A massive study by the Government Accountability Office into “Opportunities to Reduce Potential Duplication in Government Programs, Save Tax Dollars, and Enhance Revenue” has turned up an interesting finding. It seems that the government’s desire to buy more “alternative fuel vehicles” (AFVs) may actually increase the amount of gasoline used by government fleets. Why? Because agencies largely buy E85 ethanol-powered vehicles to fulfill their AFV requirements, and there aren’t enough E85 pumps to actually fuel the fleet, forcing agencies to obtain waivers to buy regular gasoline. Hit the jump for the report’s full findings on this, the latest unintended consequence of America’s ongoing ethanol-subsidy boondoggle.
How things change in a few years! Just a few short orbits of the sun ago, automakers like GM were some of the biggest boosters of ethanol subsidies. Now, the Detroit News reports
The Alliance of Automobile Manufacturers – the trade association representing General Motors Co., Ford Motor Co., Chrysler Group LLC, Toyota Motor Corp. and eight others – opposes a bill sponsored by Sen. Tom Harkin, D-Iowa, that would require 90 percent of all vehicles to run on E85 – a blend of 85 percent ethanol – by the 2016 model year.
Shane Karr, vice president for government affairs, said the mandate “would cost consumers more than $2 billion per year” for flex fuel vehicles if automakers passed on the full cost “even though consumers will have little or no access to alternative fuels. Therefore, such a mandate is essentially a tax with little consumer benefit.”
In the face of this new opposition, the Renewable Fuels Association has even taken to employing the rhetoric of market economics to justify market-manipulating ethanol subsidies. And it doesn’t seem to be convincing anyone. If anything, Harkin’s bill may just hasten the death of existing subsidies, which are under pressure as both Democrats and Republicans seek to trim the federal budget.
Recently the ethanol industry has “suffered” from a problem that epitomizes the problematic nature of government subsidies. Known as the “blend wall” this obstacle was created not by negligence on the part of the industry, but by the fact that its lobbying efforts have been far more effective than its marketing efforts. The problem, in a nutshell, is that the 2007 Renewable Fuel Standard mandates a steady increase in the amount of ethanol blended into the national fuel supply, from 9 billion gallons per year (BGY) in 2008 to 36 BGY in 2022… but with gasoline consumption falling and with standard pump gasoline capped at a maximum of ten percent ethanol (recently raised to 15% for vehicles built after 2007), the industry that’s supposed to get America off gas needs more gas to blend its ethanol into. As a study in the American Journal of Agricultural Economics puts it
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. 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. U.S. ethanol production capacity already exceeds this level. Thus, our ability to consume ethanol has reached a limit called the blend wall.
The solution: well, the EPA’s ruling allowing 15% ethanol blends was supposed to fix the problem, but according to this report, that “fix” would only buy some four years before the industry is back to bumping against the blend wall. The solution?
With ethanol as the primary biofuel and either blend limit (E10 or E15), a substantial increase in E85 would be required to fulfill the mandate.
You’ve heard the old joke about ham and eggs, right? The chicken is involved, and the pig is committed? Well, I’m going to give ethanol a shot for a while and report the details to all of you. I’m involved, and my Town Car is committed.
The Automotive X-Prize is over, and the Edison2 Team has won the “Mainstream” class with its Very Light Car. It may not look like any mainstream car you’ve seen recently, but it does fit four passengers, offers air-con, heater, an audio system, and a 200 mile range. And using a 250 cc ethanol engine, it got 102.5 MPGe, while accelerating to 60 MPH in 14.2 seconds. But this was not necessarily a hard-fought victory: Edison2 was the only team that even made it into the finals in the “Mainstream” class. Meanwhile, the X-Tracer motorcycle shown above won the “Alternative” class. In fact, it won the whole damn competition with 197 MPGe while accelerating to 60 MPH in just over 6 seconds. So, despite the ego-boosting rhetoric from Nancy Pelosi, and the other politicians speaking at the awards ceremony, the Automotive X-Prize didn’t so much advance America closer towards a fuel-efficient future as it proved that motorcycles are way more efficient than cars are. The much-maligned gas guzzlers that we know as “mainstream cars” are in little danger from this lot.
Since corn-based ethanol began coming under attack for a wide variety of negative environmental and social impacts, the renewable fuels industry has sought to cover the sins of its corn juice gravy train with a coat of “advanced biofuel” greenwash. Accordingly, the ethanol blending mandate (from the 2007 Energy Independence and Security Act (EISA)) has included requirements for cellulosic and non-corn-derived biofuels which the industry says will replace corn… eventually. Unfortunately it seems that “eventually” is going to take longer than was expected, as the EPA has already slashed the 2010 mandate for advanced biofuel blending from 100m gallons to 6.5m gallons. And today the EPA announced rules for the 2011 advanced biofuel blending goal, and once again the non-corn fuels are getting the short end of the stick.
America’s ethanol producers were some of the few Americans optimistic or cynical enough to find a bright side to the BP Gulf spill. Ethanol’s lobbyists-in-chief, GrowthEnergy, decided it would be real cute to run ads highlighting all the bad things ethanol hadn’t done. One of which is not “Ethanol has never harmed the Gulf of Mexico,” by the way. As the ad parody above points out though, even if the ethanol was creating a dead zone in the Gulf of Mexico for years before the BP spill, there are quite a few other things ethanol hasn’t done. Like this, just in from the AP [via Google]: convince the EPA to buy into its shameful, manipulative PR line and rush a decision on increasing blending limits.
Now the industry is counting on a president beleaguered by the made-for-TV crisis in the Gulf of Mexico to help it out. And he appears ready to do just that. On April 28, six days after the Deepwater Horizon rig sank, President Obama visited an ethanol plant in Missouri and declared that “there shouldn’t be any doubt that renewable, homegrown fuels are a key part of our strategy for a clean-energy future.” Obama also said, “I didn’t just discover the merits of biofuels like ethanol when I first hopped on the campaign bus.”
The strongest indication that an ethanol bailout is imminent came last Friday when Agriculture Secretary Tom Vilsack (former governor of Iowa, the nation’s biggest ethanol-producing state) said, “I’m very confident that we’re going to see an increase in the blend rate.”
As TTAC readers well know: There is a huge E85 flex-fuel loophole in the new federal fuel economy CAFE standards. Ford will drive right through that barn door-sized hole.
By the end of this year, Ford wants to deliver 370,000 flex fuel vehicles, a number which they can trade against fuel oinkers. Let’s review: A flex-fuel vehicle is one that is capable of running on E-85. But it doesn’t have to. It can also run on straight gas. Or on any mixture of the two fuels. As long as it’s E85 capable, it counts at least for a Peppermint White Chocolate Mocha at the DC CAFE. (Read More…)
CAFE got you down? Worried that it’s only a matter of time before the feds come for your V8? You can relax a little, as General Motors is announcing that it will spend nearly a billion dollars rolling out its next generation of small-block V8 engines. According to Automotive News [sub], GM is dropping $893m to upgrade or renovate engine plants in Tonawanda, NY; Bay City, MI; Bedford, IN; Defiance, OH; and St. Catharines, Ontario. These new plants will build GM’s next generation of all-aluminum V8 engines, which will use direct-injection and a new combustion system for improved efficiency.GM won’t say what vehicles these new V8s will be offered in, but expect this to signal the end of the road for the Northstar family of engines as well as replacing the outgoing small-blocks. And what of GM’s commitment to reducing emissions? According to The General’s presser, all of its future small-block V8s will be E85-capable, meaning they qualify for the CAFE ramp-up’s Flex Fuel Vehicle credit loophole. As such,
their fuel economy is determined using a special calculation procedure that results in those vehicles being assigned a higher fuel economy level than would otherwise occur.
Which helps explain why Sen Chuck Schumer (D-NY) doesn’t mind publicly lobbying for V8 production at Tonawanda despite his strong belief in Global Warming: the regulatory fix was already in.
GM is spending about $100 million a year adding flex-fuel capability to our vehicles. We can’t afford to leave this capital stranded… I think it would be very helpful if we could get government assistance. But I really want the oil industry, I want the people who are at this conference, I want the government and I want us to just work together to make ethanol a reality,
This was the message the GM’s Tom Stephens took to the Renewable Fuels Association’s National Ethanol Conference in Orlando. And though Stephens’ exhortation of the ethanol industry makes for a pleasant addition to GM’s typical ethanol message (i.e. the first sentence of the quote), it’s little more than filler. GM’s push to align itself with the ethanol industry continues unabated, as Stephens reveals that half of all GM vehicles will be flex-fuel capable by 2012. The problem is that GM reckons the country needs another 10k E85 pumps (up from the current 2k), and since the ethanol industry would effectively collapse without government support, nobody from the industry is jumping in to take responsibility for this self-serving infrastructure project.