Open the toolbox to give fuel economy rules a chance

Source: By Doug Durante, The Hill • Posted: Friday, August 19, 2016

As Washington goes in to somewhat of a sleep mode for the August recess, a critical issue may be slipping under the radar of everyone from environmentalists to fuel providers.  Government regulators and the auto industry agreed when they set ever increasing efficiency and emission standards several years ago to take a breath halfway through the program and take stock of the progress, and that is happening right now.

For all those who pound on their desk and demand we not weaken the standards, I submit they are unfortunately looking at this issue through a very narrow lens.

We simply cannot ignore market realities that have undermined the key assumptions that went into the development of what are, by any measure, challenging requirements.  Plummeting oil prices, consumers demanding larger vehicles, and slow to develop alternatives have all conspired to make the leap to a world of 50 miles per gallon or more that much more difficult.

There is no question that any increases in fuel efficiency, and the related reduction in emissions, will provide a range of benefits, and our members are all for that.  However, adopting a command and control approach and simply demanding progress  does not ensure success.  One of the arguments being made is that the auto industry has made great progress since  2012 “proving” they can indeed reach these levels of efficiency.  Therefore, some  say, keep the hammer down and force the issue, regardless of these other factors.

The reality is that it only gets tougher.  In fact, a lot tougher.  Under the new rule, by the year 2025 these standards call for a whopping 90% increase in mileage requirements over 2011 levels.  While we are now at an impressive fleet average of 34 mpg in 2016, assuming we can continue this pace without giving the auto industry the full compliment of tools it needs to do so is unrealistic. And keep in mind all these mileage requirements include significant reductions in CO2 emissions.

As noted,  the rule calls for a Mid Term Evaluation of the program. It heavily relies on the findings of a Technical Assessment Report (TAR)  recently released by EPA and is subject to public comment. This report falls in to the same trap of assuming the auto industry can maintain the pace they are on simply based on the success they have had to date.  Not only is this questionable, but the TAR fails to address a critical factor which is the composition of fuel and looking at cars and fuel as an integrated system. Key to that approach is the octane of the fuel.   On one hand EPA acknowledges the slow rate of electric vehicle commercialization and the low cost of oil will result in a continued dominance of internal combustion engines (ICEs) in the market, and those engines will be run on gasoline.

On the other, despite that reality, the TAR inexplicably fails to examine options for gasoline, such as raising the octane levels.

The US Department of Energy just last week released a report that confirms the role of high octane and how it would meet automakers’ needs for high efficiency, high compression engines.  Among the options DOE has identified is a low carbon ethanol blend in  the 25-40% volume range which would reduce CO2 emissions.   EPA itself has acknowledged on several occasions that higher octane gasoline would indeed improve efficiency and reduce carbon emissions but says it will not address that option until after 2025.  Say what?  Wait a decade to implement a new fuel standard that we could begin to use today?  This is a tool that is available to us immediately and does not need to wait for next generation vehicles to contribute to the reduction of GHGs and other pollutants.

If EPA updated its lifecycle emissions models it would show biofuels like ethanol have a dramatically improved carbon footprint over petroleum.

Given that the transportation sector now accounts for the largest source of CO2 it is incumbent on EPA to expand the scope of their Mid Term Evaluation and look at options that include a higher baseline than today’s 87 octane.

While renewable ethanol is an excellent option, this is not a mandate or prescriptive.  Natural gas can participate and refiners can choose how they would provide the octane, including from their own resources. But provide they must as  automakers are captive to the fuels that are in the market and only EPA can ensure that these fuels are at the level they need to be.

We can meet these tough, but critical standards.  Automakers have been asking for higher octane fuels for years.  EPA needs to open the toolbox and give them the tools they need to get the job done.

Doug Durante is the Executive Director of the Clean Fuels Development Coalition (CFDC) representing a broad base of ethanol, agriculture, and technology interests.

 

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