Billions needed to distribute E-15 in US - Congress study

08 July 2011 20:11  [Source: ICIS news]

WASHINGTON (ICIS)--US industry will have to spend billions of dollars to upgrade rail, truck and barge infrastructure to meet federal biofuel use requirements and millions more to install retail storage tanks and fuel pumps, a congressional study said on Friday.

The Government Accountability Office (GAO), the audit and investigative arm of Congress, said that as federal mandates for US consumption of ethanol expand beyond 2015, the US does not have enough rail tank cars, trucks, barges and related infrastructure to get the biofuels to wholesale markets.

In order to build tanker carrier capacity to meet the biofuel consumption mandate beyond 2015, the GAO said that “several billion dollars would be needed to upgrade rail, truck and barge infrastructure to transport ethanol to wholesale markets”.

In addition, assuming that US rail, road and waterway carriers would want to make those multi-billion dollar investments, the study said that there are key challenges to moving mandated ethanol supplies beyond wholesale suppliers to retail vendors.

“Federally sponsored research indicates that intermediate [ethanol] blends may degrade or damage some materials used in existing underground storage tank (UST) systems and dispensing equipment, potentially causing leaks,” the GAO said in its 50-page report.

Intermediate ethanol blends are those that contain more than 10% of the biofuel. Recently, the US Environmental Protection Agency (EPA) ordered nationwide use of automotive gasolines containing 15% ethanol, known as E-15.

That order was opposed and is being challenged in court by a wide coalition of US manufacturers and agricultural interests.

The GAO report noted that “while EPA officials have stated that additional research will be needed to more fully understand the effects off intermediate blends on UST systems, no such research is currently planned”.

Because of the threat to existing underground storage systems and fuel dispensers, the GAO said that retail sale of E-15 and higher ethanol blends would require installation of special tanks and fuel dispensers to handle the biofuels.

“The cost of installing a single-tank UST system compatible with intermediate blends [E-15] is more than $100,000” (€70,000), the report said, adding: “the cost of installing a single compatible fuel dispenser is over $20,000”.

Those costs would present a significant burden to most US gasoline retailers, the GAO said, noting too that those retailers would not likely make those investments.

The study also said that fuel retailers are concerned about their exposure to lawsuits and other liabilities if consumers mistakenly put E-15 in automobiles manufactured prior to 2001 or in off-road vehicles, marine engines and gasoline-powered construction and maintenance equipment, generators and other machinery.

The EPA’s E-15 use mandate specifies that only passenger vehicles and light trucks produced in 2001 and later should burn E-15 blends and that it should not be used in older vehicles and the broad range of off-road gasoline-powered equipment for fear of damage and accidents. 

EPA plans to provide fuelling instruction warnings for display at retail locations.

The GAO study said that it recommends that the Occupational Safety and Health Administration (OSHA) should take further steps to ensure against mis-fuelling at E-15 retail facilities and that EPA should work with other federal agencies to research the viability of “a transition to intermediate ethanol blends”.

($1 = €0.70)

Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy
Doris de Guzman examines alternative processing, new technology, R&D and other sustainability initiatives in Green Chemicals
For more on ethanol visit ICIS chemical intelligence

By: Joe Kamalick
+1 713 525 2653

AddThis Social Bookmark Button

For the latest chemical news, data and analysis that directly impacts your business sign up for a free trial to ICIS news - the breaking online news service for the global chemical industry.

Get the facts and analysis behind the headlines from our market leading weekly magazine: sign up to a free trial to ICIS Chemical Business.

Printer Friendly

Get access to breaking chemical news as it happens.
ICIS Global Petrochemical Index (IPEX)
ICIS Global Petrochemical Index (IPEX). Download the free tabular data and a chart of the historical index