Political window opens for high-grade fuel standard
Image courtesy of Witch-Dr-Tim
WASHINGTON — Auto engineers have touted the benefits of high-octane fuel for years. Marry a high-grade gasoline with the latest high- compression engines, and you can capture an easy 3 to 4 percent fuel efficiency gain at modest expense.
Politically, it's not so simple.
Automakers don't control the fuel supply. Consumers don't want to pay 15 percent more for the privilege of being eco-friendly. And powerful vested interests including Big Oil and agribusiness are involved.
Still, automakers, led by the Detroit 3, and others now sense an opportunity to create a national high-octane standard that satisfies all stakeholders. It would involve piggybacking on legislative efforts to reform controversial mandates for blending biofuels such as ethanol into the nation's fuel supply.
The concept has taken on new urgency with the auto industry under pressure to comply with higher fuel economy and emissions standards next decade. One way to help them, EPA Administrator Scott Pruitt said at a House hearing last month, is to pursue a national standard for high-octane fuel. "I think there is a potential that will serve the auto sector as well as the ag sector and consumers across the country that we could pursue together," he testified.
That's the same potential automakers see. "This is an opportunity to create a win for the environment, the auto industry and particularly for our consumers by keeping vehicles affordable and performance and efficiency high," said Steve Zimmer, executive director of the U.S. Council for Automotive Research, the research alliance of the Detroit 3.
"Our members are poised to move forward. What we need next is the full engagement of energy producers, distributors and retailers, and particularly policymakers."
Higher octane enables engineers to raise an engine's compression ratio. That, in turn, increases horsepower and torque and helps the engine run more efficiently. Automakers say raising an engine's compression is less expensive than using lighter materials or other technologies for achieving incremental gains in fuel economy.
The path to making high-octane fuel a commodity rather than a costly niche product is tied to the future of the Renewable Fuel Standard, which requires biofuels such as ethanol to be blended into transportation fuel in increasing amounts each year, escalating to 36 billion gallons by 2022. Enacted in 2005 to help move the nation toward energy independence, the Renewable Fuel Standard is now seen by critics as a bloated farm support program for corn, ethanol's feedstock.
The program has pitted the petroleum and ethanol industries against each other.
Oil companies don't like the government dictating their fuel mix — even though ethanol is an inexpensive octane booster — or the cost of buying renewable-fuel credits to meet rising volume requirements when gasoline demand remains flat. But ethanol producers have used their clout in presidential primary states, such as Iowa, to sustain congressional support.
The EPA administers the fuel standard program, but in 2022, the statutory guardrails come off, and the agency can decide how much bio- fuel refiners must mix with gasoline or diesel fuel.
The resulting uncertainty for ethanol producers, along with slumping prices of renewable-fuel credits and corn itself, has created an opening to reform or replace the fuel standard, according to representatives from trade associations with a stake in the outcome.
The EPA technically could set a national octane level, but agency officials insist following the required steps would take more than a decade, so industry groups are pushing for a legislative solution instead.
Rep. John Shimkus, R-Ill., chairman of the House Energy and Commerce environment subcommittee, has said reforming the fuel standard is a priority. Talks are also underway in the Senate.
For the first time, the auto, petroleum and retail fuel industries are on the same page and engaging the ethanol sector to agree to a 95 Research Octane Number — roughly equivalent to 91 octane today — as the nation's baseline fuel. Under the proposal, the Renewable Fuel Standard would fall away, and vehicles made after, say, 2023 would be engineered to run on 95 RON.
Advocates say everyone would win. Refiners would reduce their compliance costs and be more willing to make investments in systems for premium fuel because there would be enough demand to achieve economies of scale. Today, just 11 percent of fuel produced is premium. Automakers would gain an easier path to meeting fuel efficiency targets. And consumers would have a less expensive way to improve their fuel economy through higher-grade fuel.
The goal would be to produce a premium grade that costs only pennies more than regular gasoline, compared with a 40- or 50-cent spread today.
The lower price would boost market acceptance and make it attractive for automakers to invest in new engine technology.
The biofuel industry would compete well under such a scenario and have the opportunity to even boost its market share, as E15 or higher blends become more common, Chet Thompson, president of the American Fuel & Petrochemical Manufacturers, told Shimkus' panel.
An added benefit for automakers is that 95 RON would align with the main fuel used in Europe.
Change would be gradual, because only about 7 percent of the nation's auto fleet turns over each year. Refiners still would make fuel for existing vehicles, but eventually, today's regular unleaded would switch places with premium and become the niche product.
Gas station upgrades and guarantees that nonethanol additives wouldn't add to air pollution will need to be addressed, among other issues, experts say.
"Automakers need adequate lead time to design and develop vehicles optimized for a new fuel" and ensure regulatory compliance, said Wade Newton, spokesman for the Alliance of Automobile Manufacturers.
"It's also important to keep legacy fuels widely available for older vehicles, up to 20 years," he added, "so consumers can continue to purchase the fuels for which their vehicles were designed, certified and warrantied."
SOURCE: Automotive News
AUTHOR: Eric Kulisch