Feasibility of meeting increased biofuel mandates with E85

The Environmental Protection Agency implements the Renewable Fuel Standard through annual blending mandates for different categories of biofuels. In its proposed rule released for the 2014, 2015 and 2016 calendar years, EPA reduced mandates because the volume of ethanol that consumers can easily use is lower than the original mandates specified in the Renewable Fuels Standard. This study estimates the demand for E85 using a new dataset that allows direct inference about the demand from the data. We report on how owners of flex vehicles in two metropolitan areas responded to changes in the price of E85. Using our new estimates of consumer demand, we find that owners of current flex vehicles in all US metro areas would consume 285 million gallons of E85 if it was priced at parity on a cost-per-mile basis with E10, and one billion gallons of E85 if it was priced to save drivers 20% on a cost-per-mile basis.