Kansas Corn Commentary: Josh Roe Talks About the Bill that Sets a High Octane Low Carbon Standard

We have a bill that “sets the standard”!

Josh Roe, VP of Market Development and Public Policy

By Josh Roe, Vice President of Market Development and Public Policy

I am pleased to announce that after over a year of negotiations and attempts to bring different parties to the table, Congresswoman Bustos (D-IL) introduced the Next Generation Fuels Act of 2020 this past Thursday (September 23rd). This bill, supported by the National Corn Growers Association (NCGA), Renewable Fuels Association (RFA) and Growth Energy, among others, is the first step in many to come for implementing a Low Caron, High Octane Fuel Standard. Many of you have heard me state that it would be considerably more beneficial for long-term corn demand if we could remove the current barriers holding ethanol at 10% and give automakers the tools to produce engines optimized to run on higher blends of ethanol. While this legislation will not garner immediate support from other industries such as petroleum, up to this point ethanol had no formal proposal to allow for higher blends.

Like most legislation, the  Next Generation Fuels Act of 2020 is complex, but if I had to describe it in one sentence, it sets the stage for automakers to produce engines optimized to run on high octane fuels containing up to 30% ethanol, limits the amount of harmful aromatics in unleaded gasoline and requires EPA to put ethanol on a level playing field with unleaded gasoline. Here are a few high-level talking points, and for those interested in a deeper dive, I go into more detail.

Talking points

The Next Generation Fuels Act establishes a minimum fuel octane level of 98 Research Octane Number, or RON, an increase from today’s regular gasoline, which is 91 RON. A new 98 RON would support mid-level blends like E25 and E30 which would generate new corn grind.

  • By increasing the octane rating of the nation’s fuel, automakers will be able to use advanced engine design features that increase engine performance and significantly improve vehicle fuel efficiency from 5 to 7 percent.
  • Additionally, the legislation requires that the sources of additional octane in the new 98 RON fuel result in at least 30 percent fewer greenhouse gas (GHG) emissions than unblended gasoline, reducing emissions by at least 11 percent, compared to current regular gasoline.
  • By requiring that octane come from low carbon sources, The Next Generation Fuels Act further decarbonizes liquid fuels as vehicle technologies advance. This requirement, coupled with a new limit on harmful aromatics content, ensures the progress already made to lower emissions, by replacing harmful petroleum-based gasoline components with cleaner renewable fuels, continues.
  • The legislation removes barriers to blends of ethanol up to 30%, harmonizing regulations to credit the full benefits of higher ethanol blends and ensuring vehicles and fueling infrastructure are ready.

A little more detail

There are three sections to the bill. Section one defines a the fuel specifications, for a fuel to qualify it must have a RON of 98 or greater and have greenhouse gas emissions of at least 30% lower than unleaded gasoline. Additionally, the percent of aromatics (found to be the most harmful additives in gasoline) are limited, this is to prevent a fuel maker from achieving greater octane through harmful additives. It’s worth noting that overtime, ethanol’s greenhouse gas emissions and carbon intensity have both been declining, while that of unleaded gasoline has been increasing.

Section two harmonizes regulations to clear the path for higher ethanol blends, something that has held ethanol back in many instances from the E15 in KC issue to unfair warning labels that are required for flex fuel pumps. Unnecessary and outdated regulations still exist that prevent the year-round sale of higher blends, this section updates the regulation to account for the most up to date science. Additionally, this section updates fuel economy formulas used by EPA, as current assumptions are outdated and do not reflect the performance of modern engines. This section also gives EPA the authority to approve fuel blends up to 30% ethanol, WITHOUT creating a mandate. Finally, and paramount to this entire bill, this section requires EPA to update the modeling used to estimate air quality impacts. Current models are widely accepted across the scientific community as being outdated and not in line with reality.

Section three deals with automakers and fueling infrastructure. Automakers are required, beginning in 2024, to design light-duty vehicles to operate on 98 RON fuel, in return, automakers will receive appropriate credits for doing so. At one time automakers received meaningful credits to produce flex fuel vehicles, but those credits have slowly disappeared, due in large part to EPA. While 2024 seems like a long time from now, it’s worth noting that automakers are finalizing power train designs at least three years out. Additionally, in the meantime, the credits are immediately restored, providing incentive to produce vehicles optimized for high octane fuels in the immediate future. This section also requires all new fueling infrastructure to be compatible with higher ethanol blends effective January 1, 20204. While this might seem like a steep mandate on fuel retailers, in reality, all fuel dispensers currently sold by major manufacturers today are already certified for blends up to 25% ethanol.

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