1. Alternative Transportation Fuels
Good morning. I'm honored to be invited to speak to you this morning.
I'm Maria Tome, an alternate energy engineer with the Hawaii State Energy Office.
I'll go through the slides quickly. If you need more information on something, you can refer to your handout, or we can come back to it at the end.
Maria Tome, P.E.
State of Hawaii Department of Business, Economic Development, and Tourism Strategic Industries Division

2. Overview Hawaii's Transportation Fuel Demand Alternative Fuels
Alternative Fueled Vehicles
Incentives
If you are planning your transportation energy, remember:
Efficiency always comes first.
Then, we look at ways to meet the remaining energy needs.
There are alternative fuels, alternative fuel vehicles, and incentives.

3. Hawaii's Gasoline Use
Here's a snapshot of Hawaii's gasoline use over the past 20 years.
You can see that the '90s were relatively flat. We kept pretty close to the 400 million gallons per year mark.
But in the past few years, the demand has been increasing quite rapidly. We hit 400 million gallons per year in 2000 and 450 million gallons per year in
The vehicles that were purchased then, and that are being purchased now, will be on the roads for quite a few years. So, we don't expect to see much of a drop in the near future.

4. Gasoline Demand per Year Actual (1983-2003) and Projected (2004-2015)
Here's a projection of what Hawaii's gasoline demand might look like over the next few years.
By the way, diesel fuel demand is expected to follow a similar trend, but the numbers are much smaller. Diesel provides less than 10% of our ground transportation fuel demand.
OK, so this chart shows a reasonable estimate of light duty vehicle energy demand. There are some alternative fuels which can be used to meet this demand.

5. Alternative Fuels Alcohol Fuels Biodiesel Electricity Hydrogen LPG
Ethanol
Methanol
Biodiesel
Electricity
Hydrogen
LPG
Natural Gas (CNG, LNG)
Others under development (P-series, diesohol)
These are the alternative fuels, as defined at the Federal level.
Let's go through and edit this list for Hawaii.

6. Most Significant Alternative Fuels for Hawaii√
Alcohol Fuels
Ethanol
Methanol
Biodiesel
Hydrogen / Fuel Cell / Electricity
LPG
Natural Gas (CNG, LNG)
Others under development (P-series, e-diesel)
Blending to begin in 2006; flex-fuel vehicles in use √
Alcohol fuel has a great deal of potential. But we don't talk about methanol anymore; when we say alcohol fuel, we mean ethanol.
Biodiesel is in use and is being produced in Hawaii. We'll talk more about this later.
Hydrogen, fuel cell, electric, and hybrid vehicle technology are still under development but have significant potential, and Hawaii is a leader in this area.
LPG, also called propane, is well-known in Hawaii. It's been used in fleets for years but is not getting the same support nationally as some of the other alternative fuels.
Natural gas is not currently a player in the Hawaii market but if someone starts shipping in LNG that could change.
And others are still under development; not yet available in Hawaii.
P-series fuel is a blend of natural gas liquids (pentanes plus), ethanol, and the biomass-derived co-solvent methyltetrahydrofuran (MeTHF). P-Series fuels are formulated to be used in flexible fuel vehicles (FFVs). These fuels are not currently being produced in large quantities and are not widely used. P-Series fuels were added to the list of alternative fuels in
E-diesel: Ethanol-diesel blends contain up to 15 volume percent ethanol and an emulsifier. The main technical barriers to commercializing e-diesel are:
Low flashpoint of this fuel. E-diesel must be handled like gasoline.
Engine manufacturers do not warrantee their engines for use with e-diesel
EPA fuel registration will involve Tier 1 and Tier 2 emission and health effects testing.
Potentially significant; under development √ √
30 years of local use but facing challenges
If LNG available, this could change

7. Most Significant Alternative Fuels for Hawaii
Ethanol
LPG (Propane)
Biodiesel
Hydrogen / Fuel Cell / Electricity
Here are the four we're going to talk about. We'll spend quite a bit of time on ethanol; I expect it will be receiving a fair amount of attention in the coming year.

8. Fuel Ethanol
Ethanol is also known as ethyl alcohol. It’s the alcohol in beer, wine, rum, vodka, etc.
Ethanol was used to fuel some of the first automobiles.
Fuel ethanol is the same alcohol that's found in beverages.
But when it's used in fuel, it's denatured so that it won't be drinkable and it won't be subject to the alcohol beverage taxes.
It's been used as a vehicle fuel since automobiles were invented.

9. Fuel Ethanol
On the Mainland, independent gasoline stations were generally first to offer gasoline with up to 10% ethanol (E10; formerly known as gasohol).
1970s-1980s: Used as a gasoline extender
1980s: An octane booster (raises octane 2-3 points)
1990s: Used as an oxygenate for clean air (Adds oxygen & reduces emissions of carbon monoxide)
In 1908, Henry Ford expected ethanol to be the major fuel used in his Model T automobile.
In the 1930s, oil discoveries in the U.S. peaked, and low gasoline prices resulted in a shift away from ethanol.
It wasn’t until 1979 that ethanol-gasoline blends were reintroduced to the U.S. market when oil supply disruptions in the Middle East became a national security issue. Several major oil companies marketed ethanol blends as a “gasoline extender.”
In 1974, unleaded gas became available and by 1986 lead had been completely phased out; all gasoline was unleaded. How to increase the octane of gasoline became an important question. Since ethanol increases octane by a couple of points, it was used as an “octane booster” in the 1980s.
In 1990, the Clean Air Act Amendments required oxygen to be added to fuel in areas with unhealthy levels of carbon monoxide.

10. Projected US Ethanol Demand
Here is historical and projected demand for fuel ethanol in the US.
The increased use of ethanol for fuel is not limited to the United States. It's international.
For example, according to the China Energy Report, all gasoline sold in Henan Province is required to be blended with ethanol. In October, 2004, China's economic planning body accelerated efforts to promote ethanol mixed gasoline in over a hundred Chinese cities. Apart from Henan, there are another eight pilot provinces involved in the switch to ethanol fuel.
Graph: from ethanol alternatives report by Stillwater Associates
BN GLN = billion gallons

11. Fuel Ethanol
Today, ethanol-blended gasoline is available in most states.
All of Minnesota's gasoline contains 10% ethanol
Minneapolis/Saint Paul, 1995
Statewide, 1997
California, New York, and Connecticut switched completely at the end of 2003 and are now using ethanol rather than MTBE.
Let's come back to the U.S.
Today, about one third of the gasoline sold in the U.S. is blended with ethanol.
And in some areas, ALL of the gasoline contains ethanol.

12. States With 10 or More Years of Fuel Ethanol Use
According to the Energy Information Administration, ethanol blends have been available for over 10 years in over 38 states.
The basis for the EIA data actually under-states the use of ethanol, because "in States where gasohol is taxed at the same rate as gasoline, gasohol is usually not reported separately from gasoline, and volume data are not available.”
So this is a conservative number.
I think we can sum this up by saying that "ethanol blends have been in widespread use in the United States for many years."
Hawaii shows up in 1980, 1981, and 1982 (3 years).
From Reynolds: "Between 1980 and the end of 2001, over 25 billion gallons of fuel grade ethanol have been produced meaning that over 260 billion gallons of gasoline ethanol blends have been sold. Put another way, over 5.2 trillion miles have been driven on gasoline ethanol blends. For comparison, this is 650 times the amount of gasoline used annually on the islands."

13. Hawaii’s Ethanol Potential from Stillwater Report
Ethanol could be produced in Hawaii at a large scale (up to 90 million gallons per year) and at a competitive cost ($1.25 -$1.30 per gallon).
Waste biomass is better used for electricity production than for ethanol production, since Hawaii's electricity is relatively expensive.
Ethanol blending provides cost advantages to blenders.
The production of ethanol and generation of power from sugarcane is recommended.

14. Biomass to Ethanol… or Electricity?
EBITDA = Earnings Before Income Tax, Depreciation and Amortization

15. Why no fuel ethanol in Hawaii?
According to ASTM specification D4814, Hawaii gasoline may not have a RVP (Reid vapor pressure) greater than 11.5 pounds per square inch (psi).
Gasoline testing report in 1989 showed that vapor pressures ranged from 9.7 to 11.4 psi.
Adding ethanol to gasoline near the 11.5 psi limit would result in fuel that did not conform to specifications.
To successfully blend ethanol in Hawaii, a suitable blendstock is needed.
Bottom line: in Hawaii, refiner participation is necessary.

16. RVP = Reid Vapor Pressure.
10.0
10.5
11.0
11.5
12.0
12.5
13.0 2 4 6 8 10 12
Vol % Ethanol
RVP (psi)
RVP = Reid Vapor Pressure.
Upper curve: If gasoline with an RVP of 11.5 psi has ethanol added to it, the blend will have a (too) high RVP.
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.

17. Considerations & Recommendations from Stillwater Report
For each gallon of ethanol, local refiners will lose market share and be required to modify operations and construct facilities.
Such cost increases are offset… the price per gallon at the rack will not increase.
The evaluation of the production of Ethyl Tertiary Butyl Ether (ETBE) using locally produced ethanol and isobutylene from the local refineries is recommended.

18. Hawaii Gasoline to Contain 10% Ethanol
Beginning in April of 2006, at least 85 out of every 100 gallons of gasoline sold in the State for use in motor vehicles shall contain 10% ethanol by volume. HRS §486J(10), HAR 15-35
Hawaii will soon be joining the states that blend ethanol in their gasoline. Beginning in April of 2006, at least 85 out of every 100 gallons of gasoline sold in the State for use in motor vehicles shall contain 10% ethanol.
From a practical perspective, the fuel distributors may decide to blend ethanol in all their gasoline. That's shown on the graph. Note that the demand for both gasoline and ethanol are projected to continue to increase.
Not shown on this chart are displacement of fuel demand due to:
efficiency;
use of alternative fuels, such as E85 or propane; or
development and use of hybrid and fuel cell vehicles.
Let's briefly talk about E85.

19. Ethanol-based Alternative Fuel: E85
Gasoline with ethanol is still gasoline. It's not an alternative fuel.
An increasing number of new vehicles can use E85 (15% gasoline, 85% ethanol), which is an alternative fuel.
Gasoline with ethanol is still gasoline. It's not an alternative fuel.
According to an editorial in a Madison newspaper, about 25% of new vehicles can use E85, a blend of 85% ethanol with 15% gasoline.
These are flexible-fuel vehicles, and have been sold as standard equipment to individuals and fleets since 1998.
You may have one and not even know it!
newsid= &PAG=461&rfi=9

20. E85 Flexibly-Fueled Vehicles
Here are just some of the current models.
They are called "flex-fueled" vehicles because they can operate on any combination of gasoline and up to 85% ethanol.

21. Onroad Alternative Fuel and Hybrid Vehicles in the U.S., 2003
4 million on the road in the U.S.
You can see that by far the greatest number of alternative fuel vehicles in 2003 were E85 flexible fuel vehicles.
This is based on EIA data, and really only tells us how many people know their vehicles are alternative fuel vehicles.
Data from the manufacturers provides a much larger number - there are about 3.5 million E85 FFVs on the road today.
Some of those are used in fleets to meet Federal requirements for the purchase of alternative-fuel- capable vehicles.

22. State, Federal, and Fuel Provider Fleets are Required to Purchase AFVs
Model Year
Federal Fleets
State Fleets
Fuel Providers
1997
25%
10%
50%
1998
33%
15%
70%
1999
90%
2000
75%
2001+
Energy Policy Act of 1992 (EPACT) alternative fueled vehicle (AFV) purchase requirements
A Federal law enacted in 1992 requires light duty vehicles purchased by Federal fleets, State fleets, and fleets operated by alternative fuel providers, to be capable of operating on an alternative fuel.
The alternative fuel vehicles in use in Hawaii include flex-fueled vehicles, propane vehicles, and electric vehicles.
Biodiesel fuel used in heavy-duty vehicles may be used to offset up to half of the light-duty vehicle purchase requirements.
I'll start with the alternative fuel which was the most common in Hawaii in the 1980s:

23. Propane (LPG)
Propane.
Propane has been used in Hawaii since the 1970s. There are many forklifts, some State, and many City and County of Honolulu vehicles which operate on propane.
The propane gas suppliers used to convert light duty vehicles to propane operation. Several large fleets participated.
In some cases, the apparent fuel economy of their fleets improved once their fleets were converted to propane. This actually has nothing to do with thermodynamics and everything to do with making it less tempting for empoyees to use company fuel in their own vehicles.

24. Biodiesel Produced locally (Maui & Oahu) from used cooking oil
Can also be produced from oilseed crops
For use in diesel engines
Biodiesel is produced locally and is used in National Parks as well as in boats, stationary diesel power generator sets, County vehicles, private vehicles, and yes, there is a rental car company that features a biodiesel-powered vehicle.
The City and County of Honolulu uses a 20% biodiesel blend. They did not make any modifications to their diesel storage or equipment.

25. Biodiesel Can be used pure or blended with regular diesel.
B100=100% biodiesel;
B20 = 20% biodiesel, 80% petro diesel;
B5 = 5% biodiesel, 95% petro diesel;
B2* = 2% biodiesel, 98% petro diesel;
Can be added to regular diesel to improve cetane rating and reduce engine wear.
Burns cleaner; produces less soot, smoke, and cancer-causing emissions than diesel; smells different.
Biodiesel can be used straight, or can be blended with regular diesel. It can be used in existing vehicles.
No modifications are necessary for low-level blends. Blends of up to 20% biodiesel with regular diesel are the most common.
Minnesota passed a law in 2002 that will require biodiesel to be blended into diesel sold in the state. About 200 service stations are already offering B2 and it appears that the statewide 2% mandate will be put into effect sometime in the later part of this year.
* Minnesota has a B2 mandate, triggered by 2 requirements: 1) 8 million gallons of biodiesel production capacity; AND 2) No earlier than June 30, 2005.

26. Biodiesel
This shows some of the relative properties of diesel number 1, diesel number 2, and 100% biodiesel.
Biodiesel has an excellent cetane rating, very low sulfur, and high lubricity, which means it reduces engine wear. That's in the bottom line of the chart.
The lubricity of fuel is becoming very important as the Environmental Protection Agency reduces the amount of sulfur allowed in fuels.
The higher the level of sulfur in fuels, the greater the emissions. This is true for gasoline and diesel. But when sulfur is removed from regular diesel fuel, the lubricating ability of the fuel, also known as lubricity, is increased.
The test for that is the HFRR scar test.

27. Biodiesel
Here's more detail on the lubricity benefit of adding biodiesel to regular diesel.
A level as low as 1% in number 2 diesel and 2% in number 1 diesel significantly improves lubricity.

28. Biodiesel Emissions
This is a graph of a biodiesel emissions evaluation performed in 2002 by the U.S. Environmental Protection Agency.
The most dramatic reduction is in HC (hydrocarbons), with roughly equal reductions in PM (particulate matter) and CO (carbon monoxide).
There was a slight increase in NOx.
The diesel engine people say that the NOx can be controlled by optimizing the engine for biodiesel use by retarding the timing.
The engine adjustment was not done for this EPA study. The study was set up to evaluate the emissions effects of using the fuel in un-modified engines.

29. Hydrogen / Fuel Cell / Electricity
Hawaii has contributed to advances in electric vehicle technology. This will serve us well in the transition to electric hybrids and fuel cell vehicles.
Fuel cell vehicles are sometimes described as the best of both worlds - they can offer the fuel flexibility of internal combustion engines, and the energy efficiency of fuel cell electric technology.
The fuels that we are used to -- gasoline, alcohol fuels, natural gas, propane -- all contain hydrogen. A device called a "reformer" can be located on the vehicle -- or at the fueling station -- and the reformer can produce hydrogen from these fuels. The hydrogen can then be used in a fuel cell to produce electricity on-board the vehicle.
Or, electricity can be used to produce the hydrogen from water molecules.

30. Incentives Federal ethanol credit: 51¢ per gallon provided to blender
Federal biodiesel credit: $.50 or $1.00 per gallon to producer
Federal small ethanol producer credit: 10¢/gallon to producer
Federal Commodity Credit Corp: credits for new production of ethanol and biodiesel (amounts vary; approx. $100 million nationwide)
State credit for ethanol facility: up to $4.5 million per facility
State highway taxes reduced for alternate fuels
State 4% retail excise tax exemption for gasoline with 10% ethanol
Electric vehicles with special license plates are allowed free parking at meters; HOV access
Counties provide highway tax reductions or exemptions for alternative fuels
There are several Federal, State, and even County incentives for alternative fuels.
If you are considering incentives, please keep in mind that you must carefully consider what SPECIFICALLY is rewarded by the incentive, because if you are not careful about what you reward, you may not get the results you want.
Some states used to provide tax credits for companies that sold ethanol or blended ethanol. These incentives did increase the use of ethanol in those states. However, the governments soon realized that the ethanol was not being produced in-state. The ethanol production was occurring where the ethanol production incentives were provided. So they changed their approach, to support the local production of fuel.
Another situation was with investment credits. There are stories about investors receiving credits for spending money for either building - or buying - fuel production facilities that never worked.
If you want fuel to be produced, you have to specifically require the production of fuel. And make sure that it's high quality fuel. If you want the fuel to be produced from beginning to end within your country or within your state, you should say that, too. If not, someone could ship in ethanol made somewhere else, and just take out the last bit of water - that's called the dehydration step - and say that they have "produced" fuel grade ethanol.

31. Sum of State & County Highway Taxes (cents per gallon)
This slide shows the combined rate of State and County highway taxes on alternative fuels.

32. Summary Transportation Fuel Demand is Projected to Increase
Alternative Fuels and Vehicles are Available
Ethanol
LPG
Biodiesel
Hydrogen / Fuel Cell / Electricity
Incentives are Available
And finally, the summary -
Transportation Fuel Demand is Projected to Increase
(and now you know how much and why);
Alternative Fuels and Vehicles are Available
(and now you know which ones and how many); and
Incentives are Available
(and you know about those too).

33. Internet Resources
Alternative Fuels Data Center (national)
Hawaii's Ethanol Program new-fuel.com
Biodiesel
Hawaii State Energy Office

34. Questions?
Are there any questions?
THANK YOU for your attention!