State may see a new crop of alternative fuel stations

Ben LeBeau pulled up to the Conserv Fuel station in Brentwood on a recent Friday and started filling the tank of his black Chevy Tahoe with a liquid rarely found in California -- E85, an alternative fuel made of 85% ethanol and 15% gasoline.

The station is near his office, and he’s been a regular there for more than a month. LeBeau’s Chevy, a so-called flexible-fuel vehicle, can run on gasoline, E85 or any combination of the two -- and that’s one reason he bought it.

“Unless I have to, I don’t use regular gas anymore,” said LeBeau, 34, of Agoura Hills. He doesn’t mind that his mileage per gallon is lower with E85, which is usually made from corn. The fuel is easier on the environment than gasoline, LeBeau said. “It’s what you can do today.”

For LeBeau and other E85 converts, there’s just one problem: Although California leads the nation in adopting alternative fuels, there are only seven places to get E85 in the state, and only three are open to the public. New government funding and a greater sense of environmental urgency is starting to improve the outlook, though.

In 2007, California had 835 alternative fuel stations, more than any other state. Most dispense electricity (379), liquefied petroleum gas (215) or compressed natural gas (174), according to figures compiled by the U.S. Department of Energy. Sites offering liquefied natural gas, hydrogen, biodiesel or E85 were far down the list.

The disparity is largely a reflection of the state’s longtime emphasis on converting large fleets used by governments, school districts and private industry to alternative fuels, rather than changing the vehicle choices and habits of the masses. It’s also a manifestation of California’s small role in growing corn and soy beans, the primary crops used to produce E85 and biodiesel.

Now, however, California has adopted ambitious new goals for alternative fuels and cutting greenhouse gas emissions -- and it can no longer afford to leave the public out of the mix. For starters, the state is going to increase the use of ethanol as a fuel additive to all gasoline sold here.

For years, California’s gasoline has contained 5.7% ethanol to boost octane and comply with federal emissions rules; starting in 2010, that will rise to 10% ethanol. For a state that consumes about 43 million gallons of gas each day, that change alone represents a huge jump in ethanol consumption.

Meanwhile, biodiesel backers have helped build a statewide roster of more than 50 sites that offer the fuel, with many selling to the public and offering blends ranging from B10 (10% biodiesel and 90% petroleum diesel) to B99, a nearly pure biodiesel fuel.

New state and federal grants will help add E85 sites. In May, the state air board set aside millions to help set up 34 public E85 stations. Most are planned for the Sacramento area, but new sites will also open in the coming weeks in Carlsbad and Oceanside in San Diego County. Separate grants will fund new E85 sites elsewhere later this year.

Persuading gas station owners to take a chance on biofuels is not easy, though.

To add E85 pumps, most station owners would have to invest more than $50,000 in an era where high fuel prices have benefited refiners but squeezed dealer profits. Even if the owner landed government grants, “that’s a big investment, and they have to be sure there’s a market there,” said Tam Hunt, energy program director for the Community Environmental Council based in Santa Barbara.

What’s more, although most stations are independently owned, the majority of California’s outlets carry major brands such as Chevron and Shell, and the oil companies impose strict rules about how those stations look and what fuels they offer.

Chevron Corp., one of California’s largest fuel retailers, participated in a one-year state demonstration project that included setting up two E85 stations for government use and studying the results. But Chevron won’t sell the fuel at stations it owns, and company spokesman Leif Sollid said, “our marketers and retailers have not expressed a widespread desire to install E85 at their stations.”

Sollid disagrees with critics who believe U.S. oil companies are dragging their feet on E85 and biodiesel to protect profits from their franchise fuels. Even so, a look at the oil giant’s U.S. retail network is telling: Out of 9,600 U.S. stations selling Chevron or Texaco fuel, 26 offer biofuels.

In an industry that has sold the same basic products for more than a century, change doesn’t come easily. Sometimes it takes prodding from a younger generation.

Family-owned Redwood Oil Co., based in Rohnert Park, Calif., operates 19 Chevron-branded gas stations. In May, the company started selling 99% biodiesel at one station and added B20 at another outlet a few months ago.

“I was the one who started the project,” said 33-year-old Julie Van Alyea, whose father, Peter Van Alyea, is the company’s founder and owner. “He probably wouldn’t have done it without me. . . . I’m an environmentalist, and I wanted to make it available.”

The story behind Brentwood’s Conserv Fuels is much the same. But the hurdles have been high.

In 2006, when Kristopher Moller persuaded his father to offer biodiesel at some of the family’s USA gas stations in Southern California, he thought the timing couldn’t have been better. After all, high gas prices were infuriating drivers, the government was pushing alternative energy sources, and more and more people were becoming convinced that petroleum-based fuels were making global warming worse.

But in early 2007, just weeks after Moller finished outfitting the fifth USA station with biodiesel pumps, his father, John, agreed to sell the USA chain to Tesoro Corp. A few months ago, Tesoro stopped offering 99% biodiesel.

It was back to the drawing board. Kristopher Moller took control of a USA station in Brentwood that was not included in the Tesoro deal and in April started selling nearly pure biodiesel made from cooking and vegetable oils. The station was renamed Conserv Fuel and hosted a visit from Democratic presidential candidate Barack Obama.

In December, the station became just the second outlet in the state offering E85 to the public. The move should have been a triumph for Moller, but he was in no mood to celebrate.

Permitting delays and other glitches had sapped his finances. “I was struggling and fighting,” said Moller, a 32-year-old Malibu resident, “but I didn’t have the pocketbook to weather the storm.”

So he handed control back to his father, who plans to give the station one year to improve its financial performance. If it doesn’t, the elder Moller intends to convert it back into a standard gasoline station with a big oil company brand on the pumps.

“His heart is into the biofuels . . . and he really wants to see it succeed,” John Moller said of his son. But his own view, Moller explained, is “show me the money.”

The younger Moller is pinning his hopes on customers like James Courtney, who on a recent Friday drove from Venice to Moller’s Brentwood station to pump the 99% blend of biodiesel into his buttercup-colored 1976 Mercedes Benz 300D, a car that’s been in his family for decades. He paid $3.799 a gallon, more than he would have for standard diesel, but Courtney didn’t mind.

“It’s expensive, but it’s worth it,” he said. “I believe in supporting the people who have the courage and the foresight to do this.”

To get the word out about its offerings, the station is hosting a special sale today, when drivers can get a bargain on E85. From noon to 2 p.m., the station will sell it for 85.9 cents a gallon. The price difference is being paid by General Motors Corp., which has sold the largest share of the 6 million cars and trucks now on the road that can run on E85 -- and GM gets special credits toward meeting government fuel-efficiency standards by producing the cars.

Moller and others say state agencies, fire officials and others have been slow to adapt their rules to accommodate biofuels. Confusion and extra red tape involving equipment standards and permitting have been major hurdles, especially for E85.

The Brentwood station and the two others like it, for example, had to be designated as research sites to get all the approvals for the E85 pumps because the state hasn’t finalized emissions and equipment guidelines, Moller said.

To sell the highest blend of biodiesel, stations like Conserv Fuel must secure a variance from the state Division of Measurement Standards, which regulates biodiesel as an additive and not a fuel. In addition, anyone selling biodiesel blends higher than B20 must limit sales to customers who become members of a free, loosely defined “users group,” and to submit monthly reports to the measurement division -- a requirement not present in any other state, Moller said.

The market is another uncertainty. Many drivers are unaware that their vehicle can run on E85, and it’s unclear how many will make the switch, given the fuel’s higher per-mile cost.

Despite the obstacles, groups backing E85 are planning new sites in Los Angeles, Ventura and other areas. Even the elder Moller is warming up to the trend. He plans to add biodiesel to stations he owns in Santa Barbara and in San Luis Obispo, and he’s backing the construction of an ethanol plant in Pixley, Calif.

“It’s hard for me, but I’m realizing more and more that it’s the way of the future, and we have to get into it,” John Moller said. “It’s just like it’s hard for an old man to start using a BlackBerry.”

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elizabeth.douglass@latimes.com

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(BEGIN TEXT OF INFOBOX)

Alternative fuels

Biodiesel [B99 or B100]

Made from: Vegetable oils or animal fat. Most common sources are soy or canola oils as well as used restaurant grease.

Use: In any diesel vehicle, but use with caution in vehicles built before 1996 because biodiesel can damage rubber seals.

Public availability in California: Through more than 50 retail stations and other sites, but customers must become members of a co-op or user group. Hours, restrictions and available blends vary.

Pros: Nontoxic; biodegradable; ample domestic material for production; 78% less carbon dioxide emissions than petroleum diesel; cuts petroleum consumption.

Cons: More expensive; quality can be uneven, depending on the producer’s process and source material; pure biodiesel and high blends can thicken in cold weather; large-scale use of soy or palm oils could raise food supply and land use concerns; some engine makers limit or won’t back warranties on vehicles using higher diesel blends.

Ethanol [E85 blend]

Made from: Corn or sugar crops, mostly. But producers are moving toward deriving it from agricultural waste, prairie grasses and other sources. E85 contains 85% ethanol and 15% regular gasoline.

Use: In so-called flexible-fuel vehicles built to run on E85, gasoline, or any blend of the two. There are more than 6 million of them already on the road, such as recent Lincoln Town Cars, Dodge Ram pickups, Chevrolet Tahoes and Suburbans.

Public availability in California: At three gas stations, including Pearson Fuels in San Diego, Conserv Fuel in Brentwood and Stanley’s Food Mart in Tulare. Four other facilities serve government fleets and are not open to the public.

Pros: E85 boosts octane, which reduces knocking; cuts overall greenhouse gas emissions compared with conventional gasoline; sharply reduces petroleum use; helps create fueling infrastructure needed for next-generation biofuels; ethanol production yields byproducts such as dried distillers’ grains used as animal feed.

Cons: Ethanol contains about 30% less energy than gasoline, yielding lower gas mileage; the petroleum products used to produce and transport ethanol reduce the net energy gains; large-scale use of corn-based ethanol could stress supplies for food and raise land use concerns.

Sources: Department of Energy, California Energy Commission, fuel studies; National Ethanol Vehicle Coalition, Argonne National Laboratory study