Ethanol Sham & Alternative Fuel Vehicles

The Truth about Ethanol Alternative Fuel Vehicles

The Chicken and The Egg
The OEM’s are pushing ethanol with a vengeance. They started doing this when there were almost zero E85 pumps in existence. Is this a chicken and egg problem or is there more to it? The OEM’s lobbied that this was a problem. If there was no fuel available, why should they build vehicles that would use it, and similarly if there were no vehicles to use the fuel why would fuel providers want to put capacity in place?

Why Does EcoV Care?
We are a company that is dedicated to electricity as an alternative fuel for transportation. Electric vehicles struggle to gain a foothold in the market. Again General Motors has come out and said it will electrify its entire fleet in the future (read our other blog on this.) Sure the technology is not quite ready or affordable for “prime time” with advanced battery technology but there are choices today for limited EV capability, like EcoV, which are real, reasonable, environmentally and budget friendly alternatives. These products are important because they help “prime the pump” to higher sales in electric vehicles. The biggest reason for lack of active development is that the technology is very disruptive to current big OEM thinking. This means the technology does not fit the OEM’s standard ways of thinking or building automobiles. They are afraid of it. They can not even see it because they have lived their entire lives in a world of gasoline. “A worm in horseradish thinks the world is horseradish.” We and EcoV care because we can provide an environmental transportation solution that can have virtually zero impact on our world. EcoV has no emissions, odors, noise, never stops at a gas station, releases no CO2 in its operation, can be “fueled” by wind, sun, water power or nuclear. It is also virtually maintenance free and easy to own and operate. On energy equivalent basis EcoV gets between 200 and 300 miles per gallon and on a cost basis with gas at $2.50 gallon and electricity at 10¢ kWh, EcoV is equivalent to 125-200 miles per gallon.
What EcoV cares about is that while LSV are street legal vehicles, they are not considered as AFV’s in fleet applications by EPAct. They were perceived as “golf carts” and not real replacement vehicles. This is wrong and needs to be changed. One half of our market, the commercial fleets will be buying EcoV’s to replace more expensive to operate gas cars.

So What Is Going On With Ethanol or E85?
By the AMFA (Alternative Motor Fuel Act of 1988) Congress provided that motor vehicles subject to corporate average fuel economy (CAFE) standard are accorded special consideration if they are capable of running either flexibly (dual fuel) or exclusively (dedicated) on fuel other than petroleum. AMFA encourages the production of these vehicles by providing a specified credit towards the calculation of CAFE. From 1993 through 2004, the maximum credit was 1.2 mpg per manufacturer on CAFE. In 2005, it was extended through 2008 with maximum allowed credit of 0.9 mpg. The number of flex-fuel ethanol vehicles on the road today is about 5,000,000. Many people do not even know their vehicles can run E85. And those that do either can not find it or have tried it and found it too expensive when considering they need to fill up 25% more often.
The automakers have been building flex-fuel vehicles since 1998. Why? Because it helps them meet CAFE that they would otherwise have not met and paid huge fines. They have started pushing ethanol only recently when dependency on foreign oil and environmental issues became important in the public’s list of buying issues. GM has a major campaign that promotes their flex fuel vehicles and as “live green go yellow” (reference to corn from which ethanol is currently made). That GM is “yellow” is another story in lack of courage and deception. GM, Ford, Chrysler, and Nissan all took advantage of this ability to improve their CAFE’s in 2006 and reduce their fines to EPA.

There is a lot more to it. Not well publicize but the Federal Government thru Department of Transportation, Environmental Protection Agency grants the auto companies a significant boost in fuel economy calculations when alternative fuels are used (AMFA 1988). An AFV that uses E85 gets its fuel economy boosted by dividing by 0.15 (or multiplying by 6.67). So an AFV that gets real world 20 mpg is calculated at 133 mpg. But the Government recognizes that E85 would only be used about 50% of the time (actually it is less than 1% of the time), so they average gasoline fuel economy with alternative motor fuel, fuel economy to get an average. Engines burning E85 do emit about 20% less CO2 per mile but have the same emission air pollution rating. E85 is also higher octane which allows it to be used where premium fuel would be required. See http://www.fueleconomy.gov/feg/byfueltype.htm for 2007 models and fuel economy.
Here is an example. GM sold about 636,000 Chevrolet Silverado pickup trucks in 2006. The standard Silverado is rated at 17 mpg city and 21 mpg highway with standard gas. With E85 the numbers are about 25% worse since ethanol does not contain as much energy as gasoline per gallon. However, when the real E85 fuel economy is divided by 0.15 the alternative fuel economy for CAFE calculations is 85 mpg/105 mpg. In the final calculation for half and half use, the composite fuel economy comes out as 31 mpg versus 18.6 mpg for a straight gasoline truck. Did you know this? Well now you do.
So this allows GM and others to use this higher fuel economy to avoid huge penalties and build and sell more big gas guzzling trucks & SUV’s. In 2006 GM built enough high volume cars and trucks with flex fuel to meet CAFE. Assuming they did this perfectly will they avoided a 0.9 mpg CAFE penalty? This calculates out at $5/0.1 mpg missed in CAFE x 9 missed tenths mpg gallon x 4,860,000 cars and trucks sold = $212M. Is that the environmental and energy security issue the original law had intended? We don’t think so.
Bottom-line has the absolute opposite. Gas consumption has not gone down. Alternative fuel consumption has risen slowly. In Federal Fleet Report – 2006 http://www.gsa.gov/gsa/cm_attachments/GSA_DOCUMENT/FFR2006_030707_R2K-g6_0Z5RDZ-i34K-pR.pdf
In 2006:
E85 accounted for 3,205,693 gallons (GGE) versus 286,922,862 gallons of gasoline – 1.1%. While total world fuel consumption dropped in 2006 by 4.7% from 2005, the trend line for petroleum based fuels – gasoline since 2002 has grown upward at something less than 1% per year. Diesel fuel has dropped about 8% per year. Petroleum fuels have not dropped the 20% between 1999 and 2005, required under Executive Order 13149. Also required by 2005 was that alternative fuels were to be the majority of fuel used. Alternative fuels in total accounted for only 4% of all fuels used. Also by 2005, the Federal Fleet was to be buying 75% AFV. In 2006, of the 62,978 acquisitions made, only 18,411 were AFV’s or 29%. The Federal Government is not meeting the law! Not even close!
The chicken and egg story has never materialized and it is time to enforce the EPAct of 1992. AFV’s using E85, should carry their own weight and the Government should put in places policies to make the objectives of EPAct happen. AFV vehicles should get credits based on the amount of E85 fuel a fleet uses. When they start paying for it, they will stop because it does not make economic sense. This needs to be fixed, too.