GM Wants More Ethanol Stations in US

But, is this the answer to a question that no one is asking anymore?

By Brendan Moore

02.17.2010

E85 logoFor most of you, the excitement over ethanol is probably sort of a hazy memory; you remember when all the fuss was being made over ethanol fuel, but you also remember that it was rather quickly shown that making ethanol from corn was not a good deal from an environmental and energy standpoint.

So, it just sort of went away, right? Didn’t we move on to hybrids and electric vehicles?

The public moved on, but not the federal government. In those heady days (2007) of optimism about ethanol, the brave talk about the American Midwest being the new energy capitol of the world, and our sturdy corn farmers saving America from the clutches of Middle Eastern oil despots, Congress passed energy legislation that actually set mandatory targets for fuel blending each year.

That’s right. Is this all coming back to you now?

Ethanol use is required to rise to about 20.5 billion gallons by 2015 and 35 billion gallons by 2022 from 4 billion gallons in 2006, when this was all being put together, and almost 13 billion gallons last year, in 2009. It’s the law, and it’s still the law in 2010. All the public enthusiasm disappeared, but the legislation remained behind.

DOE Energy Efficiency and Renewable Energy logoCorn is still the substance that most ethanol is made out of in the United States, and it’s still not a good deal from an overall energy perspective or an environmental standpoint. The United States EPA (Environmental Protection Agency) says that in order to increase it’s attractiveness as an alternative fuel, ethanol will need to be produced from something else besides corn; things like farm waste, landfill waste, algae and switchgrass. The EPA also states that the current 10% blend of ethanol in gasoline must be bumped up much higher in order for ethanol to be a viable energy solution.

Cue General Motors.

GM says it has produced 4 million of the approximately 7.5 million flex-fuel vehicles now on the road in the US. GM Vice Chairman Tom Stephens states that there are 2,200 ethanol fuel stations in the US, but 2/3 of those stations are in only 10 states. Those 10 states are all in the Midwest (corn country), and only 19% of GM’s four million flex-fuel vehicles are in those states. In other words, there are millions of flex-fuel capable vehicles driving around in the United States that are nowhere near an ethanol fuel station.

GM wants more ethanol stations. Stephens says there are around 160,000 gas stations in the country, and GM figures that there should be around 12,000 more locations that also offer ethanol. According to GM’s calculations, that will put an ethanol-dispensing station within two miles of almost every customer that owns a GM flex-fuel vehicle.

The Detroit automaker has invested heavily in flex-fuel technology over the last few years, and continues to do so, with the company stating that half of their lineup will be able to run on E85 fuel by 2012. The E85 fuel is a fuel mixture that is 85% ethanol and 15% gasoline. The current limit for ethanol blended gasoline is fuel with only 10% ethanol.

The company says it spends an average of $70 USD extra in production costs on every vehicleGM logo small it equips with E85 capability. The total production cost to GM is $100 million per year across all vehicles. The company says this capital is “stranded” without a place for motorists to fill up with ethanol.

True enough.

However, given the current situation regarding ethanol, that is, it doesn’t make much sense from an economic or environmental perspective to produce it from corn, and that is where almost all the ethanol in the US is derived from, does it make sense to push for more ethanol? Ethanol does produce less emissions than gasoline and it doesn’t come from oil, but it has been demonstrated rather conclusively that producing ethanol from corn is not practical when you factor in production costs and consequences of production.

Cynics also point out that the main reason GM started producing flex-fuel vehicles in the first place was not to be a good global citizen, but rather, to exploit a loophole in the federal CAFE requirements regarding combined corporate fuel economy. GM’s interests in promoting greater ethanol availability, these people say, are self-serving, and are designed to help the company meet corporate fleet fuel economy standards as opposed to reducing emissions or reducing dependence on foreign oil.

In fairness, it must be noted that GM neither produces ethanol nor is able to mandate the terms of CAFE. They are playing in this game, but they didn’t set the rules. And, as company executives have noted, having a network of ethanol fueling stations and vehicles that can run on E85 already in place is certainly not a bad thing when the code is finally cracked on making ethanol a practical fuel choice – whenever that might be.

COPYRIGHT Autosavant – All Rights Reserved

Author: Brendan Moore

Brendan Moore is a Principal Consultant with Cedar Point Consulting , a management consulting practice based in the Washington, DC area. He also manages Autosavant Consulting, a separate practice within Cedar Point Consulting. where he advises businesses connected to the auto industry. Cedar Point Consulting can be found at http://www.cedarpointconsulting.com.

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8 Comments

  1. Ethanol is a deadend right now. I don’t see a potential breakthrough in terms of production anytime soon. I guess it’s a good idea to be prepared for that breakthrough, but it (more fueling stations) doesn’t exactly seem pressing at the moment.

  2. I cannot believe those regs are still on the books. You’d think someone would have gone back and removed those mandates after the hoax of ethanol was exposed.

    Must be the agricultural lobbyists keepin’ it real.

  3. I remember that whole ethanol joyride. It all seemed wonderful until someone put some numbers to it.

  4. Well the corn-based ethanol wasn’t a good idea, having removing some imports of sugar, sugar-based ethanol like sugarcane for example is more promising then the one from corn. Brazil use lots of sugarcane for ethanol. Then there the cellulosic ethanol coming from forest waste, agricultural waste, plants like swichgrass or even… hemp http://www.youtube.com/watch?v=S6cKjdIej04 http://www.youtube.com/watch?v=RKVmYCSTKUs and soon from aglae. Maybe one day, we could have ethanol fuel from regular waste almost like the “Mr.Fusion” kit from Back to the Future.

  5. So what do the poster and commenters suppose is going to power cars as the oil supply drops after Peak Oil?

    No one wants to face Peak Oil or even talk about it.

    Follow developments and learn at http://www.theoildrum.com/

  6. Xavier Durant –

    What’s your point? Do you think producing ethanol from corn is the solution? If you do, then I think you are incredibly misinformed.

    If you’re proposing another solution, what is it?

    Your comment doesn’t offer anything valuable to the discussion about ethanol. Are you for it? Against it?

    Don’t be a jerk and just state the obvious, that someday we’re going to run out of oil, every high scholl student knows that. That’s just a stupid thing to say.

    Say something about ethanol that someone else can react to, Xavier.

    Put up or shut up!

  7. From afar, I often wondered what was happening with ethanol use in the USA. Like some other so called “green” alternatives based on using renewable resources, often the processing costs and other downsides are ignored. I seem to remember there were riots in Mexico perhaps because the diversion of corn in North America to ethanol production raised prices of corn products there. Each country has its own economy and the success in Brazil with sugar cane as the raw material does not mean it will work elsewhere with other products. In Indonesia there are various potential raw materials including sugar cane and cassava. Bio Premium (RON 88) using 5% ethanol was introduced in 1996, this was followed by Bio Pertamax (RON 92) using 3% ethanol in 1997. However, the announcement of increased distribution in 1998 said the ethanol content was only 2%, but claimed the advantages to be: “environmentally friendly fuel, better gas emission, perfect burning, no engine modification, longer engine life time, and renewable energy” (sic). Bio Solar (biodiesel, cetane rating 51) also launched in 1996 with 5% FAME (fatty acid methyl ester) seems to be more widely available, but presently contains only 2.5% FAME.

  8. @Victor Poole –

    I got lost about halfway through your comment because I just don’t have that sort of knowledge about the composition of fuel types. You could be right. You could be wrong. I don’t know enough from a general perspective to agree or disagree with your specific facts.

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