AAA and other groups have come out against it, claiming that it is only suitable for 5 percent of vehicles currently on the road.

Despite the drawbacks, Navigant expects this year's U.S. ethanol consumption to reach 13.9 billion gallons--so it suggests that the EPA may actually be cutting the target too much.

Do you think the U.S. has more ethanol than it can handle?

You've read  of  free articles. Subscribe to continue.

Dear Reader,

About a year ago, I happened upon this statement about the Monitor in the Harvard Business Review – under the charming heading of “do things that don’t interest you”:

“Many things that end up” being meaningful, writes social scientist Joseph Grenny, “have come from conference workshops, articles, or online videos that began as a chore and ended with an insight. My work in Kenya, for example, was heavily influenced by a Christian Science Monitor article I had forced myself to read 10 years earlier. Sometimes, we call things ‘boring’ simply because they lie outside the box we are currently in.”

If you were to come up with a punchline to a joke about the Monitor, that would probably be it. We’re seen as being global, fair, insightful, and perhaps a bit too earnest. We’re the bran muffin of journalism.

But you know what? We change lives. And I’m going to argue that we change lives precisely because we force open that too-small box that most human beings think they live in.

The Monitor is a peculiar little publication that’s hard for the world to figure out. We’re run by a church, but we’re not only for church members and we’re not about converting people. We’re known as being fair even as the world becomes as polarized as at any time since the newspaper’s founding in 1908.

We have a mission beyond circulation, we want to bridge divides. We’re about kicking down the door of thought everywhere and saying, “You are bigger and more capable than you realize. And we can prove it.”

If you’re looking for bran muffin journalism, you can subscribe to the Monitor for $15. You’ll get the Monitor Weekly magazine, the Monitor Daily email, and unlimited access to CSMonitor.com.