Ethanol-pump subsidy may be turned down

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CORRECTION

A story on ethanol fuel that ran in Saturday's Business section attributed a federal grant to the wrong agency. The $590,000 grant was made by the U.S. Department of Energy to help defray the cost of installing ethanol fuel pumps at eight filling stations in North Carolina.

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A pot of cash is ready and waiting to help pay for Raleigh's first commercial ethanol pump, but fans of the alternative fuel need to find a gas station owner willing to pick up part of the tab.

The U.S. Environmental Protection Agency has released $590,000 to help pay for eight filling stations in North Carolina to install pumps and tanks for an alternative fuel made from corn, called E85. The federal kitty typically covers a third to half of the cost of installing an ethanol pump and tank.

A gas station in Raleigh qualified for the money and could claim it, but the owner of the Exxon station said Friday that he doubts the ethanol fuel will sell well here. Larry Hopkins, who owns the filling station on South Blount Street, said E85 can be as much as 28 percent less efficient than gasoline, making it less economical and limiting its appeal.

"Right now it's a waste of money, until the math changes," Hopkins said. "If I put the pump out there, no one's going to use it."

The agency that received the ethanol grant, the Triangle J Council of Governments, is still committed to bringing an ethanol pump to downtown Raleigh next year. There is a ready market of state government vehicles to buy the ethanol, said Tobin Freid, Project Coordinator for Energy and Environment at the Triangle J Council. If Hopkins balks, the grant money designated for his Exxon station would be offered to another filling station.

"Absolutely we would give it to someone else," Freid said. "My highest priority is Raleigh."

The E85 fuel, billed as a cleaner-burning alternative to gasoline, is widely available in the Midwest, where it is made from corn, and countries such as Brazil, where it is made from sugar cane.

E85 fuel has not been commercially available in the Triangle until this year, though the fuel has been available at two state-run facilities in Raleigh for government-owned automobiles. The blend derives its name from its composition -- 85 percent ethanol and 15 percent gasoline -- and is compatible with some commercially available cars.

If developed, the eight pumps would extend a small group of 12 existing E85 pumps throughout the state, including one in Durham and another in Southern Pines. The installation cost of the new pumps would be partly subsidized by the grant from the EPA to the Triangle J Council of Governments, a regional policy group. According to the Triangle J Council, the grant would subsidize E85 pumps in Arden, Asheville, Gaston, Gastonia, Lenoir, Raleigh and Salisbury.

Hopkins' Exxon station qualified for $25,000. He would have to contribute about $50,000 to install an ethanol pump. Hopkins said his business recently had other expenses, making it difficult to justify investing in ethanol, but he hasn't made a final decision about installing an ethanol pump.

"I'm not at all certain it's a good investment," he said. "People are just not going to use it unless it makes economic sense."

Using E85 requires a "flexible fuel vehicle," of which there are about 16,000 in the Triangle, Freid said. Compatible cars can run on regular gasoline or ethanol, and include newer models of the Ford 150, Lincoln Town Car, Chevy Silverado, Chevy Impala, Mercedes C230 and C240 and Mercury Grand Marquis.

But drivers are not likely to use E85 if they don't live or work near a filling station that sells the fuel.

"It doesn't make sense to drive from Raleigh to Durham to get E85," Freid said. "They're not going to drive out of their way."

The federal grant would also add nine pumps, including one in Raleigh, that sell a diesel alternative called B20. The Triangle has three B20 pumps already, Freid said.