In 2005, the Renewable Fuel Standard (RFS) was enacted to ensure that transportation fuel would contain a specific amount of renewable fuel. The idea behind this was to reduce America’s dependency on foreign oil, bring pump prices down and cut back on harmful carbon emissions.
The RFS was expanded in 2007 under the Energy Independence Security Act (EISA). Under this expansion, the RFS now included diesel while a goal was set to blend 36 billion gallons of renewable fuel such as ethanol into transportation fuel in 2022.
In light of this, the Environmental Protection Agency (EPA) established annual Renewable Volume Obligations (RVO) to refiners and importers of gasoline and diesel as a means of implementing the RFS.
As a result, the RFS has been a resounding success and the volume of ethanol mixed with gasoline has been trending upwards consistently since 2005. In turn, America’s crude oil imports have reduced, consumers have saved at the pump and the air we breathe is cleaner than it was 10 years ago.
With the exception of the sale of non-oxygenated fuel used in marine equipment and small engines, ethanol on average comprises 10% of all motor fuel consumed in America.
However, this is where the oil industry's so-called ethanol “blend wall” comes in. The oil industry wants ethanol's percentage of fuel consumed to be capped at 10% (E10), arguing that vehicles cannot use fuels that contain more than 10% ethanol.
But as we know, there are flex fuel vehicles (FFVs) that are capable of consuming higher blends of ethanol such as E30 (30% ethanol, 70% gasoline) and E85 (85% ethanol, 15% gasoline). According to the Renewables Fuel Association, there are over 15 million flex-fuel vehicles on the road today and in Minnesota alone, there are over 400,000 flex-fuel vehicles.
Moreover, in 2011 the EPA approved the use of E15 (15% ethanol, 85% gasoline) in all vehicles made in 2001 and newer.
According to the USDA, approximately 93 percent of the 263 million vehicles registered in the United States can use E15.
As such, it is quite clear that 10% is not the maximum amount of ethanol that can be blended into transportation fuel.
Furthermore, thanks to blends like E15 and E85, ethanol's percentage of the transportation market has been increasing. New data from the EIA shows that ethanol's percentage of the market in 33 states in 2020 was above the oil industry's blend wall. Minnesota led the way with ethanol comprising 12.67% of total transportation fuel consumed. Overall, ethanol comprised 10.24% of all transportation fuel consumed in the United States in 2020.
2020 ETHANOL CONSUMPTION
|State||Ethanol Consumption (thousand barrels)||Gasoline Consumption (thousand barrels)||Percentage|
|District of Columbia||233||2199||10.59|