EPA Opens Door To Raising Gasoline Octane Rating In ‘Tier III’ Fuel Rule

Source: Dawn Reeves, Inside EPA, 4/12/13 • Posted: Friday, April 12, 2013

EPA’s “Tier III” fuel and vehicle emissions rule opens the door to raising gasoline’s octane level — a rating of a fuel’s performance — to promote better-performing cleaner fuels and engines, but automakers and biofuel advocates are criticizing the agency for proposing that the onus be on automakers to ensure the fuels are available given refiner resistance.

Automakers have long sought higher octane levels in regular fuel, which currently averages an 87 rating, because they do not want to mandate that consumers purchase higher octane mid-grade at 89 or premium at 92 that are far more expensive. But they say they need even higher octane levels to ensure that technologies, such as direct fuel injection and turbocharge operate properly, boosting efficiency and reducing emissions, making it easier for automakers to comply with EPA’s greenhouse gas (GHG) tailpipe rule that requires fleets to average 54.5 miles per gallon in 2025.

The biofuel industry also supports higher octane blends as a strategy for avoiding the renewable fuel standard (RFS) “blend wall” — the limit on the amount of ethanol that can be blended with the gasoline supply given that only fuel blends of 10-percent ethanol (E10) are widely available, and also as a way to reduce GHG emissions.

If ethanol is used as an octane booster, then a 30 percent ethanol blend (E30) should cost less than a gallon of regular gasoline today and have an average octane rating of about 97, biofuels advocates say.

However, refiners generally oppose high octane regular grade fuel, noting that mid-grade and premium blends are already available. They also oppose mandates to raise ethanol blends in gasoline, and are asking the Supreme Court to hear their challenge of EPA’s recent partial approval of an E15 blend for some vehicles.

Attention on EPA’s March 29 Tier III proposal has largely focused on the agency’s plan to reduce the allowable sulfur level in gasoline from the existing 30 parts per million (ppm) limit to 10 ppm. Refiners claim that change will increase fuel production costs that they will pass on to consumers through higher gas prices. EPA counters that the costs are overstated, and that the rule will benefit public health by cutting emissions (Inside EPA, April 5).

But the proposal opens the door for higher octane fuel, seeking comment on allowing “vehicle manufacturers to request certification fuel such as a high-octane [an E30] blend for vehicles they might design or optimize for use on such a fuel.” Certification fuels are used for engine and emissions tests.

EPA notes, “This could help manufacturers that wish to raise compression ratios to improve vehicle efficiency, as a step toward complying with” EPA’s model year 2017-2025 passenger vehicle GHG tailpipe rule. “This in turn could help provide a market incentive to increase ethanol use beyond E10 by overcoming the disincentive of lower fuel economy associated with increasing ethanol concentrations in fuel, and enhance the environmental performance of ethanol as a transportation fuel by using it to enable more fuel efficient engines,” according to EPA.

However, the agency says that if it were to approve a test fuel for vehicles designed to run on this fuel, then manufacturers must ensure its availability. EPA in the Tier III rule says, “Under this proposal, if manufacturers were to design vehicles that required operation on a higher octane, higher ethanol content gasoline (e.g. dedicated E30 vehicles or [flexible-fueled vehicles (FFV)] optimized to run on E30 or higher ethanol blends), . . . they could petition the administrator for approval of a higher octane, higher ethanol test fuel if they could demonstrate that such a fuel would be used by the operator and would be readily available nationwide.”

One auto industry source says the sector is pleased that EPA is taking a first-time step to raising fuel octane levels to allow advanced engine technologies but notes a “disconnect with EPA’s proposal. Generally speaking, they won’t allow you to do anything in certification that can’t be done in use. . . . It doesn’t make sense to put the onus on automakers [to demonstrate such fuel would be available] when they don’t produce or sell gasoline.”

Mercedes-Benz fuels official Bill Woebkenberg calls it “the chicken or the egg discussion” in an April 10 interview with Inside EPA. He also cites a paper he presented to engineers and the ethanol industry in February that proposes replacing mid-grade fuel with high-octane “Tier III” fuel blended with E20 or E30 as a way to address EPA’s reluctance to regulate octane.

Some sources suggest EPA may be seeking to walk a fine line by opening the door to a new certification fuel while declining to regulate octane in a bid to avoid problems that occurred when manufacturers sold FFVs that can run on conventional gasoline or E85 but rarely run on E85 because of a lack of availability of the fuel.

However, because the new vehicles as envisioned under the agency’s proposal would be required to run on high-octane fuel, proponents say rather than model the FFV situation, EPA should look back to 1975 when it required catalytic converters on vehicles that necessitated unleaded gasoline.

At that time, the agency did not mandate that automakers demonstrate that unleaded fuel be available, but required refiners to make it available. “They required as part of that rule that unleaded gasoline had to be generally available,” the auto industry source says. “They could, if they wanted, follow along [that kind of] path and pick a year in the future and require fuels and vehicles to come together at a higher-octane level.”

An advanced biofuels source agrees that the transition to unleaded gasoline is a parallel to the current situation, and that EPA could require refiners to make higher-octane fuels.

The auto industry source adds that raising gasoline’s octane level could help satisfy the RFS mandate that 36 billion gallons of biofuels be blended into fuel by 2022 as well as help automakers meet the EPA passenger vehicle GHG rules. However, the source adds that “a lot of the stars have to align for that to work.” The auto industry has not yet met with EPA since it issued its proposal but intends to do so soon, the source adds.

Another proponent of boosting fuel octane with biofuels points to a Jan. 28 presentation by EPA Office of Transportation & Air Quality official Paul Machiele, where the agency acknowledges — possibly for the first time, sources suggest — its authority to mandate higher octane levels due to EPA’s GHG endangerment finding.

“EPA endangerment finding and regulation of GHG emissions from motor vehicles raises the issue of considering fuel controls that might reduce GHG emissions — octane historically has had little or no effect on criteria pollutants or air toxics, but could affect GHG emissions,” says the presentation, “Statutory and Regulatory Background for Fuel Standards.” The presentation is available on InsideEPA.com. (Doc ID: 2430455)

The proponent of boosting fuel octane notes that in the slide presentation, EPA is citing its GHG endangerment finding authority to mandate higher octane fuel if it thought it would address global warming.

But the source faults EPA in the Tier III proposal for requiring automakers to demonstrate market availability of a high-octane E30 fuel. “People will comment on this and say it makes no sense,” the source adds.

Some sources are calling on EPA to issue parallel rules to raise octane in regular grade gasoline to boost environmental benefits, a potential move the oil industry is already opposing.

One oil industry source says, “If automakers want to produce an engine that’s optimized for high-octane fuel, they can do that today. We supply premium octane fuel nationwide. . . . In general we have no objection to the autos building vehicles designed for a higher-octane fuel but there is no need to require all vehicles existing on the road to use higher octane fuels.” The source notes that the market dictates what fuel is available and given the lack of E85, “It’s questionable whether the market demand for a mid range of that, like E30, would take off.”

A refining industry source says there is no guarantee biofuels would be used to boost octane, noting automakers do not care where octane comes from, and if there was a mandate to raise it, refiners would seek to use products they make in lieu of ethanol in a bid to break “an unholy alliance” between renewable fuel advocates and automakers.

The source says battle lines are still emerging and the oil industry would argue it could provide higher octane with higher energy content — and greater efficiency — “than the ethanol guys can ever give you.” The source also disputes that widespread use of E30 could solve the RFS blend wall, noting that does not address “the liability or infrastructure problems” of using higher ethanol blends “and until you address those, you can’t get at the blend wall. . . . What do you do with the fact that only 4 percent of the fleet has engines warranted to take anything above E10?”

This source says the ensuing battles will be fought on Capitol Hill as debate over the future of the RFS intensifies, as well as behind closed doors at EPA and through public comments on the Tier III proposal.

The advanced biofuels industry source, however, counters that the cheapest way to get higher octane fuel is with ethanol, which the source sees as a major selling point. This source also criticizes EPA for seeking to stay out of the battle when it is the agency’s sole decision to make. “They could and should be doing more.”

Environmentalists, meanwhile, are generally staying out of the octane battle. “We’re in information-gathering mode,” one source says, adding that they are reviewing whether there are environmental tradeoffs to increasing octane. The source does call the path for higher octane in the Tier III proposal “pretty steep” for automakers, while noting that environmentalists are focused on the sulfur reductions in the rule. — Dawn Reeves