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The Success of E85 in the California Market

The Success of E85 in the California Market

Greg Jones
Pearson Fuels

Transcript

  1. The Success of in the California Market

  2. Pearson Fuels E85 Locations • Pearson Fuels supplies 244 E85

    stations in CA (retail & government) • Expect to build 160 - 170 retail E85 stations over the next 24 months • Distribute and sell bulk Ethanol & bulk Renewable Diesel • In January 2021, entered into our first long-term retail sales agreement to supply Renewable Diesel & Biodiesel blended fuel (RD80/B20)
  3. E85 Incentives • Infrastructure grants were available when E85 was

    introduced into CA. Grants paid for the majority of the retail station project costs • Pearson Fuels made the decision to invest capital into E85 projects. Assisted station owners financially & entered into long-term supply agreements • Long-term supply business model enabled us to surpass the 200 E85 retail station milestone in 2020 • USDA offered the HBIIP program, we were able to secure funding for 122 new E85 retail stations in the first round
  4. E85 Sales Trends in California Gallons 0 5000000 10000000 15000000

    20000000 25000000 30000000 35000000 40000000 45000000 2014 2015 2016 2017 2018 2019 2020 CALIFORNIA E85 VOLUME Gallons 42.5M 40.6M 33.8M 23.9M 18.7M 14.8M 11.1M PROJECTED
  5. Pearson Fuels vs California Sales PF Gallons CA Gallons 0

    5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 2014 2015 2016 2017 2018 2019 2020 PEARSON FUELS vs CALIFORNIA E85 VOLUME PF Gallons CA Gallons 42.5M 40.6M 33.8M 23.9M 18.7M 14.8M 11.1M 2.3M 4.6M 10.1M 15.7M 25.5M 31.7M 33.2M PROJECTED ACTUAL
  6. LCFS Impact on the E85 Market • Ethanol plant carbon

    reduction improvements have incentivized ethanol plants to point their product towards the CA market to capture LCFS value • LCFS credit prices have enabled ethanol plants to deeply discount contracted sales pricing vs. daily spot pricing while maintaining plant net-backs • Cellulosic ethanol production facilities expected to ship railcars into CA to capture significant LCFS credits via ultra-low Carbon Intensity scoring • Increased supply has benefited E85 economics & discounted E85 retail pricing vs. unleaded gasoline retail pricing • LCFS credit values projected to climb YOY
  7. LCFS Impact on the E85 Market

  8. LCFS Impact on the E85 Market • Strong LCFS values

    have changed the landscape of biofuel logistics, funding has flowed towards biofuels-specific projects • Lowering logistic costs and increasing the economic advantages of ethanol • Pre-blended E85 & delivered through rail transload facilities throughout CA LCFS Benefits E85 Distribution
  9. Bridging the Gap • CARB’s management of the LCFS program

    • Program assisted build-out of Pearson Fuels’ retail network • E85 is a “bridge fuel” consistent with CA low carbon & fossil fuel reduction goals • E85 is consistent with disadvantaged & economic justice goals – it’s a clean burning, low carbon, low-cost transportation option for price sensitive customers • E85 sometimes discounted up to $1.50 compared to unleaded gas • Moving toward an “All biomass” blend of Renewable Naphtha for 15% UNL gasoline component of E85
  10. Company Low Carbon Goals • Strategic supply partners for Renewable

    Naphtha • Goal: to eliminate gasoline component of E85 throughout entire CA retail network with Renewable Naphtha • Ethanol industry should support replacing 2% gasoline denaturant in motor fuel ethanol with Renewable Naphtha
  11. Flex Fuel Vehicle Production • 2020 CA FFV population estimated

    to be over 1,300,000* • Decrease in FFV manufacturing over the last 5 years • We are actively engaged with stakeholders to revive the CAFE credit benefits to incentivize FFV production by the auto manufacturers • In 2020, we were successful in re- establishing the OEM FFV production incentive, how successful remains to be seen *Data sourced from IHS Market
  12. FFV Production Numbers *Most recent government info available

  13. How to Keep E85 Prospering • Encourage OEM’s to continue

    manufacturing FFVs • Educate the consumer – E85 is 100+ Octane not 85 Octane!! • Expand LCFS programs through other states and/or nationally, similar to what CA offers How to Keep E85 Prospering
  14. Greg Jones gjones@pearsonfuels.com pearsonfuels.com Greg Jones gjones@pearsonfuels.com pearsonfuels.com PEARSON FUELS

    E85 STATION FINDER APP