The dirty little secret about flex-fuel cars
For months now, I have been trying to figure out what to make of the big push by American auto manufacturers toward “flex-fuel” vehicles that can run on normal gasoline or E85, a blend of 85% ethanol and 15% gasoline.
The poster child of this push has been General Motors with its “Live Green, Go Yellow” campaign. GM has been plastering magazines with two page spreads touting how they have produced millions of “flex-fuel” vehicles that are ready for the wave of ethanol-based fuel.
While GM has been the leader here, Ford has been close behind.
My first reaction when I saw these campaigns was that this was a cute ploy to try to compete with the success of the Japanese hybrids.
I then decided to investigate a little further.
The next thing I found was that it costs a car company close to nothing to design their cars to accept E85 fuel. So, this wasn’t just a “cute” ploy, it was a cheap cute ploy.
You also have all sorts of good arguments about whether ethanol is even a viable solution to our problems.
Then of course, you have the elephant in the room that there are virtually no E85 fueling stations across the country. According to the National Ethanol Vehicle Coalition’s website there is exactly one E85 fuel station within one hundred miles of where I live.
But despite of all of this, I still wanted to believe that there was some good here. I mean, at least they are trying to do something, right? It’s the thought that counts, right? While ethanol may not be the bees knees, it is better than burning gas, isn’t it?
Then today, I just stumbled on the dirty little secret that explains the American car manufacturer’s love affair with flex-fuel vehicles and I’ll give you a hint — it doesn’t have a bit to do with saving the planet.
In order to understand the secret, you first have to understand the Corporate Average Fuel Effeciency (CAFE) standards. I explained this in a previous post called “20 Years Later, It’s Time for a Change”, but as a summary, the CAFE standards force auto manufacturers to maintain a certain fuel efficiency across all of the cars they sell.
In theory, if you sell on Hummer, you need to sell several fuel efficient cars so the average across your fleet meets certain minimums. (Of course, even this example is flawed since Hummers don’t count toward CAFE standards.)
But, it turns out that the heart of GM’s love for flex-fuel vehicles is a nice little loophole in the CAFE standards.
You see, in 1988, Congress passed the Alternative Motor Fuels Act (AMFA) to promote the use of alternative fuels like methanol, ethanol, and natural gas.
In order to incent auto manufacturers to build cars capable of running on these alternative fuels, Congress inflated the fuel efficiency ratings of these cars by 6.6x.
So, an purely ethanol powered car that got 20 mpg in real life would count toward the CAFE standards as if it got 133 mpg.
For a flex-fuel cars, Congress allowed the auto manufaturers to assume that 50% of the time the car would be running on gasoline and 50% of the time it would be running on the alternative fuel.
This last sentence gave auto manufacturers every motivation they needed to love flex-fuel.
In order to understand this, let’s take a real world example.
Let’s start with a Chevy Tahoe. According to the US Department of Energy, the Tahoe gets a combined fuel average of 16 mpg using gasoline and 12 mpg using ethanol.
Through the magic of math, Chevy has gone from a 16 mpg car to a 26 mpg car according to the CAFE standards.
So, through the power of this loophole, Chevy can produce a gas guzzler, but get credit for a much more fuel efficient car without spending much additional money and, on top of it all, they get to claim that they are doing it all for the love of the planet.
And I believed that there were some good intentions here. Shame on me.
Reference
The following sites had great information on this topic:
on January 24th, 2007 at 9:04 pm
Thanks for this information! I didn’t know that, but then I guess it all makes sense now doesn’t. It’s interesting that the US car makers (and the US government) are pushing an energy solution (Ethanol) which is so dependent on the climte/environment to produce. And of course, as usual, the negative feedback systems were not considered, such as ranchers who now have starving cattle because they have no hay due to freezing rain, and no corn due to ethanol production….
on January 24th, 2007 at 10:44 pm
Very interesting! I’m glad that you did this digging — good info.
I think that implicit in this story are some important lessons for environmentalism going forward.
Back at the beginning of the environmentalism, the movement became associated with the American left. This wasn’t a necessary connection — Nixon, after all, started the EPA, and one of that organization’s most effective leaders was a stalwart Republican leader — but it happened. And in the 1970s, a substantial portion of the left became quite hostile to business and capitalism. Thus, environmentalism came to seem as opposed to market forces — not necessary, in the philosophical sense, but it happened.
The DLC and Clinton remade the democratic image in part by becoming much more aligned with business and pro-market. The big tech boom of the 1990s seemed to cement this relationship. And there was a sense that any criticism of big business harkened back to the bad old days.
As a result, there’s a temptation to just say, businesses will take care of the environment. It’s in their interest and consumers demand it, ergo, it will be provided. The last six years, though, should have taught us that there is, in fact, a big difference between being pro-market and pro-business. As environmental groups try to figure out how to go forward, I think it’s important to keep the distinction between pro-business and pro-market in mind. The EDF and Nature Conservatory are both doing innovative programs by being pro-market — by using market incentives to change bad environmental practices. As you’ve made clear in previous posts, there’s much that could be done along those lines to promote climate-friendly technologies. But, relying on old guards in the business world, such as GM and Ford, may be dangerous, for the exact reasons that you’ve outlined. They have a vested interest in maintaining the status quo. So, the trick is to create market incentives and help those companies that want to innovate, and be willing to leave behind those that don’t — which isn’t an easy choice, given that the left includes both organized labor and environmentalists — but seems like the way forward.
on January 28th, 2007 at 5:28 am
The complicity of auto manufacturers, lawmakers, and many people who like to take the label of conservationist in crafting to give the public the idea we are *really* helping things out here with alternative fuels,
is pathetic.
Granted there are informed and right-thinking people in many places
who are making an impact, but not a great one at present.
Ethanol production exacts more energy costs in its “manufacture”
by farming (think of costs of cultivation, harvesting, transport, etc.,)
besides which it provides less energy in combustion, thus requires
*more* to send an automobile from point A to point B.
We haven’t begun to make inroads in the development of alternative
fuels…. enough to supply more than a fraction of our “consumption.”
One cannot help be suspicious of claims of automakers that they’re
really On Board in trying to find a replacement for the petroleum industry product. Hybrids are an interim (but only interim) step in the right
direction. More money toward innovation, toward research & development, would be nice.
(s) Honda Insight 2000 owner
on February 12th, 2007 at 2:35 am
Thanks for all the information on flex fuel. This is a really good article!
It is certainly no surprise that Bush is promoting flex fuel due to the fact that flex fuel is no closer to being available in the near future than hydrogen cell energy. He’s still looking out for big brother Exxon and all his other big energy brothers.
My partner has also written a two part article on flex fuel. Le’t hope this gets out to the public so that everyone can see the pathetic effort of Bush towards solving our energy dependence and global warming concerns.
Great article!!