Ethanol groups back new review of fuel economy, GHG rules

By EPM Staff | March 16, 2017

The ethanol industry reacted positively to President Trump's move to reevaluate hard-to-reach, Obama-era fuel economy and emissions standards. Specifically, ethanol trade groups say a deeper review of the nation’s corporate average fuel economy (CAFE) and greenhouse gas (GHG) rules could give high-octane fuels a larger, more defined role in the plan.

Announcing the action Wednesday in Michigan, Trump said EPA and the National Highway Traffic Safety Administration (NHTSA) will reinstate the so-called midterm evaluation (MTE) of the CAFE-GHG standards for the automotive industry. The two agencies will work together, using a data-driven process to complete a new evaluation over the next 12 months. Trump believes—and ethanol trade groups agree—that the Obama Administration rushed the first MTE to a premature conclusion earlier this year.

"Today’s actions allow the opportunity for EPA to slow down, remove politics from the process, and take a more comprehensive approach to fuel economy standards,” said Renewable Fuels Association President and CEO Bob Dinneen. “In 2012, EPA and the NHTSA promulgated final regulations establishing the CAFE and GHG standards for 2017-2025. Included in the final rule was a requirement that the agencies conduct an MTE for the 2022-2025 standards and determine whether the standards established in 2012 were still appropriate in light of the latest available data. The RFA filed extensive comments focused on the role of fuels in enabling more efficient vehicle technologies. By rushing through a cursory review to finalize a rule before the transition, the agency clearly did not fully consider our comments, or the comments of other stakeholders.”

Dinneen continued, "In its MTE, EPA correctly identified technologies that will effectively improve energy efficiency and reduce greenhouse gases. But they failed to appropriately consider the fuels that will enable those technologies. High-octane, low-carbon fuels can play a significant role in helping to meet fuel economy targets in the future. That is an omission that must be addressed moving forward if future vehicles can in fact help us address climate change without backsliding on other critical air quality and public health priorities. We look forward to this opportunity, giving EPA a second chance to conduct a more thorough review of fuel economy rules, vehicle technologies, and the fuels that will be necessary to assure success."

The High Octane Low Carbon Alliance, a biofuels advocacy group formed by the Urban Air Initiative and represented by former U.S. Sen. Tom Daschle, called Wednesday's announcement “an important first step in achieving realistic reductions in fuel consumption.”

Daschle said the recall was necessary because the rule, while well intended, was unnecessarily rushed. He said the CAFE rule of 2012 was “one of the most forward-looking regulatory actions in recent memory,” and established efficiency requirements out to 2025. As part of the rulemaking, automakers and EPA, with input from the Department of Transportation and the California Air Resources Board, agreed to conduct an MTE in 2016 to determine if the standards were still “appropriate.” The evaluation was to have taken place beginning in mid-2016 through 2017 with a final determination to be issued in 2018. Instead, Daschle said, the evaluation was conducted over a brief three-month period and the EPA made a determination that the standards could be met.  

Daschle said the initial MTE should have included an assessment of the important role high-octane fuels can play in reaching tough new standards. In comments filed last year and again as the rule was finalized, the Alliance argued that looking at fuels and engines as an integrated system is critical to a realistic assessment of whether the standards were still appropriate.

This is particularly important, the Alliance claimed, because some of the basic assumptions that led to aggressive increases in the requirements have failed to materialize. Key among those was the predictions of high oil prices that would not only curtail driving and fuel consumption but also the predictions of consumer preference for electric vehicles and smaller cars. While acknowledging that impressive gains have been made in recent years, Daschle said it is going to be increasingly difficult, if not impossible, to keep up that pace.

"We are seeing a clear pattern of consumers wanting to take advantage of lower fuel costs and purchasing larger vehicles. It is clear the internal combustion engine will remain the primary propulsion pathway so let’s make those engines as efficient as possible through cleaner, high octane fuels,” Daschle said, adding that the DOE predicts by 2025 nearly 80 percent of new cars will be turbocharged requiring higher octane than today's 87.

"We have a host of options available to produce such fuels, including adding 20 percent ethanol to our base fuel of E10, which would provide a low-cost 94 octane," he said. "All we are asking EPA to do is look at this and other high-octane scenarios and realize we can achieve the goals of the program while providing consumer choice."

The American Coalition for Ethanol also voiced support for Trump’s plan.

“Today’s action does not roll back the CAFE-GHG standards, but rather directs EPA to put the midterm review of the standards back on track,” said Brian Jennings, ACE executive vice president. “This is good news because reconsideration of the 2022-2025 standards will enable us to emphasize the need for EPA to allow high-octane, high-ethanol blends to be used in meeting future efficiency standards.

“Now that the review … will return to the original schedule, we will also be able to make the case that EPA and NHTSA need to provide meaningful incentives for flexible fuel vehicles (FFVs) and engines designed to operate most efficiently on high-octane, high-ethanol blends,” Jennings said. “Currently, the standards are biased in favor of electric vehicles and ignore the role that FFVs and engines optimized to run on blends in the range of E25-40 can play in meeting fuel economy and GHG reduction goals.”

Jennings said ACE has been in dialogue with automakers and other groups to develop strategies for aligning higher ethanol blends with current and future engine technology. He said revisiting CAFE-GHG standards present a natural and timely opportunity for this transition to occur. Specifically, ACE recommends increasing the minimum market gasoline octane rating, commensurate with increased use of ethanol. ACE also believes FFVs should be encouraged by credits and can play a role as a bridge to new engine technologies dedicated to run on higher octane, higher-level ethanol blends.

The EPA/NHTSA "Notice of Intention to Reconsider the Final Determination of the Mid-Term Evaluation of Greenhouse Gas Emissions Standards for Model Year 2022-2025 Light Duty Vehicles," signed by DOT Secretary Elaine Chao and EPA Administrator Scott Pruitt, is available here.