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December 21, 2018
The 21st Century Transportation Fuels Act, sponsored by outgoing House Energy & Commerce Subcommittee Chair Shimkus (R-IL), would phase out portions of the Renewable Fuel Standard, replacing it with an octane standard by 2022. As lawmakers have grappled with the competing interests of the petroleum and biofuels industry, the Administration and Republican lawmakers have attempted to broker a ‘grand bargain’ between the two industries, to little success. The latest proposal has support from the oil industry, but received a tepid response from biofuels trade groups at a recent hearing. While the bill contains a number of provisions that the ethanol industry has long sought, overall, the 21st Century Transportation Fuels Act would not spur the use of additional gallons of biofuels—indeed, ethanol’s market share could decline over time under the plan.
A November study prepared for the Energy Information Administration (EIA) by Baker & O’Brien, Inc., shows that a 95 research octane number (RON) octane standard (similar to today’s premium gasoline) could be met with current gasoline refining capacity and not require additional biofuels use. A combination of factors, including a relatively small increase in RON under the proposal, means that biofuels would not be further incentivized under the plan. A nationwide 95 RON octane standard has been supported by both the oil industry and several automotive manufacturers, as higher octane fuels enable more fuel efficient engine designs and are a low-cost option to meeting further fuel efficiency goals.
Octane is a gasoline additive that is needed for the proper functioning of modern engines. Octane sources have taken many forms throughout the years, both renewable and petroleum-based. Today, octane is provided primarily by a mix of benzene, toluene ethyl-benzene and xylene (BTEX), as well as renewable ethanol. Currently, refiners create ‘sub-octane gas,’ which has a lower octane rating than required. Ethanol, which is generally the cheapest octane provider, is then used to bring the octane rating of the finished gasoline up to the labeled octane value on the gas pump. For example, 84 octane gasoline is typically blended with 10 percent ethanol to reach the minimum octane requirement of 87 for retail gasoline (regular grade).
In addition to being a carbon-emitting petroleum product, BTEX is the most toxic portion of each gallon of gasoline. Health research indicates that even very low-level exposure to the BTEX complex, from gasoline additives and other petroleum products, may contribute to negative developmental, reproductive and immunological responses, as well as cardio-pulmonary effects. Upon incomplete combustion of the BTEX complex contained in gasoline, ultra-fine particulates (UFP) and polycyclic aromatic hydrocarbons (PAHs) are formed, which carry their own adverse health impacts even at low levels.
Ethanol is a cleaner-burning alternative to petroleum-based octane boosters. Additionally, the toxicity of ethanol is low compared to the health effects of BTEX and its combustion products, such as ultrafine particulates (UFPs) and polycyclic aromatic hydrocarbons (PAHs). Corn ethanol may also reduce lifecycle greenhouse gas emissions relative to gasoline by 19 to 48 percent, and cellulosic ethanol may do so by 90 to 103 percent. Recent data from the United States Department of Agriculture (USDA) shows that, on average, corn ethanol reduces greenhouse gases 43 percent, relative to gasoline.
The proposed 21st Century Transportation Fuels Act would raise the minimum octane rating of gasoline by eight points, to 95 RON by 2023, which is slightly lower than today’s premium gasoline. Additionally, all new vehicles would be warrantied for this new 95 octane fuel. Notably, the bill is agnostic on octane source. In 2022, it is assumed that approximately ten percent of vehicles would be using the new fuel, which would not require significant changes to refinery configurations. Looking further out, to 2027, EIA predicts that while refiners would need to increase the octane content of gasoline, they could do so with only “minor operational adjustments,” largely because of the small octane increase, as well as a projected decline in gasoline use over time.
At a recent hearing on the 21st Century Transportation Fuels Act, the biofuels industry contended that while they support a nationwide transition to a high-octane fuel, this must also be accompanied by the RFS. Without the RFS, refiners would not be required to choose ethanol as a source of octane. According to Brooke Coleman, Executive Director of the Advanced Biofuels Business Council, “In theory, renewable fuels like ethanol are in the best position to succeed under an octane standard because ethanol is (by far) the cheapest source of octane available today. In practice, and unfortunately, it is in the oil industry’s long-term financial interest to marginalize competition and buy (petroleum-based) octane enhancers from themselves, even if it means lower downstream profits in the immediate term.” Additionally, the biofuels industry commented that an E30 100 RON is a truly high-octane fuel, one that can deliver the greatest benefits to emissions and efficiency.
In looking to decarbonize the transportation sector, reducing greenhouse gases must be front and center. Emily Skor, CEO of biofuels trade group Growth Energy, noted at the hearing that “each year, ethanol production and use decreases greenhouse gas emissions by 110 million metric tons, which is the carbon equivalent of removing 20 million cars from the road.” Without a clear signal to use less petroleum, and more biofuels, it is unlikely that transportation emissions would be reduced under the draft bill.
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