By Joe O’Brien
Although EV expansion is garnering a lot of attention right now, it is not the only horse jockeying for a position in the automotive energy race. With that in mind, here are three future fuels beyond EV that have favorable odds in the next 10 to 15 years.
A few indicators point to the expansion of ethanol.
First, federal and state funding for ethanol is plentiful and rising. The U.S. Department of Agriculture has offered $100 million to help transportation fueling and fuel distribution facilities make equipment compatible with biofuels. Energy Marketers of America reports that $75 million of the funding is being made available to fuel retailers, with 40% of it earmarked for businesses with less than 10 stations.
States are also offering incentives. For example:
- In Kansas, an income tax credit is available for 40% of the cost to install alternative fueling infrastructure.
- Through 2026, Nebraska is offering a credit of 5 cents on each gallon of E15 sold and 8 cents per gallon of E25 or higher blends sold.
- Cost-share grants in Iowa help facilities upgrade or install new E85 or dual E15 and biodiesel infrastructure.
Secondly, the development of higher ethanol blends between E15 and E85 continues.
Ethanol Producer reported in October that the U.S. Environmental Protection Agency approved the continuation of research in Nebraska to confirm the long-term adaptability and feasibility of E30.
Although the adoption of medium-sized electric trucks used for short local runs is accelerating, the transition to long-haul electric vehicles is expected to be slower. The energy that long-haul trucks consume combined with larger payload considerations complicates the electrification of the heavy-duty truck fleet.
Concurrently, global supplies of diesel have dropped due to geopolitical instabilities and a decrease in refining capacity. As a result, demand for diesel is volatile and unpredictable for 2023.
That notwithstanding, diesel’s volatility is creating a market for renewable diesel. Renewable diesel is made from the same resources as biodiesel but produced using a different process. The result is a fuel that is chemically identical to petroleum diesel and can support the hauling capacity needed by today’s truck fleet. It can also be used to create biodiesel blends, which would seem to make it uniquely suited for bridging a supply gap.
However, that optimism may not be grounded in reality.
A report from Cerulogy suggests that bullish projections from the Energy Information Administration (EIA) about the expansion of renewable diesel are not realistic. The report concluded that a generous policy environment for renewable diesel has led to new standalone facilities, conversions of existing refinery units and coprocessing with fossil fuels at existing refineries. Nevertheless, renewable diesel production capacity is still likely to fall short.
Total diesel production capacity has dropped by about 180,000 barrels per day since 2019. That being said, about 21 proposed or under-construction renewable diesel projects join a handful of plants with existing renewable diesel refining capacity. This would seem to indicate renewable diesel production is expanding, but perhaps not quite as vigorously as initially projected by the EIA.
While growth in hydrogen fueling appears strongest in the Asia-Pacific region and Europe, there is evidence that expansion in the U.S. is also on the horizon.
Auto manufacturers including Honda, Hyundai and Toyota are currently offering fuel cell electric vehicles (FCEVs) to customers in markets where hydrogen fuel is available—most notably California. However, the infrastructure for distributing hydrogen nationwide in the United States still needs to be developed. (More than 800 public hydrogen stations were deployed globally in 2021. By contrast, there were only 43 retail hydrogen stations in the U.S. in mid-2020.)
Although the federal government is allocating funding toward hydrogen fueling, the near-term boost for hydrogen in the U.S. is likely to be modest. The $1.2 trillion U.S. bipartisan Infrastructure Investment and Jobs Act apportioned $62 billion to the Department of Energy (DOE) for investments in infrastructure, including $9.5 billion for clean hydrogen. Part of the financing will fund the creation of regional hydrogen hubs (H2Hubs). Utilization of clean hydrogen in the transportation sector will be among the characteristics the DOE will evaluate when selecting proposals for the H2Hubs funding.
Although light-duty applications for hydrogen appear sluggish, it is gaining traction as a diesel alternative in the U.S. In a draft of its National Clean Hydrogen Strategy and Roadmap, the DOE reports that “hydrogen and fuel cells offer significant opportunities for applications requiring long driving ranges, fast fueling, and large or heavy payloads.”
The draft goes on to say, “Fuel cells are particularly viable for applications such as heavy-duty trucks that require fast fill times comparable to diesel today, or long driving ranges above 500 miles.”
Several commercial heavy-duty truck manufacturers have announced plans to expand production of hydrogen-powered heavy-duty trucks. Additionally, electric vehicle maker Nikola Corp. announced it is working with KeyState Natural Gas Synthesis to create Pennsylvania’s first low-carbon hydrogen production supply chain.
Future fuels aside, the internal combustion engine may ultimately be the dark horse in race.
A Fuels Institute literature review points to the ICE’s staying power and continued dominance for the next decade. The report, “Future Capabilities of Combustion Engines and Liquid Fuels,” suggests that ICEs will continue to play a significant role through at least 2035. According to the report, ICE design improvements in pursuit of a lower carbon footprint continues to be the subject of research efforts. This is an indication that automakers aren’t giving up on the ICE just yet, though no major vehicle manufacturer has decided to invest all R&D efforts in internal combustion engines.
Joe O’Brien is vice president of marketing at Source™ North America Corporation. He has more than 25 years of experience in the petroleum equipment fuel industry. Contact him at firstname.lastname@example.org or visit sourcena.com to learn more.