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Repeating History with Octane Biofuel Standards is a Huge Mistake

  • Monday, 07 May 2018 14:47

The Hill

May 7, 2018

By Mike Carr

Recently, Chet Thompson of American Fuel & Petrochemical Manufacturers (AFPM) testified before Congress and proposed a “fuel neutral” octane standard as a “potential replacement” for the Renewable Fuel Standard (RFS).

Octane is a fuel characteristic that allows engines to run more efficiently and without “knock.” Refiners use biofuels to meet octane standards today, so in theory, more octane means better engine performance, cleaner air and more biofuels.

But those of us who have been around for a while have heard this one before. Thirty years ago, the oil industry used the same strategy to avoid using biofuels. And consumers paid the price.

During the debates leading up to the Clean Air Act Amendments of 1990, Sens. Tom Daschle (D-S.D.) and Bob Dole (R-Kan.) led an effort to require oil companies to use more biofuels to improve the combustion efficiency of gasoline. The oil industry demanded a “fuel neutral” oxygen standard instead. 

Biofuels contain high levels of oxygen, which also improves combustion. So, while an oxygen standard didn’t prescribe the means to improve environmental performance, farm state and environmentally minded senators agreed to Big Oil’s “fuel neutral” standard, in hopes of creating new market opportunities for biofuels and reducing air pollution.

Despite getting their way on substance, some oil state lawmakers continued to object to any standard at all. But The Washington Post noted that “the farmer-environmentalist alliance steamrolled” the opposition and won the vote 69 to 30. The issue was contentious, but the final package included an oxygen standard for reformulated gasoline. The Post predicted that ethanol “could more than double its market” as a result.

But a funny thing happened on the way from the field to the gas station. Instead of buying and blending renewable biofuels, the oil industry chose another oxygenate to meet their obligations: methyl tertiary butyl ether, or MTBE. The law was into effect from 1992 to 2005, and MTBE saturated more than 85 percent of the marketplace for oxygenates. It was the ultimate bait and switch.

MTBE is truly nasty stuff that leaches into groundwater. It is made by reforming natural gas and combining it with petroleum by-products at the refinery. In 2016, Exxon agreed to a $30 million settlement requiring them to provide clean water to three MTBE-contaminated schools in Massachusetts. Damages in some states reach into the hundreds of millions of dollars.

Congress did the right thing in 2005, effectively replacing the oxygen standard with the RFS as part of the Energy Policy Act of 2005. The RFS, together with MTBE liability concerns, essentially ended the use of the chemical in the United States. The quick transition from MTBE to ethanol has been a good outcome for public health, clean water and rural jobs. 

Now, refiners are back, with the same old pitch. Incredibly, oil champions in Congress did little to hide their agenda in the wake of Thompson’s testimony. Rep. Gene Green (D-Texas), who represents three major refineries in his Texas district, said, “We're still producing MTBE in Texas for export market, but we can't use it to reformulate our gas. And now we have lots of natural gas that we could be using that for.”

Green’s district produces MTBE for export to Mexico. He made clear that the politicians working for Big Oil see the octane proposal as an opportunity to bring back petrochemical octane, and replace renewable fuels with dirty, polluting chemicals that contribute to climate change.

When Rep. Paul Tonko (D-N.Y.) asked Thompson if an octane standard could in fact be met with non-renewable “petrochemicals” from the refinery, Thompson replied “that is correct,” before assuring lawmakers that biofuels are in the best position to succeed under the new standard, just like they did in 1990.

Oil refiners are simply dusting off the old playbook — get renewable fuel supporters and lawmakers to buy into a “fuel neutral” performance standard, then use the “optionality” to get toxic petrochemicals back into the fuel supply.

That would serve the purpose of winning back market share for oil companies, but would be an absolute disaster for public health, the environment, and a renewable fuels industry driving job growth in the middle of the country. And it would destroy farm jobs in rural districts, including those belonging to some lawmakers who claim to be considering octane standards, like Rep. John Shimkus (R-Ill.).

To be sure, pursuing higher octane fuels is a good thing. Policies that result in higher efficiency engines, less pollution, lower emissions, and allow for higher blends of emissions-friendly biofuels are certainly worth considering.

But as we saw in the 1990s, and before that with leaded fuel, we shouldn’t count on the promise that the refineries will simply do the right thing for the environment or the consumer. The devil, especially when it comes to the oil industry, is in the details. Repealing the RFS for a toxic trojan horse would be a terrible idea.

Mike Carr is the executive director of New Energy America, an organization that promotes clean energy jobs in rural America. Previously, he served as principal deputy assistant secretary in the Office of Energy Efficiency and Renewable Energy at the Department of Energy.

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