Alternative

Transportation Fuels
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

3
Hawaii's Gasoline Use
0
50
100
150
200
250
300
350
400
450
500
1
9
8
3
1
9
8
5
1
9
8
7
1
9
8
9
1
9
9
1
1
9
9
3
1
9
9
5
1
9
9
7
1
9
9
9
2
0
0
1
2
0
0
3
Year
M
i
l
l
i
o
n
s

o
f

G
a
l
l
o
n
s
Maui
County
Kauai
Hawaii
Oahu
4
Gasoline Demand per Year
Actual (1983-2003) and Projected (2004-2015)
0
100
200
300
400
500
600
1
9
8
3
1
9
8
5
1
9
8
7
1
9
8
9
1
9
9
1
1
9
9
3
1
9
9
5
1
9
9
7
1
9
9
9
2
0
0
1
2
0
0
3
2
0
0
5
2
0
0
7
2
0
0
9
2
0
1
1
2
0
1
3
2
0
1
5
Year
M
i
l
l
i
o
n
s

o
f

G
a
l
l
o
n
s
Maui County
Kauai
Hawaii
Oahu
actual projected
5
Alternative Fuels
Alcohol Fuels
Ethanol
Methanol
Biodiesel
Electricity
Hydrogen
LPG
Natural Gas (CNG, LNG)
Others under development (P-series, diesohol)
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
Potentially significant;
under development
If LNG available, this could change

30 years of local use but facing challenges

7
Most Significant
Alternative Fuels for Hawaii
Ethanol
LPG (Propane)
Biodiesel
Hydrogen / Fuel Cell / Electricity
8
Fuel Ethanol
Ethanol is also known
as ethyl alcohol. Its
the alcohol in beer,
wine, rum, vodka,
etc.

Ethanol was used to
fuel some of the first
automobiles.
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)
10
Projected US Ethanol Demand
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
1980 1990 2000 2010
B
N

G
L
N
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.

12
States With 10 or More Years of
Fuel Ethanol Use
States With 10 or More Years of
Use of Gasoline / Ethanol Blends
0
2
4
6
8
10
12
14
16
18
20
22
24
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13
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.
Hawaiis Ethanol Potential
from Stillwater Report
14
Biomass to Ethanol or Electricity?
2200 t/day
Lignocellulose
to Ethanol
69.3 MMGPY
$192 MM
Biomass
100%
11.55 x 10
12
Btu/yr
$23 MM @ $30/ton
Waste Heat
46.8%
Ethanol
48.7%
$86 MM @ $1.28/gln
Power
4.5%
$9 MM @ $0.06/kWh
2200 t/day
Lignocellulose
to Power
120 MW
$90 MM
Waste Heat
71.6%
Power
28.4%
$57 MM @ $0.06/kWh
Biomass
100%
11.55 x 10
12
Btu/yr
$23 MM @ $30/ton
Gross Margin $72 MM $22 MM Fixed & Variable Operating = $50 MM
EBITDA/Capital = 0.26
Gross Margin $34 MM $6 MM Fixed & Variable Operating = $28 MM
EBITDA/Capital = 0.31
2200 t/day
Lignocellulose
to Ethanol
69.3 MMGPY
$192 MM
Biomass
100%
11.55 x 10
12
Btu/yr
$23 MM @ $30/ton
Waste Heat
46.8%
Ethanol
48.7%
$86 MM @ $1.28/gln
Power
4.5%
$9 MM @ $0.06/kWh
2200 t/day
Lignocellulose
to Power
120 MW
$90 MM
Waste Heat
71.6%
Power
28.4%
$57 MM @ $0.06/kWh
Biomass
100%
11.55 x 10
12
Btu/yr
$23 MM @ $30/ton
Gross Margin $72 MM $22 MM Fixed & Variable Operating = $50 MM
EBITDA/Capital = 0.26
Gross Margin $34 MM $6 MM Fixed & Variable Operating = $28 MM
EBITDA/Capital = 0.31
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
10.0
10.5
11.0
11.5
12.0
12.5
13.0
0 2 4 6 8 10 12
Vol % Ethanol
R
V
P

(
p
s
i
)

RVP = Reid
Vapor Pressure.
Vapor Pressure
Hawaiis
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.
Upper curve: If gasoline with an
RVP of 11.5 psi has ethanol
added to it, the blend will have a
(too) high RVP.
17
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.
Considerations & Recommendations
from Stillwater Report
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
-
100,000,000
200,000,000
300,000,000
400,000,000
500,000,000
600,000,000
1
9
8
3
1
9
8
6
1
9
8
9
1
9
9
2
1
9
9
5
1
9
9
8
2
0
0
1
2
0
0
4
2
0
0
7
2
0
1
0
2
0
1
3
G
A
L
L
O
N
S
ETHANOL DEMAND*
GASOLINE DEMAND*
* If all gasoline
blended with
ethanol
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.
20
E85 Flexibly-Fueled Vehicles
21
Onroad Alternative Fuel and Hybrid
Vehicles in the U.S., 2003
Fuel Type Light Duty Medium Duty Heavy Duty Grand
Total Total Total Total
Compressed
Natural Gas (CNG) 2,229 2,705 1,188 6,122
Electric (EVC) 12,382 12 1 12,395
Ethanol, 85 Percent
(E85) 859,261 0 0 859,261
Gasoline/Diesel-
Electric Hybrid 50,357 0 175 50,532
Hydrogen (HYD) 6 0 0 6
Liquefied Natural
Gas (LNG) 20 0 91 111
Liquefied Petroleum
Gas (LPG) 180 1,650 281 2,111
TOTAL 924,435 4,367 1,736 930,538
4 million on the road in the U.S.
22
Energy Policy
Act of 1992
(EPACT)
alternative
fueled vehicle
(AFV)
purchase
requirements
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 50% 25% 90%
2000 75% 50% 90%
2001+ 75% 75% 90%
23
Propane (LPG)
24
Produced locally
(Maui & Oahu)
from used
cooking oil
Can also be
produced from
oilseed crops
For use in
diesel engines
Biodiesel
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.
* 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
#2 DIESEL #1 DIESEL BIODIESEL
Specifications Specifications Test results
CETANE NUMBER (min) 40 40 61.2
FLASH POINT,C (min) 60 38 >130
CLOUD POINT, C (max) 10 10 3
SULFUR, ppm (max) 500 500 4.6
Wear Test Results #2 DIESEL #1 DIESEL BIODIESEL
High Frequency
Reciprocating Rig
(HFRR) Scar, microns
536 671 314
PROPERTY
27
Biodiesel
Percent
Biodiesel Number 2 Diesel Number 1 Diesel
0.0% 536 671
0.4% 481 649
1.0% 321 500
2.0% 322 355
20.0% 314 318
100.0% 314 314
HFRR Scar (microns)*
*Lower numbers are better. Below 460 is recommended
by Fuel Injection Equipment (FIE) manufacturers
28
Biodiesel Emissions
http://www.epa.gov/otaq/models/analysis/biodsl/p02001.pdf
29
Hydrogen /
Fuel Cell /
Electricity
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
31
Sum of State & County Highway
Taxes (cents per gallon)
County Gasoline Ethanol LPG Biodiesel Diesel
Honolulu
32.5 4.8 10.6 12.3 32.5
Maui
34.0 6.2 9.5 4.0 34.0
Hawaii
24.8 3.7 8.1 6.2 24.8
Kauai
29.0 4.3 9.5 4.0 29.0
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
33
Internet Resources
Alternative Fuels Data Center (national)
www.eere.energy.gov/afdc
Hawaii's Ethanol Program
new-fuel.com
Biodiesel
www.biodiesel.org
Hawaii State Energy Office
www.hawaii.gov/dbedt/ert/
34
Questions?