The ethanol blend wall has been reached.
During the 2014 National Ethanol Conference this week in Orlando, Fla., industry experts discussed various ways of tearing down this structure, brick by brick. When the Renewable Fuel Standard was put in place, economists immediately pointed out that the industry would eventually reach a point of saturation.
It appears that saturation point is around 13 billion gallons of annual production, which is roughly the amount needed to blend 10% ethanol into the U.S. fuel supply.
As EPA contemplates a reduction in the ethanol mandate, Renewable Fuels Association CEO and president Bob Dinneen did not mince words in his State of the Industry Address when he urged Washington to "keep your word" when it comes to RFS. He said it no fewer than seven times.
While the mandate will keep a baseline of ethanol production in place, the bigger issue is how to convince more consumers to choose a higher blend of the renewable fuel at the pump. Dinneen notes E15 is making progress in this realm.
Certified for cars model year 2001 or newer, E15 is now sold at more than 60 gas stations in 12 states. It's a start, but doesn't appear to be a long-term answer to ethanol's demand problem.
Perhaps the most exciting portion of the conference came when representatives from two auto manufacturers spoke on ethanol's potential. Both Bill Woebkenberg of Mercedes Benz and Coleman Jones of General Motors are excited about the fuel's ability to boost octane. Higher octane could mean smaller engines running at a higher compression ratio with no loss in power or torque.
"You could make a small engine do the work of a 10-year-old V8," Woebkenberg notes.
He went on to say marketing a 100 octane fuel product to a consumer as "Clean Octane" would be a slam dunk. But, there's a significant roadblock.
Auto manufacturers and regulatory agencies, primarily the EPA, are locked into a proverbially chicken or egg scenario. Manufacturers want a new, high-octane, higher-ethanol-blend fuel so they can develop new engines. They also want assurances that such a fuel will have longevity and adequate supply. Developing a new engine is not a low-cost venture.
On the other hand, regulatory agencies want test data from auto manufacturers that indicates implementing such a fuel would be advantageous.
In the meantime, small engines burning high-octane, high-ethanol blends of fuel will remain on the drawing board. If finally realized, this may be the economic catalyst the American consumer needs to gravitate toward higher ethanol blend fuels.