DOE Study Says Ethanol Pipeline Construction Will Likely to Need Government Incentives

A pipeline dedicated to moving ethanol from midwestern producers to East Coast consumers is likely to require some type of federal financial incentives, according to a new study by the Department of Energy.

A pipeline dedicated to moving ethanol from midwestern producers to East Coast consumers is likely to require some type of federal financial incentives, according to a new study by the Department of Energy.

In addition, the study concludes that for the pipeline to be financially successful, the nation's fleet of flex-fuel automobiles would need to increase substantially. Flex-fuel vehicles are those capable of running on fuels containing up to 85 percent ethanol.

DOE estimates that based on current consumption projections, about 2.8 billion gallons per year of ethanol would be transported from the Midwest to the East Coast. For the line to be economically viable, it would need to transport about 4.1 billion gallons per year.

If it costs $4.25 billion to build the pipeline, and assuming the volume demand meets the 2.8 billion projection, the pipeline would need to charge an average tariff of 28 cents per gallon, "substantially more than the current average rate for ethanol transport across current modes," says DOE.

The study found that increasing demand for ethanol to 4.1 billion gallons per year by allowing the use of blends containing greater than 10 percent ethanol (or expanding use of E85) would make the pipeline economically feasible without major financial incentives.

The dedicated ethanol pipeline feasibility study is available in PDF format at this link.

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