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, which includes helping us meet our carbon dioxide (CO₂) reduction targets. Second, the use of biofuels requires relatively modest and affordable 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 is a potential enabler for the introduction of higher compression ratio engines and higher engine boost technologies that improve the efficiency and torque of our future downsized engines.

Given the current trends of increasing biofuel production, increasing investment in advanced biofuels, increasing vehicle efficiencies and the introduction of vehicles that do not use liquid fuels (such as electric and natural gas vehicles) we believe that the use of biofuels may increase from their current level of 2–3 percent globally to 10–30 percent of global liquid transportation fuel over the next few decades. Although Ford is a vehicle manufacturer and not a fuel provider, it is important for us to understand the physical and chemical properties of biofuels (such as their octane ratings), their sustainability attributes (such as lifecycle greenhouse gas (GHG) emissions, water use and energy consumption, etc.) and their performance in our vehicles. We are conducting research and development to ensure that our vehicles will be able to exploit the full benefits of biofuels. Our current work focuses on the two biofuels that are available at a commercial scale: ethanol and biodiesel.

The U.S. and Brazil are the world’s largest producers of ethanol, which is made from the fermentation of sugars. In the U.S. the sugar is derived via the hydrolysis of corn starch, while in Brazil the sugar is obtained directly from sugar cane. Ethanol is typically used in blends with gasoline. Blends are identified using the volumetric content of ethanol, which is specified numerically after the letter “E” for ethanol. For example, E10 is 10 percent by volume ethanol and 90 percent petroleum gasoline, while E85 is up to 85 percent by volume ethanol. Most automotive fuel supplied in the U.S. is E10. The U.S. Environmental Protection Agency (EPA) has recently issued a waiver permitting E15 to be sold in the U.S. for use in 2001 or newer model year vehicles. Our position regarding E15 is discussed in a separate section below.

An important benefit of ethanol is its higher octane, which can improve the efficiency and torque of today’s high-efficiency internal combustion gas engines. In 2010 we developed a fundamental molecular approach to calculating the octane boost provided by ethanol blended into gasoline that is more accurate than previous measurement approaches.1 The octane number of a fuel is a critical fuel property that describes its resistance to “knock,” which results from early or uncontrolled fuel ignition. To avoid “knocking,” the compression ratios designed into engines are limited by the lowest expected octane number of available fuels. However, engines operate at higher thermal efficiency when they can be operated at higher compression ratios using appropriate higher-octane fuel. The increased availability of ethanol in the future provides an opportunity for fuel providers to deliver fuels with higher octane and automakers to provide higher compression ratio – and therefore more-efficient – engines. High-octane ethanol blends offer a win-win-win opportunity in which the increased availability of ethanol could enable increased engine efficiency, resulting in fuel savings for our customers, improved energy security and reduced CO₂ emissions. However, ethanol also may damage engines that are not designed to operate on higher concentrations of the fuel, which poses a concern for older vehicles. Our research into ethanol fuels and octane calculations will help us take the best advantage of higher-octane ethanol fuel blends in the future.

Biodiesel is a biofuel alternative to petroleum diesel made from the transesterification of vegetable oils obtained from oil seeds, including soy, canola, palm and rapeseed, or from animal fat. Biodiesel is distinct from “renewable diesel,” which is made by hydrotreating vegetable oils or animal fats. In the U.S., most biodiesel is currently made from soybean oil. Biodiesel is typically used in blends with petroleum diesel, where the volumetric content of biodiesel is specified numerically after the letter “B” for biodiesel. In the U.S. and Europe all of our diesel vehicles can run on B5, a blend containing 5 percent biodiesel. 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 6.7L diesel engine are compatible with B20. In addition, the gasoline version of these vehicles will be compatible with gasoline, E85 or any ethanol-gasoline blend between E0 and E85.

Ford has taken a leadership position on biofuels. Since 1997, we have offered flexible-fuel vehicles (FFVs) capable of running on gasoline or E85 ethanol. In the U.S., we met our commitment to double our FFV production from 2006 to 2010. To date, we have introduced more than 5.5 million E85-capable vehicles globally, including more than 2.3 million in North America and nearly 2 million in Brazil. In the U.S., we have produced more than 1 million FFVs over the last three years alone. In Europe, Ford is a market leader and pioneer in ethanol-powered FFVs, with more than 70,000 vehicles delivered to customers since 2001. Ford FFV models are available in many European markets, with Sweden, Germany, Spain and France showing the strongest demand.

Ford currently offers 17 vehicle models in the U.S., Europe and South America that can run on E85. These include the Ford Crown Victoria, Expedition, Fusion, Escape, Econoline, Super Duty and F-150 and the Lincoln Town Car and Navigator in North America; the Ford Focus, Mondeo, S-MAX and Galaxy in Europe; and the Ford Fiesta, EcoSport, Focus, Ka and Courier in Brazil. In 2009 in Europe we launched a tri-fuel version of the Ford Mondeo, capable of running on gasoline, E85 or propane (LPG).

E15 in the United States

Over the last year, the EPA approved the use of E15 ethanol blends in 2001 and newer model year vehicles. While Ford supports the use of renewable fuels to meet the challenges of energy security and climate change and has committed to expand our lineup of vehicles capable of operating on E85, we do not support approving the use of E15 in older vehicles unless concerns with the use of E15 in the legacy fleet are addressed.

The entire legacy fleet of non-FFVs consists of vehicles designed to operate on E0 to E10 (or only E0 for very old vehicles). We are concerned that vehicles will not continue to meet customer expectations for quality, durability and performance, nor legal requirements relating to emissions and on-board diagnostics, if the vehicles are operated on a fuel they were not designed to use. The Alliance of Automobile Manufacturers and the Association of International Automobile Manufacturers are among many parties seeking review of the E15 waiver in the D.C. Circuit Court of Appeals. Ford is a member of the Alliance. Our ultimate goal is to ensure that we exceed customer expectations, and we will continue to work with our customers and dealerships to address any potential concerns.

One opportunity with the introduction of increased ethanol blends is to increase the octane rating of the new fuel. As discussed above, ethanol has an octane rating greater than today’s gasoline, so when the fuels are mixed, the resulting fuel blend should have higher octane than the base gasoline. And as the octane rating of a fuel increases, it reduces the tendency for “engine knock.” Many of today’s advanced engines are programmed to improve the efficiency of the engine just short of the point where the consumer would experience engine knock. For such engines, an increase in the octane rating of the fuel could result in improved vehicle efficiency. Further improvement to engine efficiency (through increased compression ratio and downsizing) could be achieved if manufacturers knew how and when the minimum octane ratings of fuels would increase in the future. Given that vehicles’ efficiency and performance depends on the fuel it uses, the two should be considered systematically. Coordinated efforts among the involved industries (oil, biofuel, auto) and regulatory agencies are needed to ensure that maximum benefit is gained from our future fuels and vehicles.

Future Biofuels

The biofuels currently available at a commercial scale (e.g., ethanol and biodiesel) have advantages relative to their petroleum-derived counterparts. They can be made from locally available raw materials, providing support for rural communities and reducing the need for foreign-supplied oil, while increasing national energy security. They also reduce lifetime (or well-to-wheels) CO₂ emissions compared to conventional petroleum-based fuels. However, important issues remain regarding biofuels’ energy density, the best way to use these fuels to reduce GHG emissions, their ability to meet fuel needs without impacting food supplies and their potential impact on land-use decisions. (These issues are discussed in more detail later in the Biofuel Challenges section.)

Meanwhile, Ford is working to support and promote the next generation of biofuels, including cellulosic biofuels. These are primarily fuels made from plant cellulose – stalks, leaves and woody matter – instead of from sugars, starches or oil seeds. Cellulosic biofuels will have many advantages. They should minimize possible market competition between food and fuel. They would allow the more complete use of crops such as corn and soybeans by using additional parts of these crops, including stems and leaves, for fuel production. In addition, cellulosic biofuels can be made from “energy crops,” such as switchgrass and wood, that require less fertilizer and less energy-intensive farming methods. This would further reduce the total CO₂ footprint of the resulting biofuels. We are also investigating the potential for algae-based biofuels to provide another feedstock for future biofuels. Given the challenges associated with developing and scaling up new production technologies, it is our assessment that next-generation biofuels will be available at scale in the marketplace in the next 10–15 years, if the necessary technical breakthroughs in production efficiencies are made.

The United States Renewable Fuel Standard and the Future of Biofuels

The Energy Independence and Security Act of 2007 expanded the Renewable Fuel Standard (RFS) by requiring a significant increase in the use of biofuels – to a total of 36 billion gallons per year by 2022. This law also 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 the majority of this biofuel mandate and could displace nearly 20 percent of U.S. gasoline demand by 2022.2 The use of biodiesel in the U.S. 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 U.S. use diesel.

Using low-level ethanol blends such as E10 (which is the situation today), would achieve approximately 40 percent of the RFS-mandated biofuel use by 2022. Therefore, meeting the full RFS biofuel requirement will require much greater use of E85 in FFVs and/or the development of vehicles that can use “mid-level blends” of ethanol and gasoline (i.e., between E10 and E85). The expanded use of E85 in FFVs 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 improved for higher ethanol compatibility. For any of these approaches to be successful, the new fuels will have to provide enough value to the consumer to compel them 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. Without alignment between vehicles, fuels and infrastructure, a mismatch will occur, and it will be difficult to meet the RFS mandate successfully.

Biofuel Infrastructure

To increase their benefits for reducing GHG emissions and improving energy security, biofuels must become more widely used. This requires the availability of both biofuels and vehicles capable of using biofuels. In the U.S., the E85 refueling infrastructure remains inadequate. Out of more than 160,000 refueling stations in the U.S., approximately 2,300 (or less than 2 percent) offer E85. For consumers to have a true transportation fuel choice, increased access to biofuels is necessary.

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 typically made from domestic and renewable resources, they provide an economic boost to rural communities, 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 best 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.

Challenges relating to today’s biofuels include the following:

Energy Density

The energy density of ethanol is approximately two-thirds that of gasoline.3 This means there is approximately one-third less available energy in a gallon of ethanol than in a gallon of gasoline. As a result, drivers using fuels containing higher amounts of ethanol will have to refuel more frequently. Ethanol does have improved qualities, such as higher octane, that can be leveraged to recover much of the lost energy content. Biodiesel has approximately the same energy density as conventional petroleum-based diesel.

Lifecycle Greenhouse Gas Emissions

The plants used to produce biofuel feedstocks 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 ethanol and biodiesel, so the production of these biofuels results in a release of some fossil-fuel-based GHG emissions on a complete lifecycle basis. In addition, nitrous oxide (N₂O) emissions resulting from biofuel production need to be carefully considered for all types of biofuel feedstocks and farming techniques on a full lifecycle basis, including the appropriate allocation of emissions to co-products (such as animal feed) derived from biofuel production. Government and academic studies suggest that current E85 using ethanol from corn results in 20 to 30 percent fewer lifecycle 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 ethanol and biodiesel production can reduce their lifecycle 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.4

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 often cited as one of the factors that increase food prices. In the U.S., demand for corn used directly for human food (including high-fructose corn syrup) consumes less than 10 percent of the total corn supply. Approximately 42 percent of U.S. corn is used for animal feed. In 2009, about 32 percent of the corn harvest in the U.S. was used to produce ethanol. Ethanol production removes only the starch from the corn kernel – the remaining portion is a highly valued feed product (called distiller grains) and a good source of energy and protein for livestock and poultry. This mitigates the competition between ethanol production and food production. In addition, the growth of the energy crop market has encouraged improvements in farming productivity (e.g., bushels per acre) that may not have occurred otherwise, further reducing the impact of biofuels on corn availability. 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. In 2011, Ford researchers published a technical assessment of the contribution of biofuel production to the increase in food prices in 2008.5 We agree with the majority of external studies that find that biofuel production has a small, or modest, impact on commodity food prices.

Land-Use Conversion for Biofuel Production

Recent studies have looked at the overall CO₂ and N₂O impacts of “direct” land-use changes associated with biofuels – i.e., converting natural ecosystems to farmland for the production of crops to make biofuels. Additional studies have considered an “indirect” land-use change scenario in which the use of farmland for biofuels in one region indirectly leads to the conversion of natural ecosystems to farmland in another region due to crop market feedbacks (either replacing the grain in the marketplace or due to increased prices). This is a complex and important issue. Converting natural lands to croplands 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 crop farming creates a carbon “debt,” which may take a very long time to repay through the greenhouse gas benefits of the subsequent 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 have modest environmental benefits and are a first step toward cleaner transportation and energy independence. We are actively investigating the potential of 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 efficiency and changes in consumer driving patterns and practices.