Holden's ethanol experiment

Holden's migration to E85 'flex fuel' engines for its locally-manufactured Commodore range will be slow to yield large-scale gains. There'll be no immediate change in petrol dependency from the retail introduction of the VE Series II Commodore and it will likely take years for E85 vehicles to have any sort of impact in this country.

While much has been made of ethanol's status as a renewable, low-carbon fuel, it's not a universal panacea by any means -- something Holden not only acknowledges, but emphasises.

E85 is one plank of a broader energy diversity strategy and the company's Energy and Environment Director, Richard Marshall, describes that strategy as "silver buckshot" rather than a silver bullet. E85, which comprises up to 85 per cent ethanol blended with 15 per cent petrol, is just one pellet among the buckshot.

While E85 appears to be an easy means of reducing fossil fuel dependency, it's not without its own issues. Cars running E85 consume fuel faster than when burning conventional 91 octane unleaded petrol. On the flipside, the higher-octane biofuel (up to 105 octane) delivers discernible gains in mid-range power, Marshall claims, although it doesn't show up in peak power and torque figures.

But that's not the point. E85 is better for the environment in theory, although Holden can't provide fuel consumption figures for the new Commodore running this fuel, in a format comparable to the ADR-approved combined-cycle consumption test.

"There is less stored energy in a litre of ethanol than there is in a litre of petrol," admitted Holden MD Mike Devereux, who immediately countered that with a claimed 40 per cent reduction in tailpipe emissions of CO2 from the flex-fuel engines.

However, the SIDI engine's much vaunted 'Melbourne-to-Sydney on one tank' economy doesn't hold up if the car is running on E85, Marshall told journalists later.

"We don't quite get to Sydney on one tank of fuel any more, but you can get to Goulburn," he said.

Like any new technology, a reduction in fuel dependency due to E85 will manifest itself in a snowball effect. The pace of change will gather slowly at first, since introducing the new fuel to Australia's top-selling car won't show any sort of downward effect on the use of non-renewable fuels when total domestic sales of the Commodore and its derivatives in 2009 accounted for just six per cent of the full market.

And that six per cent or thereabouts will not all be E85-capable in 2010 and 2011. The 3.0-litre SIDI V6 and the 6.0-litre V8 are flex fuel engines from the launch of the Series II VE models for 2011, but the 3.6-litre version is still "eight to 12 months" away, says Devereux. A significant number of the cars sold will be LPG-fuelled too.

In the shorter term, any significant uptake in ethanol-blended E85 will be predicated on the Commodore owner's willingness to drive up to 10km to find an E85 bowser -- and the car will consume fuel at a higher rate when burning E85 as mentioned already. But the added travel and higher fuel consumption should be offset by a lower purchase price for the fuel, since retail chain Caltex expects the blended mix to be as much as 30 cents a litre cheaper than 98 RON ULP and around 20 cents cheaper than regular 91 RON unleaded.

"We have two sites already in Victoria, selling the fuel, which we call e-Flex," says Caltex spokesperson, Felicity Wilson. "And today it's being sold for 96.9 cents per litre. That price is 20 cents below the current price today of ULP and is also below what independents are selling it for at the moment.

"Obviously that's going to change with price cycles. As you're aware, the price could be higher... We're pegging it to petrol prices because that's what consumers understand. Premium prices are currently pegged to unleaded petrol prices -- about 14 cents over -- so we're looking at a 34 cent differential from Vortex 98, our highest premium fuel to e-Flex, which has an octane rating of 105."

Wilson, speaking at the same Holden media event earlier this week, revealed to the Carsales Network that the service stations equipped to sell E85 will be few on the ground initially. And the wait for E85 in country areas will be even longer. In rural towns, where the price of petrol can be significantly higher than in major metropolitan areas, E85 could be a winner, but Wilson says that there are some obstacles to overcome first.

"It's going to take some time for us to get e-Flex out to regional areas," she said. "Of the 31 sites which will be selling the fuel by the end of October, none of those are truly regional areas. We have one in Newcastle and one on the central coast of New South Wales, but none of them are truly regional at this stage.

"We are going to have regional sites in the first 100, but it's additional complexity and cost with ethanol. Because it's a different product, you can't put it in fiberglass tanks, you can't put it in certain types of tanks.

"The interesting thing is with a lot of regional and rural service stations, the tanks are very old, there might be some corrosion, but they don't leak because the corrosion actually covers the leak. When you put high ethanol blend into it, the alcohol cleans the tank and can create leaks -- and create all these different issues."

So it's a protracted process for Caltex and until such time as the fuel supplier sees substantial revenue from providing motorists with E85, it's not as if other fuel retailers will necessarily follow Caltex's lead in a hurry.

That's why Caltex is committed to as few as 100 E85 stations in the near future -- out of over 1600 around the country. And that figure doesn't even include Caltex-branded service stations operated by retailer Woolworths.

If Caltex is in the position of hastening slowly for its own infrastructure-related reasons, it's also held back by the little matter of supply. Caltex has to blend ethanol with its petrol and there's some cost associated with setting that up, which is a further infrastructure problem, but the ethanol itself is supplied by companies such as Manildra, based at Nowra in NSW.

There's no high-volume supply capacity from Coskata's second-generation ethanol production process as yet. Coskata and its strategic partners (including Holden and Caltex) are still seeking investors to contribute towards the establishment of a plant in Australia.

"What we're working on at the moment is just to get one plant running," said Richard Marshall, Holden's Energy and Environment Director, but the first plant is virtually a proof-of-concept proposition.

"If we can establish this first plant, what it shows is that it's not so much about making ethanol, it's about ethanol being a high-value economic driver, to solve a waste problem -- and then have all these additional benefits that go upstream in terms of regional development and jobs on the land, and so on.

"So this plant... we're looking at something like 200 million litres' capacity of ethanol. To feed that plant, we'd need to be putting in about a million tonnes of raw materials into that -- in terms of waste. That waste would be a mixture of municipal household waste, construction and demolition waste, commercial and industrial, old tyres, forestry waste and various agricultural residues..."

Marshall anticipates the plant would cost about $400 million to build and the construction time will likely exceed two years, but he wouldn't reveal where the first plant might be located, although there were various options already being assessed.

If the Coskata plant can lead the way, ethanol production in Australia (from waste products) offers environmental benefits not available to flex fuel vehicle buyers in the US, where ethanol is grown from corn in the mid west, but the flex fuel vehicles tend to be sold in the more populous areas on the east and west coasts. Distribution thus becomes a problem, not to mention the confronting issue of producing fuel for road transport from food crops. With the Coskata process, both those problems can be eliminated in Australia.

So there are diverse, valid reasons for Holden, Caltex and Coskata being committed to ethanol. In Holden's case the R&D for the E85 conversion for the SIDI engines is much less expensive than auto-stop technology for example and that's a cost saving passed onto the new-car buyer. E85 comes to market without requiring of vehicle owners they modify their behaviour or spend more money to be green, which is another advantage to the biofuel. And over time, E85 engines could use 30 per cent less petrol than equivalent petrol-only engines.

But like LPG before it, E85 will take a long while to establish as a viable alternative to fossil fuels. What's that saying about the journey of a thousand miles?

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