Renewable Fuels Policy

Today, more than 80 percent of global oil reserves are limited to 10 countries, while biofuels made from sugarcane can be produced in more than 100 countries. First-generation biofuels are playing an important role in building consumer awareness and spurring capital investment in infrastructure and facilities that can be used for more promising second-generation biofuels.

Ford is a leader in providing vehicles that can operate on biofuels. We met our 2010 U.S. goal to double our production of E85 flexible-fuel vehicles (those capable of using up to 85 percent ethanol), and we continue to introduce E85 flexible-fuel vehicles. These products, which we are delivering at no additional cost to consumers, go well beyond requirements and what most other automakers are doing.

Ford’s vision for biofuels is for accelerated use of renewable fuels to deliver increased energy security, enhance economic development and help to address climate change. This vision includes rapidly expanding the number of vehicles that can operate on biofuels, increasing the number of stations offering biofuels, developing the fuel distribution network to support customer choice and value, and achieving technology breakthroughs to commercialize advanced biofuels.

Policies across the globe are aimed at increasing the use and availability of biofuels. The U.S. adopted a Renewable Fuel Standard requiring 36 billion gallons of biofuels by 2022, including more than 20 billion gallons of low-carbon advanced biofuels. The EU Renewable Energy Directive establishes a 10 percent renewable energy target for transportation energy in 2020. And Brazil has had a very aggressive domestic ethanol program for years.

But these policies aren’t enough. Providing value is critical to engage consumers and get them to use alternative energy sources. Hundreds of millions of vehicles in operation today were designed to use ethanol blends containing less than 10 percent ethanol, and our transportation energy infrastructure was set up to deliver petroleum-based fuels.

In January 2011, the U.S. Environmental Protection Agency (EPA) approved a waiver allowing the use of E15 (a blend of 85 percent gasoline and 15 percent ethanol) in 2001 and later model year vehicles.

On the one hand, we recognize the potential benefits of expanded use of E15 fuel in helping to build markets for renewable fuels. In addition, ethanol has an octane rating greater than today’s gasoline, so when the fuels are mixed, the resulting fuel blend will have higher octane than base gasoline. As the octane rating of a fuel increases, it reduces the tendency for “engine knock,” a condition that can, over time, lead to engine damage. Many of today’s advanced engines currently on the road 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 would result in improved vehicle efficiency. Further improvement to engine efficiency (through increased compression ratio and downsizing) could be achieved if manufacturers knew the octane rating of the fuel would be increased.

On the other hand, the implementation of the EPA’s E15 waiver presents a number of concerns. In particular, Ford is concerned about the impact the waiver will have on the legacy fleet – the millions of vehicles still on the road that were designed to operate on E10 (or E0 for very old vehicles). Although E15 is not approved for use in such vehicles, the EPA has not developed a robust program to prevent the “misfueling” of these vehicles. As a result, we anticipate a high incidence of misfueling, i.e., customers putting E15 fuel in vehicles not designed to use it. We are concerned that such vehicles will not continue to meet customer expectations for quality, durability and performance, as well as legal requirements to meet emission and on-board diagnostic regulations.

Because of the concerns cited above, we believe that the risks for automakers, fuel providers and consumers need to be mitigated and addressed before proceeding with the widespread use of E15. We have suggested that the EPA and other policymakers develop a revised, prospective plan for the introduction of E15, in a way that better ensures the fuel is only used in vehicles designed to accommodate it.