Deployment of Mid-Level Ethanol Blends

Executive Summary

The objective of this study was to assess the opportunities and challenges associated with the deployment of mid-level ethanol blend transportation fuels for current and future vehicle and engine technologies.

The research provided a better understanding of the key barriers facing their deployment, and how well positioned Canada is to benefit from an increase in mid-level ethanol blends. Specifically, the study addressed the following research elements, with respect to mid-level ethanol blends (defined as greater than 10 vol% ethanol in fuel):

• Vehicle and Engine Warranties;
• Infrastructure;
• Technical Issues;
• Costs; and
• Market Drivers.

In terms of context, the project was carried out for Natural Resources Canada (NRCan) to support the Pan-Canadian Framework to reduce the carbon footprint of the transportation sector. One way of reducing GHG emissions from the light-duty vehicle sector is by blending lower carbon intensity (CI) ethanol with gasoline blendstock.

Standards

The CAN/CGSB-3.511 standard now includes a new Type that allows up to E15.  The CAN/CGSB-3.512 includes updated Type 1 (E50-E85) specification limits and also now includes a new Type 2 (E20-E25).  There are no limitations from a standards standpoint to deploying higher ethanol blends, given that the CAN/CGSB-3.511 and CAN/CGSB-3.512 standards will be published in Spring 2018.

From a standards viewpoint, there are no barriers to E15 or higher E20-E25 blends in Canada.

Vehicle and Engine Warranties

There are no differences between warranty statements from OEMs in Canada and the United States. The Canadian vehicles are U.S. Environmental Protection Agency (EPA) certified and therefore, Canadian OEM warranty statements are consistent with U.S. vehicle warranties.^{Footnote 1}

It has been demonstrated in the U.S. that proper labelling and retailer information is available to mitigate the risk of misfuelling for E15. The RFA (Renewable Fuels Association) has a wealth of information in this regard,^{Footnote 2} and the RFA E15 Retailer Handbook is an excellent example of such a resource.^{Footnote 3}

There are no anticipated blend stock changes for the E15 blends in Canada (CAN/CGSB-3.511). There are also no anticipated blend stock changes for the E20-E25 blends for FFVs (CAN/CGSB-3.512).

Infrastructure

There has been extensive testing on storage tanks, retail pumps, and related infrastructure including materials compatibility and there are no outstanding issues or obstacles regarding E15 and E20-E25 deployment. The appendix to this report provides the ULC (Underwriters Laboratories of Canada) complete list of ULC standards for storage tanks, retail pumps, and related infrastructure all of which are up-to-date.

Technical Issues

There will be some blend formulation changes when high compression engines are introduced, as they will require higher octane (AKI). That is the purpose of the creation of the ASTM D8076 standard: Standard Specification for 100 Research Octane Number Test Fuel for Automotive Spark Ignition Engines.^{Footnote 4} When OEMs produce cars for the North American market, the same engines and models produced for the United States are also produced for the Canadian market. Thus, high compression engines are also going to be introduced into the Canadian market. The mid-level ethanol content fuel, with a research octane number (RON) of about 100, appears to enable efficiency improvements in a suitably calibrated and designed engine/vehicle system that are sufficient to offset its lower energy density.^{Footnote 5}

Studies referenced in this report show that there is a quantifiable combustion efficiency gain in ethanol blends. These results are consistent with the data extracted from the meta-analysis for the engine efficiency. In other words, there is a quantifiable combustion efficiency gain in ethanol blends.

Costs

Based on the research conducted in this study and various referenced sources, the only anticipated cost is for some infrastructure. For storage and blending terminals, it is anticipated that they would use the same BOB and same E100 tank and that there may be some additional equipment in some cases, but it is anticipated that it would be possibly metering and/or additional piping. For retail sites, the various options for infrastructure costs are included in this section of the report and will be evaluated on a case-by-case basis. For those retail sites that choose to offer E15 and/or E20-E25, it will be dependent upon such factors as the age of the existing retail pumps, opportunity (or interest in) converting existing lower volume pumps, additional space on site for additional pumps, and in some cases additional room on site for additional storage tanks.

There is a benefit to refiners in terms of the value of the ethanol octane and in lowering GHGs with higher ethanol blends. Based on this, and on the benchmarking for E15 and mid-level blends in the United States, it is difficult to predict the cost impact for Canadian consumers.

Fleet Projections and GHG Benefits

A Canadian light-duty vehicle fleet model was constructed from best available data considering the resources available to this project. This model is not aimed at predicting the future but to provide an outlook on the portion of the fleet that is or could potentially be warranted for up to E15 and E25 during the time period 2015 to 2030, and to provide an outlook on E15 and E15+ fuel use in the Canadian light-duty vehicle fleet from 2020 to 2030. Based on results of the modeling, we found that the penetration of E15 compatible vehicles is projected to increase the Canadian fleet ethanol use by 0.4 billion litres per year in 2025 and 1.3 billion litres per year in 2030. The penetration and development of E25 compatible vehicles is estimated to further increase the ethanol consumption up to 1.6 billion litres per year in 2030.

Penetration of E15 and E15 compatible vehicles is estimated to decrease gasoline use by 0.4 billion litres per year in 2020. In 2030, gasoline use reduction due to E15 is 1.1 billion litres per year. E25 further decreases gasoline use by up to 1.4 billion litres per year in 2030. It is important to note that the modeling does not assume that all vehicles capable of using an ethanol blend are using that blend. The vehicle penetration and ethanol blend fuel penetration are separately modeled, and both are based on best available data and authors’ assumptions about reasonable penetration rates of the vehicles and fuels.

Following the fleet model development, using an estimate of current and future life cycle GHG intensities of corn ethanol from GHGenius 4.03, we estimated the potential life cycle GHG emissions benefits associated with the use of the ethanol gasoline blends in Canada’s light-duty vehicle fleet to 2030. Only direct emissions, those associated with production and use of the fuel, are included. Indirect emissions are not included within the analysis. Based on the analysis, it was projected that compared to assuming only E10 use, the penetration of E15 and E25 blends is estimated to reduce GHG emissions by 3.2 MT CO₂ eq. for the year 2030 (3% reduction compared to assuming only use of E10). Most of the reductions are due to the use of E15, the contribution to reductions from using E25 is modest, even by 2030. Of the 3.2 MT CO₂ eq reduction for the year 2030, 85% of the reduction is due to the use of E15 and 15% due to the use of E25. The small contribution to the reductions from the use of E25 relates largely to the timing of its introduction and assumed relatively modest penetration even by 2030.

Market Drivers

The retail market is divided into numerous brands, and into various legal structures for sales and distribution of the product. This fragmentation will affect any decision-making whether or not to sell E15 and/or E20-25 depending on: age of existing infrastructure; costs to make any changes or additions; and local market volumes, and all this will also affect the eventual day-to-day retail price. In the United States, the federal government has an active program to assist selected states in sharing costs with private partners for new biofuels infrastructure. This helps overcome the barriers of new storage tanks and retail pumps.

Public policy has also, and does now, encourage biofuels deployment through volumetric mandates, for example, the federal government’s requirement for 5% renewable content in the Canadian gasoline pool. A number of provincial governments have established similar mandates, and some of these may be increasing the volume requirement in the near term.

Other public policies driving the biofuels market include carbon pricing initiatives (either carbon tax or cap-and-trade); renewable fuel standards explicitly aiming to reduce GHG emissions; and a new Clean Fuel Standard, based on life-cycle carbon intensity requirements, under development.

Conclusions

Accordingly, the evidence suggests that mid-level ethanol blends is one of the possible pathways that offer an opportunity to improve Canada’s trade balance, enable the necessary improvements to gasoline internal combustion engine efficiency by raising octane levels, and to reduce life-cycle GHG emissions in accordance with Canada’s commitments under the International Paris Accord.