Migration to Alternative Fuels and Powertrains

Current Generation Biofuels

Ford has a long history of developing vehicles that run on renewable biofuels. Our founder, Henry Ford, was a strong proponent of biofuels, and we produced our first flexible-fuel vehicle approximately 100 years ago; the Ford Model T was capable of running on gasoline or ethanol.

Biofuels are an important component of our sustainability strategy for three reasons. First, biofuels can help to address economic, social and environmental sustainability as well as helping us meet our CO₂-reduction goals. Second, the use of biofuels requires relatively modest modifications to existing vehicle and fueling technology, which makes them a viable near-term option. Third, biofuels offer synergies with our other strategies. For example, the high octane of ethanol would enable the use of higher compression ratios and higher levels of boost, thereby improving the efficiency of and generating more torque from our future downsized engines, provided this fuel is available. Similarly, we can use biofuels to fuel the internal combustion engine portion of our plug-in hybrid electric vehicles, which will further lower their carbon footprint. We are aware that there are fundamental limitations associated with the scale of biofuel production, and therefore we do not see biofuels as the only solution to providing sustainable mobility. Nonetheless, we do see biofuels as part of the solution.

Ford has taken a leadership position on implementing biofuels. Since 1997, we have offered flexible-fuel vehicles (FFVs) capable of running on gasoline or E85 ethanol – a blended fuel that contains up to 85 percent ethanol and at least 15 percent petroleum-based gasoline. To date, we have more than 5 million E85-capable vehicles on the road globally, including more than 2.5 million in North America and nearly 2 million in Brazil. In the United States, we have introduced more than 550,000 FFVs over the last two years alone. In Europe, Ford is a market leader and pioneer in bioethanol-powered FFVs, with more than 70,000 vehicles delivered to customers since 2001. Ford FFV models are now available in 17 European markets, with Sweden, Germany, the Netherlands, Spain and France showing the strongest demand.

Ford currently offers 14 vehicle models in the United States, Europe, Asia and South America that can run on E85. These include the Ford Crown Victoria, Mercury Grand Marquis, Lincoln Town Car, Ford Fusion, Mercury Milan, Ford Escape, Mercury Mariner, Lincoln Navigator, Ford Expedition, Ford Econoline and Ford F-150 in North America; the Ford Focus, C-MAX, Mondeo, S-MAX and Galaxy in Europe; the Ford Fiesta, EcoSport and Focus in Brazil; and the Ford Focus in Thailand. In 2009 in Europe we launched a tri-fuel version of the Ford Mondeo capable of running on gasoline, E85 or propane (LPG).

Next-Generation Biofuels

We are continuing to develop the next generation of biofueled vehicles, including vehicles capable of running on advanced biofuels. Our current research focuses on two primary biofuels: bioethanol and biodiesel. Bioethanol (used for example in E85) is a gasoline alternative derived from plant material. Most bioethanol in the United States is made from corn. In other parts of the world it is made from other locally available crops, including sugar cane in Brazil and sugar beets in Europe. All modern gasoline vehicles can run on E10, a gasoline/bioethanol mixture of up to 10 percent by volume bioethanol.

Biodiesel is a diesel alternative made from vegetable oils obtained from oil seeds, including soy, canola, palm and rapeseed, or from animal fat. In the United States, most biodiesel is currently made from soybeans. In the United States and Europe all of our diesel vehicles can run on B5, a blend of 5 percent biodiesel and 95 percent petroleum diesel. We have worked with fuel standards organizations to allow the use of biodiesel blends of greater than B5 in our future products. For example, our 2011 F-Series Super Duty® trucks with a new 6.7-liter diesel engine are compatible with B20, which is 20 percent biodiesel and 80 percent petroleum-based diesel. In addition, the gasoline version of these vehicles will be compatible with gasoline, E85, or any ethanol-gasoline blend between E0 and E85.

Bioethanol, biodiesel and other renewable fuels have significant advantages. They can be made with locally available raw materials, reducing the need for foreign-supplied oil and increasing energy security, and they produce fewer lifetime CO₂ emissions. However, important issues remain regarding biofuels' energy density, the best way to use these fuels to reduce greenhouse gas (GHG) emissions, and their ability to meet fuel needs without diminishing food supplies. (These issues are discussed in more detail later in the Biofuel Challenges section.)

Ford is working to support and promote the next generation of biofuels, including cellulosic biofuels. These are fuels made from plant cellulose – stalks, leaves and woody matter – instead of from sugars, starches or oil seeds. Cellulosic biofuels have many advantages. They minimize possible market competition between food and fuel. They allow the more-efficient use of crops such as corn and soybeans by using more of the plant. In addition, cellulosic biofuels can be made from crops that require less energy-intensive farming, such as switchgrass and wood, further reducing the total CO₂ footprint of fuels used for operating vehicles. We are also investigating the potential for algae-based biofuels to provide another feedstock for future biofuels.

Biofuel Infrastructure

To make an impact on GHG emissions and energy security, biofuels must become more widely available. In the United States, Ford has committed to doubling the number of FFVs in our lineup by 2010. And, if the market dictates and the supporting infrastructure is in place, we have committed to expanding FFV output to 50 percent of total vehicle production by 2012. Despite this commitment, E85 refueling infrastructure remains inadequate. Out of more than 160,000 refueling stations in the United States, approximately 2,200 (or less than 2 percent) offer E85. In order for consumers to have a true transportation fuel choice, increased access to biofuels is necessary.

United States Renewable Fuel Standard and the Future of Biofuels

The Energy Independence and Security Act of 2007 established a new renewable fuel standard (RFS) requiring a significant increase in the use of biofuels – 36 billion gallons per year by 2022. In addition, this law requires that, beginning in 2010, a certain portion of biofuels must be advanced and/or cellulosic-based fuels. Ethanol blended into gasoline is expected to supply a large percentage of this biofuel mandate and could displace nearly 20 percent of U.S. gasoline demand by 2022.1 The use of biodiesel in the United States is also likely to increase in the coming years. However, it will not likely increase to the same levels as ethanol, because the RFS mandates lower volumes of biomass-based diesel and because a relatively small percentage of light-duty passenger vehicles in the United States use diesel.

Using low-level ethanol blends such as E10, which is the current compatibility limit for all non-FFV light-duty vehicles, would achieve approximately 40 percent of the RFS-mandated biofuel use by 2022. Therefore, meeting the full RFS biofuel requirement will require the use of more E85-capable FFVs and/or the development of vehicles that can use mid-level blends of ethanol (i.e., between E10 and E85). Furthermore, the expanded use of E85-compatible vehicles would require a corresponding increase in the E85 fueling infrastructure in the next 10 to 20 years. An approach using mid-level blends would require that all new vehicles be designed for higher ethanol capability, and the existing fueling infrastructure would need to be redesigned for higher ethanol compatibility. For any of these cases to work in the real world, the new fuels will have to provide value to give consumers a compelling reason to buy ethanol-blend fuels. Regardless of the specific strategy used, coordinated efforts will be required between automakers, fuel suppliers, consumers and the government to meet the RFS mandate while ensuring the compatibility of vehicles and ethanol-blended fuel.

Biofuel Challenges

Much of the interest in biofuels results from their potential to lessen the environmental impacts of transportation fuels while contributing to energy independence. Biofuels are made from domestic and renewable resources, they provide an economic boost to farmers, and they help to reduce greenhouse gas emissions because the plants from which they are made absorb CO₂ while they are growing. But are biofuels the solution to our growing fuel-related environmental, economic and political problems? The issues are complex. We believe biofuels are an important part of the equation for addressing climate change and energy security. We recognize, however, that major advances need to be made in production processes, source materials and fuel types to achieve the full promise of biofuels.

Some of the challenges relating to today's biofuels include the following.

Energy density

The energy density of ethanol is approximately two-thirds that of gasoline.2 This means there is approximately one-third less energy in a gallon of ethanol than in a gallon of gasoline. As a result, drivers using blends with a high amount of ethanol will have to refuel more frequently to drive the same distance. Biodiesel has approximately the same energy density as conventional diesel.

Life-cycle greenhouse gas emissions

The plants used to produce biofuels capture as much carbon dioxide during their growth as they release when burned. However, current farming and production processes utilize fossil fuels in the production of bioethanol and biodiesel, so the production of these biofuels for use in vehicles results in a release of some fossil-fuel-based GHG emissions on a life-cycle basis. Recent studies have suggested that nitrous oxide (N₂O) emissions from the fertilizers required to grow biofuel feedstocks may have been underestimated, and that these emissions reduce the GHG benefits attributed to biofuels. N₂O emissions from biofuel production need to be carefully considered for all types of biofuel feedstocks and farming techniques on a full life-cycle basis, including allocation of emissions to co-products derived from biofuel production. Government and academic studies suggest that current E85 ethanol from corn results in 20 to 30 percent fewer life-cycle GHG emissions than today's gasoline, on an energy-equivalent basis. In addition, GHG emissions related to petroleum can vary greatly depending on the source. Producing crude oil from tar sands, for example, results in a greater release of GHGs than producing crude oil from conventional sources. The use of renewable energy sources in the production of bioethanol and biodiesel production can reduce their life-cycle GHG emissions further. We believe that developing cellulosic or biomass-based biofuels with next-generation processes will significantly decrease the GHG emissions associated with biofuels, perhaps by up to 90 percent.3

Competition with the food supply

Another concern about current corn- and soybean-based biofuels is that they compete in the marketplace with food supplies and are one of the factors that increase food prices. Demand for corn used directly for human food (including high-fructose corn syrup) comprises less than 10 percent of the total corn supply. Approximately 42 percent of the corn produced in the United States is used for animal feed. In 2009, about 32 percent of the corn harvest in the United States was used to produce ethanol. The ethanol process removes only the starch from the corn – the remaining portion is a highly valued feed product (called distiller grains) and a good source of energy and protein for livestock and poultry. If next-generation biofuels can efficiently utilize biomass such as plant stalks, woodchips or grasses and be grown on marginal land with little irrigation, then competition with food crops should be minimized.

Land use conversion for biofuel production

Recent studies have looked at the overall CO₂ and N₂O impacts of converting natural ecosystems to farmland for the production of biofuels. This is an important and complex issue. Converting natural lands to croplands for fuel production can lead to the release of carbon stored in above- and below-ground biomass. Releasing this carbon in the form of CO₂ during land conversion to energy crops creates a carbon "debt," which may take a very long time to repay through the greenhouse gas benefits of biofuel use. The use of degraded pastures or abandoned farmland, by contrast, rather than natural ecosystems, would incur minimal carbon debt, because there is limited CO₂ storage in these previously altered ecosystems.

At Ford, we are following the debates about biofuels closely. As we proceed, we need to consider how biofuels are derived and carefully review issues such as the potential net greenhouse gas benefits; political, economic, social and environmental concerns related to biofuel and petroleum use; and the management of land, food and water resources. We agree with the general consensus among scholars and industry experts that the current generation of biofuels (e.g., corn-based bioethanol and soybean-based biodiesel) have modest environmental benefits and are a first step toward cleaner vehicles and energy independence. We are actively investigating next-generation biofuels that have greater environmental, energy security and economic benefits. We believe that improvements in the efficiency of farming technologies and biomass production processes, and the development of advanced biofuels, will significantly increase the benefits and long-term sustainability of biofuels. Even with these improvements, solving our climate change and energy security problems will require a multifaceted set of solutions, including new fuels, improvements in vehicle fuel economy and changes in consumer driving patterns and practices.