The House Energy and Commerce environment subcommittee on Friday examined the potential impacts a transition to higher octane fuels could have on refiners, biofuel producers, automakers and consumers. As part of the discussion, the panel reviewed high octane as a way to reconcile the Renewable Fuel Standard (RFS), Corporate Average Fuel Economy (CAFÉ) standards, and Greehouse Gas standards (GHG).
In opening remarks, subcommittee Chairman John Shimkus, R-Ill., said there was a “potential flaw” with the RFS and CAFÉ/GHG in that “the programs have never been fully coordinated with one another.
"The RFS doesn’t necessarily give us the liquid fuel formulations that maximize energy efficiency, and CAFE/GHG doesn’t necessarily result in the kinds of engines that make the best use of biofuel blends."
In March, the panel had looked at an Energy Department initiative called Co-Optima, which is looking to maximize energy efficiency by using high octane fuels and engines specifically designed to run on these fuels.
“Ideally, this could benefit everyone from corn growers and biofuel producers, refiners, automakers and most of all, consumers,” Shimkus said.
During the hearing, the subcommittee heard testimony on involving challenges and opportunities to the implementation of this initiative. The proposed standard would require newly manufactured automobiles to run on a minimum octane of 95 Research Octane Number (RON). The octane formula has seen a success abroad for some time now.
Dan Nicholson, vice president of General Motors' Global Propulsion Systems, testifying on behalf of United States Council for Automotive Research, said “this is the same level of RON that Europe has used as their minimum level for many years. Without this new fuel, we will continue to endure the impacts of fuel variation and forgo related available fuel economy improvement opportunities.”
Implementing 95 RON would increase automotive efficiency and decrease GHG emissions by 3 percent, said Chet Thompson, president of American Fuel and Petrochemicals Manufacturers. That would be “equivalent of 720,000 battery-electric vehicles each year,” Thompson said. “Among various octane levels, a 95 RON is also the most achievable on a timeline to help meet near-term efficiency targets.”
Engineers have said automobile engines have to be redesigned to ensure proper function with the higher octane blend. Still, they expect that the new vehicles could be ready for market as soon as 2022, which would coincide with the end to statutorily mandated blending requirements. Thompson expressed hope that the 95 RON requirement might replace the Renewable Fuel Standard (RFS).
Emily Skor, CEO of Growth Energy, agreed that “biofuels must be part of any long-term plan for engine efficiency and greenhouse gas reduction," However, in her prepared remarks, she said "any discussion of our future fuel mix cannot turn back the clock on the RFS.”
“This body can move us toward a path of a national fuel standard and doesn’t have to do that in the context of the Renewable Fuel Standard,” said Skor, CEO of Growth Energy.
Some have speculated that implementing the 95 RON requirement could look a lot like the 1974 introduction of unleaded gasoline. During the phasedown of diesel, many consumers mistakenly filled their tanks with leaded fuel causing the need for costly repairs. These higher efficiency automobiles would need to be consistently fueled with 95 RON, a blend that is expected to initially cost more.
“In considering any change to the fuels market, it is relevant to consider how the market will adjust to meet new requirements. In the case of the octane solution, the key to successful retailer integration is the flexibility of the RON regime” said Tim Columbus, general counsel of the Society of Gasoline Marketers of America and National Association of Convenience Stores. “If a fuel meets RON and RVP (Reid Vapor Pressure) specifications, it is up to the market to determine which fuel blends are desired by customers.”
Energy and Commerce Chair Greg Walden, R-Ore., said lawmakers must be especially mindful of the consumer impacts.
"We want the policy outcome that brings down the cost of driving," he said. "So questions about the impact on the price per gallon at the pump and on the sticker price of new vehicles will need to be addressed, as will questions whether this is the most cost-effective means to improve fuel economy and reduce emissions.”
In a statement after the hearing, Kevin Skunes, president of the National Corn Growers Association, said his members are pleased that automakers are recognizing the value of octane that comes naturally from ethanol, but he said “we need to look at the whole of any policy being proposed. We can’t look at an octane standard in isolation. We must look at the sum of all the parts.”
“Congress enacted the Renewable Fuel Standard because it was important to diversify the transportation fuel supply, and that diversity remains an important energy policy objective. One way to evaluate any proposal related to the transportation fuel supply is to ask whether it makes our transportation fuel more dependent on oil or whether it continues to provide opportunities to expand the use of homegrown biofuels.
“With the ongoing push for cleaner burning fuels, ethanol can be a growing contributor to the solution. Ethanol is the cleanest burning fuel in the marketplace. Now is not the time to take a step backward."