Room for E85

A new report from the Fuels Institute has said that there are opportunities to grow the E85 market, but only if prices remain significantly below those of regular grade gasoline and the automobile industry continues to produce flex fuel vehicles at historical rates. The report, ‘E85: A Market Performance Analysis and Forecast’, also says that depending on the likelihood of various scenarios, E85 sales will, at a minimum, double by 2023, but could experience a 20 fold increase in sales over the same time period.

Researchers have evaluated the performance of over 300 stations that sell E85, also known as flex fuel, and has developed forecasts, taking into account a variety of factors that could ultimately affect sales. The Fuels Institute projects that E85 sales will increase from 196 million gal. in 2013 to between 400 million and 4.4 billion gals. in 2023.

Biofuels market and E85

The biofuels market has experienced remarkable growth over the last 12 years, from 1.75 billion gals. in 2001 to 14.54 billion gals. sold in 2023. While the bulk of that growth has been from the embrace of E10, future biofuels sales growth will be highly dependent on increasing the sale of E85, a blend of gasoline with 51 – 83% ethanol.

The growth of E85 is going to be heavily dependent on increasing both the number of fuelling stations providing it and the number of flex fuel vehicles on the road. The report found that there is room for growth on both fronts.

One factor currently restricting E85 consumption is its relatively limited availability in retail. Only 2% of retail fuelling locations offer it and 60% are locates in just 10 US states. In examining both vehicle registrations and station counts, the report concluded that there are 5289 flex fuel vehicles per E85 station, compared to just 1466 light duty vehicles per retail fuelling station, indicating great potential for E85 retailers.

John Eichberger, Executive Director, Fuels Institute said, ‘increasing the E85 station count would improve the potential for additional E85 sales and introduce additional competition to the market. But several other factors also will determine the potential E85 market, particularly the relative price of E85 compared to unleaded gasoline and the number of vehicles on the road that can operate on E85.’

The price at which E85 is sold relative to gasoline will play a big part in flex fuel growth, as E85 contains approximately 23% less energy /gal. than regular grade gasoline, consumer demand will be heavily dependent on E85’s price discount relative to gasoline.

Flex fuel vehicles represent 6% of all light duty vehicle registrations in the US. The growth in flex fuel vehicle production was significantly aided by credits given to automakers for producing these vehicles. However, this credit is set to expire under the new Corporate Average Fuel Economy (CAFÉ) regulations. Further growth is thought possible if the auto industry continues to increase flex fuel vehicle production at current rates, but it remains to be seen if the automobile manufacturers continue producing flex fuel vehicles at the current rate in the absence of this credit.

Edited from press release by Claira Lloyd

Read the article online at: https://www.hydrocarbonengineering.com/clean-fuels/13112014/e85-room-to-grow/