United Front ... Octane Is Important

by Tim Albrecht (Ethanol Producer Magazine) Experts in multiple industries support the idea of a high-octane fuel standard, but some prefer it as a replacement to the RFS. -- Octane is important. The ethanol industry knows this, the automakers know it and even the oil industry understands it. But when it comes to implementing a high-octane fuel standard, the parties are split on how to go about it.

The House Energy and Commerce Committee’s Subcommittee on Environment held a hearing April 13 titled “High Octane Fuels and High Efficiency Vehicles: Challenges and Opportunities” to discuss the proposal for a high-octane fuel standard. The meeting was attended by several prominent figures across the ethanol, auto, fuel marketing and agriculture sectors, including Emily Skor, CEO of Growth Energy.

According to Skor, two main groups are “coalescing” around a nationwide high-octane fuel standard of 95 research octane number (RON), which is about 91 octane fuel at the pump. Those two groups are U.S. auto manufacturers and fuel petroleum marketers, two of the voices that spoke alongside Skor at the House Committee hearing in April.

For the ethanol industry, a high-octane fuel would be a mid-level blend of E20 or E30. Growth Energy has been a part of a working group of over 60 organizations—including ethanol manufacturers, auto manufacturers and corn growers—coordinating for several years on that very thing, Skor says. “A lot of our research and analysis has been on that E20 to E30 sweet spot.

“There has been a lot of research done recognizing that’s the point where you’re maximizing the greenhouse gas reduction emission benefits, the consumer savings and the performance benefits for the automakers.”

Broad Support
Each organization that testified at the hearing was in support of a higher-octane fuel standard and Dan Nicholson, vice president of global propulsion systems at General Motors, said the standard would be beneficial for everyone involved from ethanol to the oil industry.

Nicholson testified at the hearing to the capabilities of the auto industry and the technological improvements it has made, but insisted on the need for a higher-octane fuel standard to complement those advances.

The auto industry is focused now on the next regulatory action in engine efficiency and carbon dioxide reduction, says Kristy Moore, principal at KMoore Consulting LLC. For example, the industry is expected to reach a corporate average fuel economy (CAFE) standard of close to 50 miles per gallon in the next 10 years, she says.

“Those two pressures being put on the automakers has them saying they can do it, but they need better fuels to put in the cars,” Moore says.

Also pledging support for a high-octane fuel standard at the hearing was Timothy Columbus, general counsel to the National Association of Convenience Stores and the Society of Independent Gasoline Marketers of America.

The Catch
But a high-octane fuel standard comes with one major hitch for the biofuels industry—the argument for replacing the Renewable Fuel Standard. During the April hearing Chet Thompson, president and CEO of American Fuel Petrochemicals Manufacturers, advocated for the implementation of a 95 RON standard as a replacement for the RFS.

Given the level of investment needed for a high-octane fuel standard, there isn’t a scenario where AFPM would consider an octane standard in addition to the RFS, Thompson said.

Skor says the octane standard and RFS conversations should be separate, as the two can co-exist. Without the certainty of the RFS, there is no guarantee that the “modest increase” of octane under a high-octane fuel standard will result in market growth for American-made biofuels, she says. “That’s really the rub right now. … That’s where we get concerned. Ninety-one premium fuel is already on the market today and it’s made with E10. It can be made with a 10 percent blend of ethanol and it can be made with no ethanol, but there’s no guarantees or assurances in this conversation that the octane used for 91 will be ethanol or anything above a 10 percent blend of ethanol.”

“It’s kind of self-policed by the oil industry currently,” Moore says. “Consumers in the mountain states get shortchanged.They only get 85 or 86 octane. There hasn’t been a car manufactured to take less than 87 octane since 1984. That proves to me that if it’s self-policed, the oil industry won’t do it, they’ll follow their pocketbooks. That’s why it needs to be a standard.”

Shimkus said at the hearing the committee faces a “proverbial chicken and egg conundrum,” in that it can’t expect refiners and gas stations to invest in a new fuel unless there is a guarantee vehicles will be produced that will run on it, while automakers don’t want to commit to new engines unless the new fuel is widely available. READ MORE