Potential Increased Ethanol Sales through E85 for the 2019 RFS

This analysis was conducted to examine the feasibility of increasing ethanol consumption through E85 by an additional 0.38 bg by 2019, an annual rate that if continued through 2022 will increase ethanol consumption through E85 by 1.5 bg. The analysis reviews and updates Stillwater’s July 11, 2016 evaluation which examined the potential for E85 and E15 sales increases. This updated analysis finds that by the end of 2018, 1,500 new E85 stations will have been built since 2016. This number, added to the 3,000 E85 stations that were in place at the time of our 2016 analysis becomes a total of 4,500 stations, which is sufficient to handle a 0.38-billion-gallons (bg) increase in sales of ethanol in 2019 through the new sales of 0.57 bgy of E85. E85 dispenser utilization for these sales will increase to 21%. Achieving these additional sales requires the federal renewable fuel standard’s (RFS) D6 renewable identification numbers (RINs) price to be high enough to encourage consumers to make these purchases.

1 Introduction
This analysis was conducted to examine the 2019 impacts of increasing ethanol consumption through E85 by an additional 1.5 billion gallons (bg) by 2022. E85 offers the biggest increase of new ethanol used per gallon of fuels sold, so new E85 sales will be the primary route to increased ethanol usage.

2 Potential New E85 Sales
The E85 portion of this analysis examines the volumes that, given sufficient yet reasonable financial incentives, can increase ethanol by 1.5 bg in 2022 from increased E85 sales. Given a steady rate of increase in E85 sales through 2022, the 2019 increase in ethanol consumed would be 0.38 bg of E85. First, we quantify the E85 and ethanol volumes required in addition to the 350 million gallons per year (mgy) in existing E85 sales for 2017 and predicted by the U.S. Environmental Protection Agency (EPA) for 2018. In order to reach a targeted 0.38 bg increase in ethanol usage in 2019, E85 sales need to increase by 0.57 billion gallons per year (bgy). This addition of new E85 sales in 2019 is shown in Table 1 below. The conversion of the increased annual ethanol volumes into E85 gallons was calculated using a factor of 1.51 gallons of E85 necessary to consume one (1) gallon of incremental ethanol (i.e. additional ethanol over the ethanol in the displaced E10). Finally, the new E85 requirements are added to the existing E85 sales to determine the new E85 sales target for 2019. The result is that 0.92 bg of total E85 needs to be sold in order to consume an additional 0.38 bg of ethanol.