egnret dbedt 5 05

Alternative Alternative Transportation FuelsTransportation Fuels

Maria Tome, P.E.Maria Tome, P.E.

State of HawaiiState of HawaiiDepartment of Business, Economic Development, and Department of Business, Economic Development, and

TourismTourismStrategic Industries DivisionStrategic Industries Division

22

OverviewOverview Hawaii's Transportation Fuel Demand Hawaii's Transportation Fuel Demand Alternative Fuels Alternative Fuels Alternative Fueled VehiclesAlternative Fueled Vehicles IncentivesIncentives

33

Hawaii's Gasoline UseHawaii's Gasoline Use

0

50

100

150

200

250

300

350

400

450

50019

83

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

Year

Mill

ions

of G

allo

ns

MauiCountyKauai

Hawaii

Oahu

44

Gasoline Demand per YearGasoline Demand per YearActual (1983-2003) and Projected (2004-2015)Actual (1983-2003) and Projected (2004-2015)

0

100

200

300

400

500

60019

83

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Year

Mill

ions

of G

allo

ns

Maui CountyKauaiHawaiiOahu

actual projected

55

Alternative FuelsAlternative Fuels Alcohol Fuels Alcohol Fuels

EthanolEthanol MethanolMethanol

BiodieselBiodiesel ElectricityElectricity HydrogenHydrogen LPGLPG Natural Gas (CNG, LNG)Natural Gas (CNG, LNG) Others under development (P-series, diesohol)Others under development (P-series, diesohol)

66

Most Significant Most Significant

Alternative Fuels for Hawaii Alternative Fuels for Hawaii Alcohol Fuels Alcohol Fuels

EthanolEthanol MethanolMethanol

BiodieselBiodiesel Hydrogen / Fuel Cell / ElectricityHydrogen / Fuel Cell / Electricity LPGLPG Natural Gas (CNG, LNG)Natural Gas (CNG, LNG) Others under development (P-series, e-Others under development (P-series, e-

diesel)diesel)

√

√

Blending to begin in 2006; flex-fuel vehicles in use

Potentially significant; under development

If LNG available, this could change

√

30 years of local use but facing challenges

√

77

Most Significant Most Significant

Alternative Fuels for Hawaii Alternative Fuels for Hawaii

EthanolEthanol LPG (Propane)LPG (Propane) BiodieselBiodiesel Hydrogen / Fuel Cell / Hydrogen / Fuel Cell /

ElectricityElectricity

88

Fuel EthanolFuel Ethanol

Ethanol is also Ethanol is also known as ethyl known as ethyl alcohol. It’s the alcohol. It’s the alcohol in beer, alcohol in beer, wine, rum, vodka, wine, rum, vodka, etc.etc.

Ethanol was used Ethanol was used to fuel some of the to fuel some of the first automobiles.first automobiles.

99

Fuel EthanolFuel EthanolOn the Mainland, independent gasoline stations On the Mainland, independent gasoline stations were generally first to offer gasoline with up to were generally first to offer gasoline with up to 10% ethanol (E10; formerly known as gasohol). 10% ethanol (E10; formerly known as gasohol).

1970s-1980s: Used as a 1970s-1980s: Used as a gasoline gasoline extenderextender

1980s: An 1980s: An octane boosteroctane booster (raises octane (raises octane 2-3 points)2-3 points)

1990s: Used as an 1990s: Used as an oxygenateoxygenate for clean air for clean air(Adds oxygen & reduces emissions of (Adds oxygen & reduces emissions of carbon monoxide)carbon monoxide)

1010

Projected US Ethanol DemandProjected US Ethanol Demand

0.00.51.01.52.02.53.03.54.04.55.0

1980 1990 2000 2010

BN

GLN

BN GLN = billion gallons

1111

Fuel EthanolFuel Ethanol

Today, ethanol-blended gasoline is Today, ethanol-blended gasoline is available in most states. available in most states.

All of Minnesota's gasoline contains All of Minnesota's gasoline contains 10% ethanol10% ethanol Minneapolis/Saint Paul, 1995Minneapolis/Saint Paul, 1995 Statewide, 1997Statewide, 1997

California, New York, and Connecticut California, New York, and Connecticut switched completely at the end of switched completely at the end of 2003 and are now using ethanol rather 2003 and are now using ethanol rather than MTBE.than MTBE.

1212

States With 10 or More Years States With 10 or More Years of Fuel Ethanol Useof Fuel Ethanol Use

States With 10 or More Years of Use of Gasoline / Ethanol Blends

02468

1012141618202224

Ala

bam

aA

lask

aA

rizon

aA

rkan

sas

Cal

iforn

iaC

olor

ado

Con

nect

icut

Dis

t. of

Col

.Fl

orid

aG

eorg

iaId

aho

Illin

ois

Indi

ana

Iow

aK

ansa

sK

entu

cky

Loui

sian

aM

aryl

and

Mic

higa

nM

inne

sota

Mis

sour

iM

onta

naN

ebra

ska

Nev

ada

New

Jer

sey

New

Mex

ico

New

Yor

kN

orth

Nor

thO

hio

Ore

gon

Penn

sylv

anSo

uth

Sout

hTe

nnes

see

Texa

sU

tah

Virg

inia

Was

hing

ton

W. V

irgin

iaW

isco

nsin

Year

s

1313

Ethanol could be produced in Hawaii Ethanol could be produced in Hawaii at a large scale (up to 90 million gallons per at a large scale (up to 90 million gallons per year) andyear) andat a competitive cost ($1.25 -$1.30 per gallon).at a competitive cost ($1.25 -$1.30 per gallon).

Waste biomass is better used for electricityWaste biomass is better used for electricityproduction than for ethanol production, since production than for ethanol production, since Hawaii's electricity is relatively expensive. Hawaii's electricity is relatively expensive.

Ethanol blending provides cost advantagesEthanol blending provides cost advantagesto blenders.to blenders.

The production of ethanol and generation The production of ethanol and generation of power of power from sugarcane is recommended.from sugarcane is recommended.

Hawaii’s Ethanol PotentialHawaii’s Ethanol Potentialfrom Stillwater Reportfrom Stillwater Report

1414

Biomass to Ethanol… or Electricity?Biomass to Ethanol… or Electricity?2200 t/day

Lignocelluloseto Ethanol

69.3 MMGPY$192 MM

Biomass100%

11.55 x 1012 Btu/yr$23 MM @ $30/ton

Waste Heat46.8%

Ethanol48.7%

$86 MM @ $1.28/glnPower4.5%

$9 MM @ $0.06/kWh

2200 t/dayLignocellulose

to Power120 MW$90 MM

Waste Heat71.6%

Power28.4%

$57 MM @ $0.06/kWh

Biomass100%

11.55 x 1012 Btu/yr$23 MM @ $30/ton

Gross Margin $72 MM – $22 MM Fixed & Variable Operating = $50 MMEBITDA/Capital = 0.26



to Ethanol69.3 MMGPY

$192 MM

Biomass100%

11.55 x 1012 Btu/yr$23 MM @ $30/ton

Waste Heat46.8%

Ethanol48.7%

$86 MM @ $1.28/glnPower4.5%

$9 MM @ $0.06/kWh


to Power120 MW$90 MM

Waste Heat71.6%

Power28.4%

$57 MM @ $0.06/kWh

Biomass100%

11.55 x 1012 Btu/yr$23 MM @ $30/ton



EBITDA = Earnings Before Income Tax, Depreciation and Amortization

1515

Why no fuel ethanol in Hawaii?Why no fuel ethanol in Hawaii? According to ASTM specification D4814, Hawaii According to ASTM specification D4814, Hawaii

gasoline may not have a RVP (Reid vapor pressure) gasoline may not have a RVP (Reid vapor pressure) greater than 11.5 pounds per square inch (psi).greater than 11.5 pounds per square inch (psi).

Gasoline testing report in 1989 showed that vapor Gasoline testing report in 1989 showed that vapor pressures ranged from 9.7 to 11.4 psi.pressures ranged from 9.7 to 11.4 psi.

Adding ethanol to gasoline near the 11.5 psi limit Adding ethanol to gasoline near the 11.5 psi limit would result in fuel that did not conform to would result in fuel that did not conform to specifications.specifications.

To successfully blend ethanol in Hawaii, a suitable To successfully blend ethanol in Hawaii, a suitable blendstock is needed.blendstock is needed.

Bottom line: in Hawaii, refiner participation is Bottom line: in Hawaii, refiner participation is necessary.necessary.

1616

10.0

10.5

11.0

11.5

12.0

12.5

13.0

0 2 4 6 8 10 12

Vol % Ethanol

RVP

(psi

)

RVP = Reid Vapor Pressure.

Vapor PressureVapor Pressure

Hawaii’s gasoline (including ethanol blends)

must have an RVP of

11.5 or less.

Lower curve: If gasoline with an RVP of 10.3 psi has ethanol added to it, the blend will have an acceptable RVP.

Upper curve: If gasoline with an RVP of 11.5 psi has ethanol added to it, the blend will have a (too) high RVP.

1717

For each gallon of ethanol, local refiners For each gallon of ethanol, local refiners will lose market share and be required to will lose market share and be required to modify operations and construct facilities. modify operations and construct facilities.

Such cost increases are offset… the price Such cost increases are offset… the price per gallon at the rack will not increase.per gallon at the rack will not increase.

The evaluation of the production of Ethyl The evaluation of the production of Ethyl Tertiary Butyl Ether (ETBE) using locally Tertiary Butyl Ether (ETBE) using locally produced ethanol and isobutylene from the produced ethanol and isobutylene from the local refineries is recommended.local refineries is recommended.

Considerations & Considerations & RecommendationsRecommendationsfrom Stillwater Reportfrom Stillwater Report

1818

Hawaii Gasoline to Contain 10% Hawaii Gasoline to Contain 10% EthanolEthanol

Beginning in April of 2006, at least 85 out of every 100 Beginning in April of 2006, at least 85 out of every 100 gallons of gasoline sold in the State for use in motor vehicles gallons of gasoline sold in the State for use in motor vehicles shall contain 10% ethanol by volume. shall contain 10% ethanol by volume. HRS HRS §486J(10), HAR 15-35§486J(10), HAR 15-35

-

100,000,000

200,000,000

300,000,000

400,000,000

500,000,000

600,000,00019

83

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

GA

LLO

NS

ETHANOL DEMAND*GASOLINE DEMAND*

* If all gasoline blended with ethanol

1919

Ethanol-based Alternative Fuel: Ethanol-based Alternative Fuel: E85E85

Gasoline with ethanol is still gasoline. It's not an Gasoline with ethanol is still gasoline. It's not an alternative fuel.alternative fuel.

An increasing number of new vehicles can use An increasing number of new vehicles can use E85E85 (15% gasoline, 85% ethanol), which (15% gasoline, 85% ethanol), which isis an alternative an alternative fuel.fuel.

2020

E85 Flexibly-Fueled VehiclesE85 Flexibly-Fueled Vehicles

2121

Onroad Alternative Fuel and Onroad Alternative Fuel and Hybrid Vehicles in the U.S., Hybrid Vehicles in the U.S.,

20032003Fuel Type Light Duty Medium Duty Heavy Duty Grand

Total Total Total TotalCompressed Natural Gas (CNG) 2,229 2,705 1,188 6,122Electric (EVC) 12,382 12 1 12,395Ethanol, 85 Percent (E85) 859,261 0 0 859,261Gasoline/Diesel-Electric Hybrid 50,357 0 175 50,532Hydrogen (HYD) 6 0 0 6Liquefied Natural Gas (LNG) 20 0 91 111Liquefied Petroleum Gas (LPG) 180 1,650 281 2,111TOTAL 924,435 4,367 1,736 930,538

4 million on the road in the U.S.

2222

Energy Energy Policy Act of Policy Act of 1992 1992 (EPACT) (EPACT) alternative alternative fueled fueled vehicle vehicle (AFV) (AFV) purchase purchase requirementrequirements s

State, Federal, and Fuel Provider State, Federal, and Fuel Provider Fleets are Required to Purchase Fleets are Required to Purchase

AFVsAFVsModel Year

Federal Fleets

State Fleets

Fuel Providers

1997 25% 10% 50%

1998 33% 15% 70%

1999 50% 25% 90%

2000 75% 50% 90%

2001+ 75% 75% 90%

2323

Propane (LPG)Propane (LPG)

2424

Produced Produced locally (Maui & locally (Maui & Oahu) from Oahu) from used cooking used cooking oiloil

Can also be Can also be produced from produced from oilseed cropsoilseed crops

For use in For use in diesel enginesdiesel engines

BiodieselBiodiesel

2525

BiodieselBiodiesel Can be used pure or blended with regular diesel. Can be used pure or blended with regular diesel.

B100=100% biodiesel; B100=100% biodiesel; B20 = 20% biodiesel, 80% petro diesel; B20 = 20% biodiesel, 80% petro diesel; B5 = 5% biodiesel, 95% petro diesel;B5 = 5% biodiesel, 95% petro diesel; B2* = 2% B2* = 2% biodiesel, 98% petro diesel;biodiesel, 98% petro diesel;

Can be added to regular diesel to improve cetane Can be added to regular diesel to improve cetane rating and reduce engine wear.rating and reduce engine wear.

Burns cleaner; produces less soot, smoke, and Burns cleaner; produces less soot, smoke, and cancer-causing emissions than diesel; smells cancer-causing emissions than diesel; smells different.different.

* Minnesota has a * Minnesota has a B2 mandate, triggered by 2 B2 mandate, triggered by 2 requirements:requirements:1) 8 million gallons of biodiesel production capacity; 1) 8 million gallons of biodiesel production capacity; ANDAND2) No earlier than June 30, 2005. 2) No earlier than June 30, 2005.

2626

BiodieselBiodiesel#2 DIESEL #1 DIESEL BIODIESEL

Specifications Specifications Test results

CETANE NUMBER (min) 40 40 61.2

FLASH POINT, °C (min) 60 38 >130

CLOUD POINT, °C (max) 10 10 3

SULFUR, ppm (max) 500 500 4.6

Wear Test Results #2 DIESEL #1 DIESEL BIODIESEL

High Frequency Reciprocating Rig (HFRR) Scar, microns

536 671 314

PROPERTY

2727

BiodieselBiodieselPercent

Biodiesel Number 2 Diesel Number 1 Diesel

0.0% 536 671

0.4% 481 649

1.0% 321 500

2.0% 322 355

20.0% 314 318

100.0% 314 314

HFRR Scar (microns)*

*Lower numbers are better. Below 460 is recommended by Fuel Injection Equipment (FIE) manufacturers

2828

Biodiesel EmissionsBiodiesel Emissions

http://www.epa.gov/otaq/models/analysis/biodsl/p02001.pdf

2929

Hydrogen / Hydrogen / Fuel Cell / Fuel Cell / ElectricityElectricity

3030

IncentivesIncentives Federal ethanol credit: 51Federal ethanol credit: 51¢ per gallon provided to blender¢ per gallon provided to blender Federal biodiesel credit: Federal biodiesel credit: $.50 or $1.00 per gallon to producer$.50 or $1.00 per gallon to producer Federal small ethanol producer credit: 10¢/gallon to producerFederal small ethanol producer credit: 10¢/gallon to producer Federal Commodity Credit Corp: credits for new production of Federal Commodity Credit Corp: credits for new production of

ethanol and biodiesel (amounts vary; approx. $100 million ethanol and biodiesel (amounts vary; approx. $100 million nationwide)nationwide)

State credit for ethanol facility: up to $4.5 million per facility State credit for ethanol facility: up to $4.5 million per facility State highway taxes reduced for alternate fuelsState highway taxes reduced for alternate fuels State 4% retail excise tax exemption for gasoline with 10% State 4% retail excise tax exemption for gasoline with 10%

ethanolethanol Electric vehicles with special license plates are allowed free Electric vehicles with special license plates are allowed free

parking at meters; HOV accessparking at meters; HOV access Counties provide highway tax reductions or exemptions for Counties provide highway tax reductions or exemptions for

alternative fuelsalternative fuels

3131

Sum of State & County Sum of State & County Highway Taxes (cents per Highway Taxes (cents per

gallon)gallon)County Gasoline Ethanol LPG Biodiesel Diesel

Honolulu 32.5 4.8 10.6 12.3 32.5Maui 34.0 6.2 9.5 4.0 34.0

Hawaii 24.8 3.7 8.1 6.2 24.8

Kauai 29.0 4.3 9.5 4.0 29.0

3232

SummarySummary Transportation Fuel Demand is Projected to Transportation Fuel Demand is Projected to

IncreaseIncrease Alternative Fuels and Vehicles are AvailableAlternative Fuels and Vehicles are Available

EthanolEthanol LPGLPG BiodieselBiodiesel Hydrogen / Hydrogen /

Fuel Cell / Fuel Cell / ElectricityElectricity

Incentives are AvailableIncentives are Available

3333

Internet ResourcesInternet Resources Alternative Fuels Data CenterAlternative Fuels Data Center

(national)(national) www.eere.energy.gov/afdc www.eere.energy.gov/afdc

Hawaii's Ethanol ProgramHawaii's Ethanol Program new-fuel.com new-fuel.com

BiodieselBiodiesel www.biodiesel.org www.biodiesel.org

Hawaii State Energy OfficeHawaii State Energy Office www.hawaii.gov/dbedt/ert/ www.hawaii.gov/dbedt/ert/

3434

Questions?Questions?

egnret dbedt 5 05

Documents