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disruptions. This can be accomplished by fostering diversity among which fuel types are able to be utilized, and where they are sourced from. While domestic shale oil production has increased in recent years to provide an added diversity, the capability of the transportation sector to more flexibly utilize alternative sources of fuel would provide another type of hedge against volatility. Increasing penetrations of biofuels and plug-in electric vehicles will likely contribute to accomplishing this. Abundant low-cost natural gas also presents opportunities to do so. 4.2 AlternativeTransportationOptions This section will review the following alternative transportation options: • Ethanol • Alternative blended fuels • Drop-in biofuels • Plug-in electric and plug-in hybrid electric vehicles • Hydrogen-fueled vehicles • Natural gas vehicles. 4.2.1 Ethanol Among renewable fuels, corn starch ethanol has had the highest penetration in the transportation sector, due to blending tax credits, import tariffs, and the Renewable Fuel Standard (RFS) (see Section 4.3.2). More than 95% of the 134 billion gallons of gasoline consumed in the United States in 2011 were blended with ethanol, typically at the E10 (10% ethanol) level.ff,102 E10 can be used with existing vehicle engines and gasoline distribution infrastructure, and certain vehicles can safely accommodate higher blends such as E15. Because E10 and E15 blends are currently upper bounds for most vehicles, there is a limited amount of market penetration ethanol can have without changes to fleet mix and distribution infrastructure. The 8 million flex-fuel 103 vehicles in the United States can operate on gasoline with blends of up to 85% ethanol (E85), though infrastructure to distribute blends above E10 is limited.104 In general, pro-ethanol policies face controversy, with critics saying subsidies are too costly, unfair, or unnecessarygg and supporters claiming improved energy security, lower greenhouse gas (GHG) emissions, and increased rural incomes and employment.105 Natural gas is a common input to both corn and ethanol production processes and, as a result, their prices depend in part on the price of natural gas. Corn is typically grown using fertilizer, and natural gas is a key feedstock to producing fertilizer; in fact, it accounts for up to 90% of total fertilizer production costs.106 It is often used to produce heat for a number of process steps necessary to convert corn to ethanol. Cellulosic ethanol can be derived from a range of abundant biomass resources, mitigating many of the potential macroeconomic and environmental consequences associated with corn ethanol. ff Due to its lower energy density, ethanol-blended gasoline results in lower fuel economy. gg Some have argued that the ethanol industry would have been profitable far earlier than 2011 without subsidization, some claiming as early as 2006 (Hurt, C; Tyner, W.; Doering, O. Economics of Ethanol. Purdue University, 2006. Accessed August 30, 2012). 28PDF Image | Opportunities Synergy Natural Gas and Renewable Energy
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