Hearing explores the possibility of a fuel performance standard

By Erin Voegele | April 13, 2018

The House Energy and Commerce Committee’s Subcommittee on Environment held a hearing titled “High Octane Fuels and High Efficiency Vehicles: Challenges and Opportunities” on April 13. Representatives of the ethanol industry offered testimony in support of high-octane ethanol fuel blends during the event.

Emily Skor, CEO of Growth Energy; Paul Jeschke, member of the Illinois Corn Growers Association, Timothy Columbus, general counsel of the Society of Gasoline Marketers and National Association of Convenience Stores; Chet Thompson, president and CEO of American Fuel Petrochemicals Manufacturers; and Dan Nicholson, vice president of global propulsion systems at General Motors on behalf of United States Council for Automotive Research, testified at the event. Several other groups, including the Renewable Fuel Association and Growth Energy, submitted written testimony to the subcommittee.

A memo released by the subcommittee explains that while fuels and vehicles operate as a single system, the Renewable Fuel Standard and corporate average fuel economy standards and greenhouse gas emissions standards (CAFE/GHG) programs have largely been implemented independently of each other. As a result, the committee said synergies may be lost.

“One potential means of improving the level of mutually beneficial coordination between fuels and vehicles policies is through a transition to higher octane fuels and new vehicles whose engines are optimized to run on these fuels,” wrote the subcommittee in the memo. “Ethanol can serve as a source of additional octane, thus one of the major goals of the RFS—greater incorporation of ethanol into the transportation fuel supply—may be achieved through the use of high octane fuels. At the same time, high compression ratio engines designed to run on fuels meeting a specified high octane standard may achieve improved fuel economy and thus assist in compliance with CAFE/GHG.”

During the hearing, both Nicholson and Thompson advocated for the adoption of a 95 research octane number (RON) standard. “Research shows that 95 RON makes sense from the viewpoints of both refiners and fuel retailers,” Nicholson said, noting that without an octane standard the vehicle manufactures will have to continue to endure the impacts of fuel variation and forego related available fuel economy improvement opportunities.

Nicholson called members of the committee and others to work together to improve the fuel in the U.S. market to take advantage of engine designs that are more efficient and provide significant large-scale fuel economy improvements and corresponding reductions in GHG emissions.

Thompson called on congress to sunset the RFS and move to a 95 RON performance standard instead. While he claimed replacing the RFS with a fuel performance standard would benefit all stakeholders, including ethanol producers, Skor disagreed.

 “There have been recent discussions about moving solely to a 95 RON or 91 octane fuel standard,” Skor said. “While we applaud any move to higher octane fuels, a 95 RON could easily be met with today’s premium gasoline and there would be little to no incentive for oil refiners to move to higher biofuel blends. The past decade has shown oil companies will actively ignore economic incentives just to prevent market entry of higher ethanol blends. We cannot assume that such a modest increase in octane will drive growth in demand for American made biofuels and agriculture without the access to market provided by the RFS. Only by coupling a stable RFS to maintain market access with a significant boost in octane from a mid-level ethanol blend can consumers realize significant cost savings, increased engine efficiency and substantial environmental benefits.

“Biofuels must be part of any long-term plan for engine efficiency and greenhouse gas reduction,” Skor continued. “However, any discussion of our future fuel mix cannot turn back the clock on the RFS. We cannot support a modest move in octane at the expense of one of the most successful domestic energy policies and the only legislated carbon reduction program.”

In his testimony, Jeschke spoke about the potential benefits a high-octane performance standard could provide to U.S. corn farmers. “Given our trend-line gains in corn yields, I believe we can meet the future demand for corn-based ethanol on the land that we are farming now,” he said. “Farms are growing more corn—or more octane—per acre now than ever before. The growth of corn ethanol production has done more to bring profitability to corn farmers than any of the many government support programs which I’ve experienced.”

The domestic market for ethanol, however, has stagnated, Jeschke said. As a result, farm profitability is again collapsing. “Since 2014, Illinois farm profit has been dismal,” he continued.

“Our vehicles of the future need higher octane, cleaner burning fuel, we should look to higher blends of ethanol,” Jeschke said. Unfortunately, he said EPA regulations are stifling both fuel and engine innovations, preventing consumers from enjoying the performance benefits and fuel savings of mid-ethanol.

“Until these barriers are addressed, it is simply not true that a minimum octane standard would provide the biofuel industry with the opportunity to expand its market share,” Jeschke said. “For ethanol to be free to compete in the market on the basis of its value as an octane enhancer, EPA’s anti-competitive regulations must be corrected.” He cited RVP relief, the establishment of a new high-octane mid-level ethanol alternative certification fuel—such as 98-100 RON E15, a fuel economy equation that doesn’t penalize ethanol blends, and a technology-neutral fuel economy and GHG regulatory scheme as some of the EPA’s regulations that should be corrected.”

Columbus said the groups he represents believe a fuel performance standard would benefit all the stakeholders at the hearing. “It’s been my experience that when manufacturers face a performance standard it is the instance in which the great American competitive genius has produced the best economic results for the consumer and all of us who serve them,” he said. “We congratulate the subcommittee for holding this hearing, we urge you to move forward in an effort to alleviate the ongoing plague of industry squabbles and enhance the interest in fuel consumers in obtaining the most cost-effective fuels for their vehicles.”

A recording of the approximately 2.5 hour hearing and copies of written testimony offered by Columbus, Jeschke, Nicholson, Skor and Thompson is available on the subcommittee’s website. Copies of written testimony offered by ACE and the RFA is available on each organization’s respective website.