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US lawmakers ponder octane mandate over renewables

13 Apr 2018, 6.24 pm GMT

US lawmakers ponder octane mandate over renewables

Houston, 13 April (Argus) — Members of congress today weighed replacing federal volume-based fuel mandates with a nationwide higher-octane fuel requirement.

The proposal, pushed by some automakers and refiners and greeted warily by biofuels and agriculture groups, would replace the more than decade-old Renewable Fuel Standard (RFS) that mandates minimum renewable fuel blending levels each year.

The US would instead move toward higher-octane, premium gasoline that could be filled with a higher percentage of ethanol — or competing blendstocks.

General Moters (GM) and other automakers see a path to meeting more stringent fuel efficiency requirements while keeping liquid fuel-based engines competitive in a growing market for electric vehicles. Refiners want to do away with the RFS completely. But agriculture and biofuel groups suspect the plan is a move to crowd their fuels back out of the marketplace.

Lawmakers remain in the early stages of considering such a change at a hearing of the US House of Representatives Energy and Commerce subcommittee on the Environment today.

"I think it is time to modernize that policy," representative Greg Walden (R-Oregon) said. "I just want people at the table to understand that we are serious about that."

The proposal would move new US vehicles to requiring 95 RON, or current US premium, octane. Higher-octane gasoline runs smoother, allowing efficient use of smaller, higher compression engines.

GM vice-president of global propulsion systems Dan Nicholson made a similar pitch to the American Fuel and Petrochemical Manufacturer's (AFPM) annual meeting in March.

Focusing on octane, rather than fuel components, would create a standard that could be met in California — one of the largest US fuel markets — and other states that prohibit the sale of certain higher-ethanol blends. But it would still allow retailers to use ethanol, currently the cheapest supply of octane, to satisfy fuel demand.

Nicholson urged lawmakers again today to establish a single, nationwide standard to support the research and development of suitable engines over the next four years.

"This is the most cost effective way to increase fuel economy and reduce greenhouse gases," Nicholson said.

But lawmakers questioned the costs to consumers from premium fuels, and whether biofuels would continue to find a share of the US transportation fuel supply.

Representative Dave Loebsack (R-Iowa) said the country still had national and economic security interests in maintaining the current fuel programs.

"Clearly things have changed here in America, but we still have a lot of the same concerns around the RFS and why we have the RFS in the first place," Loebsack said. "This is about food and agricultural security as well."

Biofuel groups would not accept replacing the current fuel standards with a higher octane mandate.

"This would eviscerate, really, all of the innovation and investment that has taken place so far in advanced biofuels," Growth Energy chief executive Emily Skor said.

Conventional, corn-based ethanol continues to dominate the supply of cheap octane for US fuel.

National Association of Convenience Stores general counsel Tim Columbus told lawmakers that a higher-octane standard was the easiest for his members to meet, and that prices would likely drop as supplies of the fuel rose.

AFPM president Chet Thompson said his members would not support a new mandate in addition to the RFS.

"We are here offering up a solution to a bad status quo," Thompson said.

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