Bring down this "blend wall": New bill pushes to allow greater ethanol blends
Corn and oil may sound like an unpleasant cocktail, but blending ethanol and gasoline has resulted in savings for consumers and profits for farmers, advocates say.
Last year in an op-ed The Hill published, Cramer expressed his support for the Renewable Fuel Standard (RFS), which was created in 2005, saying that it "successfully diversified America's fuel supply. The RFS has worked. It has helped make America the world's largest biofuel producer and created thousands of jobs in the heartland," he wrote.
"The top priority for the ethanol industry is to maintain the Renewable Fuel Standard," Jeff Zueger, North Dakota Ethanol Council chairman and Midwest AgEnergy Group CEO, said in an email to The Press. "The RFS is working as it was intended by Congress. It has decreased cost at the pump for consumers, reduced the nation's dependence on foreign oil and provided a cleaner environment. In addition, repealing, waiving or altering the RFS requirements will have a detrimental effect to consumers and rural America."
An aspect of the RFS targeted for change in H.R. 1311 is something known as the "blend wall," which caps ethanol blends at 10 percent.
What the fuel standard has meant for North Dakotans is a lot of positives, particularly for corn producers. Mike Clemens, director-at-large for the North Dakota Corn Growers Association, said opening up the gas market to ethanol blends has provided corn producers with a considerable value to their crop.
"Corn growers ... want to be able to put as much ethanol through the system as possible," Clemens said. "It opened up a huge market that has been just sitting there that needed to be explored. Now we have more than just some local users of corn ... depending on the yield, 40 or 60 percentage of the corn we produce is used in ethanol production."
The benefit to using ethanol at its current blend limit of 10 percent (E10) is that it helps gasoline producers extend their fuel supply, while also meeting environmental standards and offering a competitive price for their product.
"The oil companies, they like ethanol to a point — but what ethanol is is that it is a high-octane component of fuel," Clemens said. "It lets them refine gasoline ... ethanol has a high octane. They can take 84 octane sub-grade gasoline, every time you add 10 percent ethanol into it you add the octane 2.5 points. It's a cheap way to raise the octane of your gasoline."Ethanol blends can be increased to 15 percent (E15) without much difficulty, Clemens said.
"To use more ethanol blends in your retail gasoline solutions, absolutely (it is a good thing.)," he said. "It is a win-win. You have cleaner air, you're using a renewable fuel instead of a fossil fuel ... the oil company is going to say, 'Oh, your vehicle isn't going to run right,' but they're protecting their own turf. They're using scapegoats ... that your vehicles aren't going to run on it. We've been running on ethanol for decades in the United States and it's fine."
Engine technology is advancing sufficiently to run higher ethanol blends, Clemens said.
"Just about all the gasoline is blended at 10 percent. Adding another 5 percent, everybody's vehicles are still going to run on it."
Cramer in his op-ed, wrote that ethanol blends are proving to be the more economical choice, and technology is more open to them than ever.
"As auto manufacturers continue producing more vehicles capable of running on fuels with higher concentrations of ethanol, consumers will choose these fuels more often when it is economical to do so," he wrote.
For corn producers, this may not strictly increase the price — and therefore value — of corn, but it will provide a market, and that could expand the economic benefits of diversifying North Dakota crops.
Clemens said there are other benefits to cheaper gas.
"In your food that's delivered to the grocery store, more money is spent on transportation of the product than (the products themselves)," he said. "If you can do it with a cheaper fuel, that'd make the cost of the products go down in price."
Additional benefits include the creation of jobs at ethanol plants, Clemens said, and ethanol production is also not a byproduct, but a co-product — meaning that once ethanol is taken from the corn, there remains other valuable uses for that corn such as livestock feed and distiller's grain.
"All we're doing is removing the starch from that corn kernel," he said. "All of the other nutrient value is still there."
Ethanol advocates are confident about the growing market for biofuel.
"We are confident that given equal market access, high-level ethanol blends will be competitive in the free market," Zueger said. "We'd like to see extensive efforts put forth over the next five years, leading up to 2022, to establish the retail infrastructure and remove the barriers that are inhibiting an open market for higher-level ethanol blends."
H.R. 1311 is now under committee review in the U.S. House.