Will Cheap Gasoline Doom Carbon Reduction? Not if Ethanol Has Anything to Say About It!

by Dave Vander Griend, President of Urban Air Initiative

In the upcoming Midterm Review, we have a tremendous opportunity to make the case that ethanol can help the nation reach its goals of increased fuel economy while reducing greenhouse gases. This is another path that leads to higher ethanol blends.

What is the Midterm Review you ask? Well, I asked the same thing, and then braced myself for all the information that would be thrown my way!  The best way I can explain how all these issues fit together is to look at it like a puzzle.

When you look at each piece individually, such as carbon reduction, gas mileage, higher octane, and greenhouse gases, it becomes hard to see how we get to the picture on the box. Like me, do you wonder why auto manufacturers want higher octane and how that connects to carbon reduction? Well that’s where ethanol comes in; it’s the piece that will complete the puzzle in order for the auto industry to fulfill the tough light duty vehicle standards set by the EPA. This explanation is going to get fuzzy, but I promise if you stick with me you’ll see the picture by the end of this column!

In 2012, through the CAFE Standard, the EPA and NHTSA (National Highway Traffic Safety Admin) called for 54 miles per gallon by 2025.  That’s a whopping 90% increase over 2011’s 34mpg!

Connect that to the second puzzle piece which is the Obama Administration’s determination to reduce petroleum use as a means of cutting emissions of so called greenhouse gases. According to the EPA, the transportation sector is responsible for 34% of all CO2 emissions, and light duty vehicles are responsible for more than 65% of that.

The winding path to this final level of efficiency will see the traditional CAFE mileage standards merged into a greenhouse gas reduction program. That means vehicles will be measured in terms of grams per mile emitted in addition to miles per gallon.

While not unprecedented, it is nonetheless unusual to create a regulatory program that reaches 13 years in to the future. To do so requires a baseline of assumptions of what that future looks like, and it doesn’t look much like what the regulators thought.  In a nutshell, the EPA incorrectly predicted expensive oil, reasonably priced and available electric vehicles, and most importantly, eager consumers. This is a problem when most of your CO2 reductions are based on smaller cars and electric vehicles.

Well, in a rare instance of rational thinking in Washington, the EPA promised to do a Midterm Evaluation in order to assess the success of the light duty vehicle standards. This is very important to the auto manufacturers because they are the ones who are burdened to meet the requirements. And this is where ethanol, specifically mid-level blends, can help save the day!

In the Midterm Review, the EPA states it will evaluate the long term standards of 2022- 2025 to determine if those levels are still “appropriate”.  The key evaluation factors will be fuel prices and how effective new technologies, notably electric vehicles have been in penetrating the market. We already know the answer to both those questions and it is highly unlikely we can achieve anything remotely close to the carbon reduction targets — unless we embrace higher ethanol blends.

We have a tremendous opportunity to make this case in the Midterm Evaluation in what EPA says will be a “data driven and transparent process”… which is good news for us. We can show how carbon reductions are indeed possible without drastic changes in vehicles, driving habits, or increased costs, while giving automakers the high octane they need to design more efficient engines to meet the new mileage standards.

Our extensive research through the Urban Air Initiative confirms the substantial carbon savings a high octane E30 blend can achieve. Refiners would use less energy and the ethanol would replace carbon intensive aromatics currently used to boost octane.

In addition, Urban Air’s recent report to the Office of Inspector General, details the huge improvements in the carbon footprint of corn, based on current yield increases and better understood carbon sequestration, which makes a case for corn ethanol to be closer to the 50% greenhouse gas reduction level. This is compared to EPA’s 20% reduction over gasoline currently used.

The draft review is scheduled to come out in June and will be available for public comment. The final rule is expected in 2018. The Urban Air Initiative will put significant resources into this effort and in so doing create new demand, based on real value, that will grow our industry for decades to come.

When we all work to put more pieces together, it paints a bright picture for ethanol!