Washington Auto Show Policy Day Brings Biofuels Conversation to Capitol Hill

January 30, 2013

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by Joanne Ivancic (Advanced Biofuels USA) “Affordable Mobility: A Roadmap to Energy Efficiency” framed a public discussion of automotive issues for Capitol Hill staff which ranged from fuel efficiency and the new CAFÉ (Corporate Average Fuel Economy) standards to increasing gas taxes (highway user fees) at state and local levels; from vehicle costs related to safety mandates and other regulations to infrastructure needs to achieve greater efficiency and lower emissions.

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National Journal correspondent, Fawn Johnson, moderated a panel discussion featuring Mitch Bainwol, president and CEO of the Alliance of Automobile Manufacturers, Don Chalmers of the National Auto Dealers Association, Rebecca Lindland, director of research for IHS Automotive, Gina McCarthy, assistant administrator for EPA’s Office of Air and Radiation, and Mary Nichols, chairman of the California Air Resources Board.

National Journal’s Amy Harder then interviewed Robert Bienenfeld, senior manager, environment & energy strategy for American Honda Motor Co., Reg Modlin, director of regulatory affairs for Chrysler, LLC, and Tom Stricker, vice president of technical and regulatory affairs, and energy and environmental research for Toyota Motor North America, Inc. in a ‘Report from the Automakers’ panel.

Bainwol articulated a key dilemma explaining that the automotive industry doesn’t really like mandates and regulations; but they do want certainty; and while they will push to achieve the ideal, they also look to the customers’ reality. This requires a “capacity to be nimble.”

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This was a diplomatic way to indicate that although the Obama administration’s ideal might be to transition to a fleet of electric vehicles, the reality is, as Modlin later explained, the market for EVs has plateaued at 3%. Thus, even though the number of plug-in or hybrid electrics models reached about 60, the competition is not for an expanded market, but for one that has stagnated.

Similarly, Modlin continued, regarding other alternative vehicles, not only consumer acceptance, but availability of fuels will determine what the future looks like.

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In general, Lindland of HIS Global Insight explained that cultural changes including more car sharing lead forecasters to believe that fewer vehicles will be sold in the US, period, leaving auto manufacturers competing for pieces of a smaller pie.

To win a piece of that pie, affordability is key. Honda’s Bienenfeld anticipates lots of evolutionary changes to the internal combustion (gasoline-powered) engines with reduced power consumption, improved aerodynamics and more. He spoke of “redefining” what is conventional oil. He proposed a process that proved successful in achieving clean air goals set 40 years ago. He urged that technology-neutral, performance-based policy goals be set with industry tasked with achieving those goals as they see fit according to their expertise not only in technology development, but also in developing customer acceptance.

Stricker spoke of “improved fuels” that would contribute to achievement of the efficiency and pollution control/carbon emissions minimization goals.

EPA’s McCarthy also noted how successful a collaborative approach to developing goals could be, with 2016 standards already reached in significant ways. She also indicated support for policy goals not based on ideals, but on sound understanding of technologies in the marketplace now and those that will be in the marketplace in 2025, with a recognition that internal combustion and diesel engines will predominate through that period, with EV’s expected to stay at 2% of the market and with hybrids reaching 5%. Others in the industry affirmed her forecast, also hinting that there might be technologies used in hybrids applied to other parts of the fleet, as well.

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Talk of taxes (highway user fees) on gas and other vehicle power sources as a way to provide needed funds for transportation infrastructure was all over the place, seemingly in an attempt to avoid providing the kind of straight answer to the question provided by California Air Resource Board chairman Nichols, that it would be impossible to raise gas taxes.

Nichols did brag a bit about California’s progress in looking toward “fuels of the future” as giving the greatest bang for the buck environmentally. Although it was hard to get anyone to say the word, “biofuels,” a later mention of cellulosic ethanol indicates they were surely on her mind, and she did admit that much electricity in California comes from coal-fired plants.

Discussion of Tier 3 regulations focused on low sulfur regulations due in March. When asked if that announcement will also include anything on new certification fuels to replace the current E0 certification fuel, a cert fuel that might address California’s efforts to create a cert fuel more representative of the E10 that is commercially available, or a high octane fuel that may be recommended to achieve new CAFÉ standards, McCarthy would only suggest checking the proposed regulations when they are published.

Related to the topic of biofuels, Bienenfeld gave an indication of how the car manufacturers may be looking at them by illustrating his thoughts with the following calculations. Achievement of the new CAFÉ standards at twice the average mpg we have now, means half the cost per mile; thus a person would experience the same “wallet feel” with gas at $6.00/gallon. This does two things. It could signal to the market an opportunity to increase the price of gasoline. He noted that this could accommodate an increase in the gas tax; those who understand that the price of advanced biofuels might be higher before it gets lower might also see an opening that would accommodate a market for those improved fuels. As Bienenfeld noted, if a carbon tax is assessed along the value chain prior to the retail pump, the result of increased mpg will be to accommodate the passing of that carbon tax to the consumer at the pump.

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He summarized the key overarching questions: What does society value? And how to implement those values so that the result is fair and balanced?

He surmised that this provides a good opportunity to transition to ethanol, cellulosic ethanol, biobutanol and other renewable fuel components in a way that is transparent to the consumer; just as we transitioned from leaded to unleaded fuels. Thus, he suggested that drop-in biofuels would be the way to go.

Chrysler’s Modlin emphasized that “we can’t just keep on using fossil fuels,” that we can use different feedstocks to make new, sustainable fuels while creating jobs in every state. He sees a strong role for that, mentioning technologies for the development of cellulosic biofuels. He warned that prescribing a specific octane fuel would be as dangerous as prescribing a carbon tax; however, the auto manufactuers would like a narrowly specified fuel.

Toyota’s Stricker added that the fuel that cars are designed to use has to be available to consumers. If not, then they will demand waivers and will end up operating their vehicles on sub-optimal fuel. And that will thwart achievement of the efficiency and carbon emissions reduction policy goals. Success will depend not only on automotive technological advances, but also on appropriate infrastructure materializing.

After a discussion of other alternative fuels from natural gas as CNG and LNG, hydrogen for fuel cells, etc., Bienenfeld summed up with a reminder that 40 years ago cars had half the fuel economy and 1000 times the pollution of vehicles today. In many ways that transition was invisible to the consumer, yet what today’s consumers have in common with those of 40 years ago is an expectation of innovation that will successfully address goals of even greater efficiencies and improved pollution and carbon emission controls. READ MORE WATCH C-Span Coverage ( 42:39 - 45:36 for discussion of new certification fuel, ethanol blends, etc.)

photos by J. Ivancic