House and Senate leaders last week reached an historic agreement to increase average car and light truck fuel economy to 35 miles per gallon by 2020. Lost amid all the hoopla is the extension of the credit for automakers’ production of flex-fuel vehicles—cars and trucks that can run on ordinary gasoline or E85, a fuel that is 85 percent ethanol and 15 percent gasoline. These FFVs use less oil, and the production and use of ethanol produces 20 percent less carbon dioxide compared with gasoline.
A flexible fuel credit program, begun in 1993, gives auto manufacturers that make flex-fuel vehicles a credit of 1.2 mpg toward their overall Corporate Average Fuel Economy. The CAFÉ credit was reduced to 0.9 mpg for the 2005 model year, and this was supposed to expire in 2009. The pending energy bill will increase the credit to 1.2 mpg until model year 2014. Then, the credit will decrease by 0.2 mpg annually until it equals zero in model year 2020.
There are currently 4.3 million flex-fuel vehicles on the roads. But the Union of Concerned Scientists found that more than 99 percent of them run on ordinary gasoline because E85 is rarely available to the everyday driving public. There are only 1,261 public service stations that sell E85 out of 170,000 service stations nationwide. But availability is improving: This number is a nearly 9 percent increase from June 2007.
E85 is not readily available because the transportation infrastructure to deliver the fuel to service stations is in its infancy. In addition, oil companies have established roadblocks to the sale of E85. The Wall Street Journal found that “oil companies lose sales every time a driver chooses E85, and they employ a variety of tactics that help keep the fuel out of stations that bear the company name.”
Oil companies’ efforts include franchise agreements with service stations. The Journal reported that these “contracts sometimes limit advertising of E85 and restrict the use of credit cards to pay for it. Some require that any E85 pump be on a separate island, not under the main canopy.” These barriers reduce the availability and use of E85 and therefore the benefits from the fuel.
The House energy bill, H.R. 3221, includes a number of provisions to remove barriers to the sale of E85, including a prohibition on franchise agreements that restrict the installation of E85 dispensing equipment or limit the marketing or sales of it. The bill would also establish grants and tax credits to encourage stations to install or convert pumps and storage tanks for the sale of E85 and other renewable fuels.
These provisions are necessary to ensure that more service stations will sell E85 for flex-fuel vehicles, which will reduce oil use and carbon dioxide emissions that contribute to global warming.