Something exciting is happening in the distribution of what could be broadly described as “high-renewable-content” fuels, which we’ll dub HRC fuels in order to give them an obscure three-letter acronym.
What is an HRC fuel? In the world of gasoline replacement, it is any fuel which has a renewable content higher than the typical E10 ethanol saturation point. It can include drop-in renewable gasoline, or E85 ethanol blends, or even E30 or E15.
Each gallon is critical in terms of offering obligated parties an opportunity to comply with the Renewable Fuel Standard, which is moving now well past “traditional limits on ethanol blending” and into volumes where innovation will be required in new fuels and new distribution strategies.
On the diesel replacement side, it is any fuel distribution beyond the typical B20 blending limits which has been a conventional limit for many vehicle manufacturers until now. This would include drop-in renewable diesel, and opportunities to distribute B100 or B99 biodiesel as well.
One way to look at the Renewable Fuel Standard is to divide compliance into two buckets, HRC fuels and LRC (low renewable content) fuels. So-called “blend walls” refer to distribution failures in the area of HRC fuels, which leaves obligated parties trying to stuff, ultimately, 36 billion gallons through the LRC distribution system.
Why could HRC fuels become critical to decarbonizing the global economy?
It’s axiomatic that you change liquid fuels distribution faster with higher blends than lower blends. One car with 98.5 percent renewable content displaces more high-pollutant fuel than 19 cars with a 5 percent blend.
But consider the carbon implications if we take into account the next generation of low-carbon fuels — such as cellulosic fuels with 60-80 percent reductions in polluting CO2 compared to baseline gasoline. Even more exotically, the fuels on the way from the likes of Joule, expected to top out as high as a 90 percent reduction, and Cool Planet fuels which would have a negative carbon footprint: thta’s right, every mile you drive takes carbon out of the atmosphere instead of putting it in there.
With carbon negative fuels and high renewable content, one can begin to see the tranditional transport fleet not as a carbon liabiliity, but as foot soldiers in decarbonizing the skies. It could become the case that lower efficiency fuels and reduced engine efficiency would have better outcomes for the environment. But only if the fuels are distributed in “high renewable content” form. A 2 percent blend of Cool Planet fuels is 98 tranditional “high pollutant”, CO2-laden fuel. A 98 percent blend of Cool Planet fuel is something more powerful for carbon reduction than a plug-in electric car running off solar power and that shakes up the landscape.
Four horsemen of the new fuels: Protec, Propel, Pearson and Minnoco
Meanwhile, a revolution has been bubbling up in the world of HRC fuels, and it is a story of quite a number of visionary fuel suppliers and retailers. Today, we’ll focus on four, Pearson, Ptotec, Minnoco and Propel — and perhaps most importantly. on the story of California, where there are approximately 1 million flex-fuel vehicles on the road.
Minnoco: expanding to offer lower cost, better performing biofuels like E15, E30 and E85
In Minnesota, retail owners are moving away from a branded oil contract into the independent brand of Minnoco. MINNOCO (Minnesota Independent Oil Company) is a brand of gasoline developed for the members of the Minnesota Service Station & Convenience Store Association by the members of the MSSA.
“With Minnoco, I’m able to offer E15 as a more competitive fuel to my customers at a much lower price vs. regular,” explained Rick Bohnen, president of Minnoco and owner of Penn Minnoco. “This is a better business model for me because it significantly reduces my operational costs vs. branded fuels and I’m able to pass the savings on to consumers.”
In addition, Minnoco retailers have more freedom to offer biofuels that are grown and produced in Minnesota. Though the product offering will vary slightly by retail location, Minnoco will be offering E15, E30, E85 and diesel along with regular grades of gasoline.
“Our owners believe we have a competitive advantage by offering more fuel choices like E15 to consumers,” stated Lance Klatt, executive director for Minnoco. “Our new brand not only draws in consumers for more affordable fuels but is also a great business model for retailers.”
“All of our regular 87 gas already contains 10% ethanol,” explained Jerry Charmoli, Minnoco owner and a mechanic for more than 30 years. “E15 is approved for vehicles 2001 and newer and we’ve had zero problems, in fact my customers love the cost savings and extra performance.”
The concept is growing in appeal.
Last September, Minnoco announced an expansion program that will bring more of the locally owned fuel retail outlets to the Twin Cities area. After successful introduction of four retail outlets during the fall of 2013, the retail group has identified another 18 locations planning to convert to the new brand, bringing the total to 24 outlets when completed.
Pearson – expanding in the critical California market
In California, Pearson Fuels of San Diego, CA and G&M Oil Company of Huntington Beach, CA held a grand opening last month of their newest E85 Flex Fuel location in Calimesa. The event is intended to kickoff the announcement of 13 E85 site openings built through a collaboration between Pearson Fuels and G&M Oil.
The stations will all be located in Southern California in San Bernardino, Orange, Riverside and San Diego counties. Partial funding for these projects was made available through the California Energy Commission’s Alternative and Renewable Fuel and Vehicle Technology Program. That funding, matched with G&M’s and Pearson’s is allowing these sites to be built.
Pearson Fuels General Manager, Mike Lewis states, “We are very proud to make this announcement. We have been opening these E85 sites one and two at a time for years but it is a whole new level to declare our plans to open 13 sites in 13 months. The alternative fuel industry is no stranger to outlandish claims of what people are going to do which so often do not come to pass. That is why we thought long and hard about making this announcement because we take great pride in being a group that does what we say we are going to do. This confidence comes in no small part due to the partner we have with G&M Oil Company.
G&M Oil Company Senior Vice-President Julie Jackson said, “We have sold E85 Flex Fuel at four of our locations for several years and are happy with the results. The customers seem happy to be saving money and helping the environment. We are confident based on our experience with E85 so far that the public will embrace these new E-85 locations and we are excited to continue our leadership in the industry by showing that these sites can be converted quickly and safely so the public can have a new fuel choice throughout our market area.”
Protec – pushing the envelope with E15
Last September, Protec’s announced a multi-phase introduction of E15 to 28 outlets in metropolitan areas in the South and Southeast. Three of those opened just last week, In Georga — Gulf stations.
“Because of the success of our retailers who have offered E85 in the past, our retail customers are asking us for E15,” said Todd Garner, CEO of Protec Fuel. “With our proven expertise in the field, it’s natural for us to help meet the demand of many convenience store retailers – large and small – who want to offer products different than their competitors. Further, this can aid in helping to meet the Renewable Fuel Standard blend wall, after market concentration of E10,” Garner said.
E15 is allowed in 2001 and newer cars; this equates to more than 80 percent of all the gasoline vehicles on the road today. E15 is a blend of 15% ethanol and 85% gasoline; E85 is 85% ethanol and 15% gasoline.
There are nearly 100 flex-fuel vehicle (FFV) models on the market today that can run on E85. Coupled with the fact that there are over 16.5 million FFVs on the road, there is strong need for more stations offering higher level blends of ethanol. With plans to expand this push with future phases, Protec said that initial stations should be completed by end of Q1 2015.
Protec Fuel is a fuel distribution and management company based in Boca Raton, Fla., with its alternative fuel division specializing in turnkey ethanol programs for retailers, fleets and fuel distributors throughout the United States. E15, E85 and other higher ethanol blend services include physical ethanol supply and blending programs; financial risk management programs; E15/E85/etc. strategic site selection; station design; equipment supply; station installation and conversions; RINS management; government grant funding assistance and support with station sales and marketing. Protec currently supplies, either directly or through distribution partners, more than 200 E85 stations.
As of last September, E15 was available at more than 90 stations across the nation. The locations are spread between 14 states including: Wis., S.D., Ohio, Neb., N.D., N.C., Mo., Mich., Minn., Kan., Ill., Iowa, Ark. and Ala.
Tom Buis, CEO of Growth Energy, observed, “Protec has listened to their customers and retailers, and has taken the initiative to offer higher ethanol blends that improve the environment, create jobs at home, and strengthen our energy and national security. Furthermore, Protec knows that by offering a homegrown, less expensive fuel they will continue to build a customer base by providing a choice and savings at the pump. The demand for E15 is strong, and we believe that when consumers are given the choice, they will choose the less expensive fuel that is better for their engines and our environment – one that creates jobs in America and reduces our dangerous dependence on foreign oil.
Propel – tripling the per-store sales of HRC fuels like E85 and drop-in renewable diesel
Out in California, Propel Fuels CEO Rob Elam says that the business of distributing independent alternative fuels is expanding rapidly.
“The company is focused entirely on capital efficient ways to distribute low carbon fuels. We left the whole gas station model, where we operated 6 multi products stations and convenience stores. We sold all those stations and have focused on branded supply and co-location. We’re the largest e85 retailer in the state with more than 70% of the market, we’ve moved into renewable diesel, and updated our offering from B20 to renewable diesel. We’ve just rolled out 18 sites in northerns cal, and we’ll be adding 15 in Southern California by July.”
The most important stat? Nationwide, E85 moves less than 5000 gallons per store per month. Propel is averaging roughly 25,000 gallons per store per month, and has more than one outlet moving 50,000 gallons in a month. And, it’s economically viable.
If every E85 outlet in the US moved 25000 gallons per month, that would equate to an additional 550 million gallons of demand per year, from existing stations. And you might find a lot more retailers interested in distribution, and a lot more interest in making more flex fuel cars. And that doesn’t even touch on the opportunities with a 98.5 renewable diesel blend, that offers 5x the carbon reduction vs B20 and 5X the air quality improvement.
Recently, The Digest visited with Propel CEO Rob Elam and the company’s story, and you can read that here.