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Industry View: Prepare for alternative fuels now

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Get ready or be left behind! Another good read from the folks at Convenience Store daily.

 

By Jeff Dzierzanowski, Business Development Manager, Source North America

 

As consumers continue to gravitate toward renewable fuel sources to reduce dependence on imported oil and the resulting unstable fuel prices, the demand for alternative fuels (including E10, E15, B5, B2, HCNG, B20 and E85) is expected to grow.

 

The United States has been blending ethanol into gasoline since the late 1970s, but only in the past 10 to 15 years has ethanol become a significant part of fuel consumption. According to the U.S. Energy Information Administration’s October 2012 Biofuels Issues and Trends report, ethanol represented little more than 1% of gasoline volume in 2001, but it reached nearly 10% of gasoline consumption in 2011.

 

This trend is expected to continue as a result of the federal Renewable Fuels Standard, which requires 36 billion gallons of renewable fuels be mixed into the transportation fuel market by 2022. A percentage of the renewable fuel blended into transportation fuel must be cellulosic biofuel, biomass-based diesel and advanced biofuel. (See glossary below.)

 

By 2040, according to NACS:

 

▶ Gasoline gallons will decline 24%.

 

▶ Diesel gallons will increase 26%

 

E85 gallons will increase 2,200%.

 

Financial incentives including grants, tax exemptions and credits—which are available at the state and federal level for motorists, retailers, distributors and fuel producers—are contributing to the surge in alternative fuels.

 

Challenges for Retailers

 

If you ask people to define the composition of E85, you will likely hear: E85 is 85% ethanol and 15% gasoline. In reality, the E85 ratio of ethanol to gasoline can vary from 51% to 83%, according to the American Society for Testing and Materials.

 

As ethanol increases its presence, marketers are feeling pressured to install blender pumps, which are designed to accommodate a specific ratio of ethanol to gasoline. If the ethanol-to-gasoline ratios are allowed to fluctuate, the blender equipment needs to be designed to tolerate that variance. Faced with such constant variations and the cost associated with trying to keep up with the persistent change, a fuel marketer must consider if it is a worthwhile investment.

 

According to the U.S. Department of Energy’s Alternative Fuels Data Center, only 11 states have renewable fuel standards or mandates. With much growth forecast for the alternative-fuels marketplace, retailers can expect to have to decipher and comply with a slew of new regulations. The challenge for fuel marketers, especially single-site operators challenged to stay informed about emerging industry trends, is to stay compliant, efficient and profitable.

 

Expertise at Hand

 

A skilled, experienced fuel systems adviser can help single-site operators navigate emerging fuel trends and help them make forward-thinking adjustments to their fuel system. The benefits of a qualified fuel system partner include:

 

▶ Insider Industry Expertise: A fuel systems adviser on the front lines of fuel technology can offer insights into trends and recommend solutions that will capture profits in the short and long term.

 

▶ Compliance Consultation: A fuel system partner can help you navigate the complicated world of environmental regulations, ensuring your operation is compliant with your state’s specific regulations, including Stage II Decommissioning laws.

 

▶ Cost-Effective System Strategies: Trustworthy advisers will develop a long-term plan that works within a fuel-site operator’s budget.

 

▶ Big-Picture Analysis: A fuel system consultant will help you understand the short- and long-term benefits of infrastructure investments.

 

The demand for alternative fuels is poised to take off, and with it will come a whole new wave of conversion considerations for fuel retailers. It is important to align yourself with a credible resource who will use cost-effective strategies to lead you through the transition.

 

Renewable Fuels 101, a Glossary of Terms

Cellulosic biofuel: Any renewable fuel derived from cellulose, hemicellulose or lignin that achieves a 60% greenhouse gas (GHG) emissions reduction.

 

Biomass-based diesel: A renewable transportation fuel, transportation fuel additive, heating oil or jet fuel that meets the definition of either biodiesel or non-ester renewable diesel, and achieves a 50% GHG emissions reduction.

 

Advanced biofuel: Any renewable fuel, other than ethanol derived from corn, that achieves a 50% GHG emissions reduction.

 

Source: U.S. Department of Energy’s Alternative Fuels Data Center

 

You can find the article by clicking here.

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