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A transition to the increased use of E15 and other higher gasoline blends could be met with various economic, regulatory, and infrastructure/technical challenges, according to a recent report from the USDA’s Office of the Chief Economist.
The USDA report was prepared as part of an effort to understand the barriers and opportunities to expand the use of higher blends of ethanol in the US gasoline market, especially 15 percent ethanol blends. The EPA on April 29 issued an emergency waiver to allow the sale of E15 gasoline during the peak summer driving period this year. The waiver is expected to increase near-term demand for ethanol.
Currently, of the gasoline sold in the U.S., about 95 percent to 98 percent is sold with concentrations of E10. Historically, the second most common ethanol blend available at retail stations was E85, which is an ethanol-gasoline blend that may contain up to 85 percent ethanol by volume. However, in 2019, E15 sales surpassed those of E85 for the first time. Flexible fuel vehicles (FFVs) are the only ones approved to safely operate on gasoline with any blend of ethanol up to E85.
However, with a decrease in FFV offerings by car manufacturers and stalled E85 sales growth, the report pointed to concerns about possible ethanol demand reductions given the projected decline in gasoline consumption in the next ten years.
“Given the decline in FFVs and lack of growth in E85 sales, mid-level ethanol blends, in particular E15, are options to expand future ethanol markets. Furthermore, transitioning to ethanol blends between E11 to E25 will be easier and less costly than blends above E25. The current structure of the RFS, combined with the commercialization stage of cellulosic fuels, does not serve to incentivize ethanol blends higher than E10. “
Federal and State policies are providing incentives for the conversion of refueling infrastructure. Finally, resolution and clarity relative to the permissibility of E15 to be sold year-round will have implications for the marketability and expansion of E15.
Gas stations are less likely to invest in infrastructure for a fuel that can only be sold for a portion of the year,” the report concluded.
The increased use of E15 could have an effect on credit values and prices.