POLICY

from 2022 December Ethanol Producer Magazine

WATER

ADVANCING POLICY IN PARALLEL

The Drive Clean Initiative and Next Generation Fuels Act are simultaneously finding support in the ethanol industry. Both aim to usher in higher blends of ethanol, but via different mechanisms. By Katie Schroeder

The Inflation Reduction Act, arguably the most sweeping clean energy legislation in U.S. history, is poised to considerably benefit the ethanol industry and bioenergy writ

large. The bill’s passage in August was hailed as a watershed moment for clean energy, climate and, specifically, CO2 capture and sequestration—the keystone of ultra-low-carbon ethanol production. But for all that the IRA delivers—which is, to say, a lot—it does not address several of the U.S. ethanol industry’s most pressing needs and obstacles to future growth. More is needed.

Shepherding federal legislation is difficult and tricky—compromising on new policy can have unwanted effects on existing law. That’s why trade groups representing biofuels in Washington D.C. have, for years, been very careful to not back proposals that might jeopardize the Renewable Fuel Standard, the nation’s longtime biofuels program. But as the RFS enters a new phase of its existence, with the U.S. Environmental Protection Agency exercising a “reset” of the legislation this fall, and the electric vehicle movement gaining critical mass, the ethanol industry’s policy guardians are entertaining federal legislation that would, if not replace the RFS, backstop it with a national lowcarbon fuel standard, a high-octane fuel requirement, or both.

The favored vehicle for an octanebased biofuel program is the Next Generation Fuels Act, a bill that raises the octane content for fuel, increasing engine efficiency and reducing emissions by requiring higher blends of ethanol. The bill was introduced by U.S. Rep. Cheri Bustos of Illinois in both the 2021 and 2022 Congresses. Bustos tells Ethanol Producer Magazine her reason for supporting and presenting the bill is rooted in her family’s heritage of farming, and her service to the rural, cornproducing part of Illinois she serves. She says that even though the IRA should boost higher ethanol blends—it provides $500 million for biofuels infrastructure—it does not accomplish what the Next Generation Fuels Act would. Bustos says interest in the proposed bill has been strong; it gained bipartisan support at its introduction with 17 Republican representatives and 12 Democrat representatives cosponsoring it. The bill was also introduced to the Senate this year by Republican Sen. Chuck Grassley of Iowa, longtime supporter of the biofuels industry.

“I really see this as a win-win-win. And what I mean by that is, obviously we are facing the challenges of higher gas prices. This can help bring down a gallon of gas by 50 cents a gallon by blending ethanol,” Bustos says. “Number two, we have a climate disaster on the horizon, and this helps bring down the carbon that is emitted into the air. And [third], it supports rural America, specifically our family farmers. So, I think when you look at those three wins, we just think this has great potential.”

On a different but related path, a national low-carbon fuel standard push is being organized as the Drive Clean Initiative. Already, the initiative is a surprisingly diverse group of transporta-

tion industry stakeholders—from ethanol producers to EV companies—interested in achieving net-zero emissions from transportation by 2050. Geoff Cooper, president and CEO of the Renewable Fuels Association, says the RFA has been involved with the initiative since its inception and is a founding member. The Drive Clean Initiative, he says, is made up of ethanol producers, environmental groups, electric vehicle stakeholders and more, all united around the common belief that the best way to reach net zero emissions by 2050 is through the implementation of a national low-carbon fuel standard.

Whether the Drive Clean Initiative complements, competes against or overlaps with the Next Generation Fuels Act is best explained by what each proposal is primarily championing. Both are aimed at supporting the proliferation of higher-level ethanol blends, albeit through different but related “stick-and-carrot” mechanisms—one focused more on the internal combustion engine vehicles on the road today, the other casting a wider net big enough for ethanol, EVs and all other low-carbon transportation sources.

Leveraging Octane

Doug Durante, executive director of the Clean Fuels Development Coalition, outlines what the Next Generation Fuel Act is and how it can help the ethanol industry. “The key to all of this is not just low carbon, but octane,” he says. “Ethanol’s highest value proposition is octane. There’s nothing like it; there’s nothing that adds octane the way it does, and then, now, with the [sequestration] of carbon, there’s definitely nothing that does it in a low-carbon way.”

The act would raise the octane requirement on fuel and requires that the octane added reduces greenhouse gas emissions by 40 percent to guarantee that the octane will not be increased through the use of toxic aromatics, Durante explains. The minimum amount of octane needed in a fuel to propel a vehicle is 87 AKI (anti knock index, made up of the average of a fuel’s research octane number, or RON, and motor octane number), Durante explains. Refiners generally make an 84 AKI fuel and then add ten percent ethanol to add three points of octane to make the 87 AKI fuel that drivers find at the pump. The bill would increase the octane requirement to 90/91 AKI, gradually increasing it over the years, thereby increasing the percentage of ethanol in the fuel.

Durante explains that the automotive industry has been calling for higher octane ratings for years, since this would allow them to make more fuel efficient, high-performance engines. Companies within the automotive industry such as General Motors and United Autoworkers, and companies within the machinery industry like John Deere and Case International are supporters of the NGFA. Durante explains that the bill would address issues such as the soonto-be diminishing number of FFVs on the road. It would also require automakers to warranty their vehicles for high-octane fuel and RVP waivers, while giving ethanol producers an opportunity for volume growth in the domestic transportation market.

The bill provides a “systematic knock down of the obstacles,” Durante explains, by ensuring that the high-octane fuel would be low carbon through the increased use of ethanol as an octane additive. The bill also puts limits on aromatics, otherwise known as mobile source air toxics, chemicals used in gasoline to raise octane, Durante explains. Limiting these aromatics would allow ethanol to step in and fill the gap as a clean, low carbon option for increasing octane. “The whole point is to make clean octane, and this goes all the way back to the Clean Air Act of 1990, when they passed a lot of these initial clean fuel provisions, they were calling for clean octane from ethanol all the way back then,” he says. “So, this is very important. It would control these aromatics and make sure that not only the octane additives and such have to meet a low-carbon standard. And, just by virtue of being ethanol, they’re nontoxic.”

The other obstacle it knocks down is the need for vehicles designed to burn higher octane fuels. The bill would address this by reestablishing flex-fuel vehicle credits for automakers. “I used to do a lot of work in the FFV area, and right now the automakers just aren’t making [them],” Durante says. “There’s not a market for it; there’s no incentive for them to make it, so we reestablish those credits, and I’m a big fan of those credits because they don’t cost anything. They don’t cost the consumer anything ... Just give those guys a little credit for using a fuel that doesn’t emit as much carbon or use as much gasoline.”

This legislation has the potential to increase demand for ethanol by another 4 to 5 billion gallons, as well as increasing corn use by another billion and a half bushels, Durante says. He calls this increase a co-benefit as it reduces greenhouse gases (which is a potential low-carbon fuels standard tie-in).

Durante believes ethanol’s most unique and valuable attribute is its ability to add octane to fuel. “The octane would be able to start at this 95 [RON] and then increase over the years even more to a 98 RON, which would be a 93 or a 94 premium, it would almost be like a super-premium,” he says. “You’re talking about being able to [sell] 20 percent ethanol blends at the 95 level and 25 or 30 at this 98 RON level. So, that would be a significant increase over where we are now, we’re only using 10 or 15 percent now, so that’s important.”

Pursuing a Clean Fuel Standard

The ultimate goal of the Drive Clean Initiative is to create a national clean fuel standard—based on carbon intensity—that is technology neutral. “The guiding principle here is that we need to remain focused on the overall objective of reducing carbon emissions rather than trying to prescribe what technologies or what fuels need to be used to reduce emissions,” Cooper says. With California recently implementing an

electric vehicle mandate that bans internal combustion engines beginning in 2035, the Drive Clean Initiative wants to demonstrate that there is more than one way to reach net zero emissions. The goal, Cooper explains, is to set carbon reduction targets and create “a market mechanism to drive investment and creativity in the marketplace” to reach those goals without dictating one technology as the solution.

This technology-neutral framework would allow for ethanol, electricity, hydrogen and other technologies to all play a role in meeting the net zero goal. “We think that’s a much better approach than being prescriptive and mandating certain technologies,” Cooper says. “And it’s certainly better than choosing technology winners and losers and forcing certain technologies on consumers who may not want those technologies.”

Allowing the consumer to find the best solution for them could help decarbonization happen more quickly. The Drive Clean initiative has been educating lawmakers on the benefits of such a policy as well as highlighting “lessons learned” from clean fuel standards at the state level, Cooper says. “The point is to build momentum for the conversation and get more people talking about this policy solution and get more people up to speed on why, we believe, this is the most efficient and most economically attractive path forward for decarbonization,” he says. Currently, he expects a bill to be introduced in Congress sometime in the next 12 months.

The technology-neutral nature of this policy solution is evident in the industries represented; ethanol producers such as POET and Calgren Renewable Fuels, electrical charging companies like Charge Point, automakers such as Alliance for Automotive Innovation, environmental group involvement from the New York League of Conservation Voters, SAF producers such as Alder Fuels, biodiesel and renewable diesel producers, and more. “For the last several years we have spent a lot of time just building trust with groups who share this common interest of reducing carbon emissions from transportation, and doing it in a way that is market-based and incentivebased, rather than using mandates and draconian measures to force certain technologies,” Cooper says.

In order to ensure the program is fair, the Drive Clean Initiative supports utilizing the GREET model developed by the Department of Energy’s Argonne National Laboratory. Cooper explains that this measurement fills the necessary role of being science-based, data driven and not politicized.

Pursuing Solutions

These two policy approaches both have their benefits, and elements of each may ultimately influence final policy. “We strongly believe that we need to be pursuing any opportunity to advance the dialogue and advance the discussion around ethanol’s role in reducing carbon emissions, and both of these concepts do that,” Cooper says. “We’ll get to a point where it's clear that one approach has more appeal than the other, and at that juncture we’ll make a decision on how we want to proceed, but we’re a long way from being there, and that’s why we think it’s foolish to promote one policy at the expense of the other when we should be promoting both.”

Author: Katie Schroeder Contact: katie.schroeder@bbiinternational.com

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