How much would you pay for renewable fuels?

December 4, 2013 | Jim Lane

Many thanks for the quick response to the Digest survey.

Here, as the EPA delves into the future of the Renewable Fuel Standard, today is your response on who would pay what for which renewable fuel.

The highlights

1. For E85, you indicated that you would switch to renewable fuels if there were a 15 percent discount to gasoline prices. Just around 50 cents, not at all different from on-ground data we’ve heard from the likes of Propel Fuels.

2. For B2 biodiesel, you were willing to make the switch to renewable fuels with a 3 cent premium to fossil-based diesel. That translates into a $2.25 per gallon premium for B100 biodiesel, as a premium over fossil-based diesel — in terms of the underlying cost of the fuel. More than covering the existing premium in the marketplace.

3. For drop-in renewable gasoline or diesel, you were willing to make the switch to renewable fuels with a 3-5 cent premium (median), 6.4 cent premium (average) to fossil-based gasoline or diesel. Now, that’s for, presumably, a 100 percent substitute. When drop-is are used as a blendstock, premiums may be lower.

4. For renewable jet fuel, you were willing to make the switch to a 50 percent renewable fuel blend with a $5-$10 premium (media), $9.54 premium (average) on a ticket. That’s for a proposed 1000-mile flight for which the underlying fuel cost is roughly $43. Using the average figure, that’s a 44% percent premium, after accounting for the blend percentage. More than 75 percent of you were willing to pay a premium of at least $1 per gallon.

For the nay-sayers

Now, surveys are surveys and translating survey results into the field takes careful, persistent, imaginative messaging and marketing.

Now, we’ve heard from some skeptics along the lines of “only the industry reads Biofuels Digest, and they’re biased.” True, the Digest is closely-read in the industry, with in many cases more than half a company’s employee base on the subscriber list. But the Digest’s readership of 600,000 is much larger than the industry’s employment base.

The hard data

(responses through 12/4/13)


1. For fuels like ethanol, there is a loss in mileage compared to gasoline. This is offset by lower per-gallon prices, higher octane (premium levels like 93 octane) and by lowering carbon monoxide emissions up to 30%, fine particulate matter emissions by 50%, and carbon dioxide emissions by 21%. Plus, creating domestic green jobs and improving energy security. Given those benefits – for a fuel like E85 ethanol that would have 20% lower mileage compared to regular unleaded – how much less would you expect to pay at the pump before switching your (flex-fuel) car over to E85 fuel?
	%
I would pay the same price per gallon as gasoline for these benefits, despite the loss in mileage.	22%
I would expect to pay 5 percent less before switching to E85, for these benefits.	7%
10 percent less	17%
15 percent less	12%
20 percent less – must break even on a per-mile basis, regardless of other benefits	26%
25 percent – must perform better on fuel economy	5%
30 percent less (or a greater discount) – there must be a dramatic per-mile savings	7%
Other	5%
Total	100%	12.9%


2. For fuel blends like 2 percent (B2) biodiesel, there is roughly equivalent fuel economy compared to diesel. Plus, B2 biodiesel replaces the lubricity in diesel fuel that was lost with the introduction of ulta low-sulphur diesel (ULSD). And, there are less air pollutants, a reduction in CO2 emissions, and biodiesel creates domestic green jobs and improves energy security. Given all those benefits – for a fuel like B2 biodiesel that would have roughly the same mileage compared to regular diesel – how much more would you expect to pay at the pump and still choose B2 over regular diesel?
	%
I would only buy B2 if it costs less, despite the other benefits	6%
I would only buy B2 if it costs the same, despite the other benefits	35%
I would be willing to pay 3 cents per gallon more for these other benefits	18%
I would be willing to pay 5 cents per gallon more	18%
I would be willing to pay 10 cents per gallon more	11%
I would be willing to pay 20 cents per gallon more	5%
I would be willing to pay a 25 cents per gallon (or more) premium	5%
Other	3%
Total	100%	$0.045


3. For fuels like drop-in renewable gasoline, diesel, there are exactly the same fuel properties – and, up to 60 percent reduction in CO2 emissions, plus domestic green jobs and improved energy security. Given all those benefits – for a fuel like drop-in renewable gasoline, diesel or jet fuel that would have exactly the same performance in mileage and in the engine – how much more would you expect to pay at the pump and still choose renewable fuels over regular fuels?
	%
I would only buy renewable fuels if they cost less, despite equivalent mileage, performance and other benefits	4%
I would only buy renewable fuels if they cost the same, despite the other benefits	31%
I would be willing to pay 3 cents per gallon more for these other benefits and comparable mleage	18%
I would be willing to pay 5 cents per gallon more	14%
I would be willing to pay 10 cents per gallon more	17%
I would be willing to pay 20 cents per gallon more	6%
I would be willing to pay a premium of 25 cents per gallon or more	9%
Other	2%
Total	100%	$0.064


4. For renewable jet fuel, there are exactly the same fuel properties and fuel economy – and, up to 60 percent reduction in CO2 emissions, plus domestic green jobs and improved energy security. Given all those benefits – for renewable jet fuel that would have exactly the same performance in mileage and in the engine – how much more would you be willing to pay for an 1000-mile airline ticket, that would have roughly $43 in fuel cost – if that airline chose to use a 50 percent renewable fuel blend?
	%
I would only buy a ticket if it cost the same, regardless of the benefits	23%
I would be willing to pay $1 more for a ticket for these benefits	9%
I would be willing to pay $5 more for a ticket for these benefits	19%
I would be willing to pay $10 more for a ticket for these benefits	21%
I would be willing to pay $20 more for a ticket for these benefits	17%
I would be willing to pay a $32 premium or more – for a ticket for these benefits	9%
Other	2%	3
Total	100%	$9.54