Ethanol, Oil Groups Find Common Ground

ORLANDO, Fla. (DTN) -- If there's a piece of legislation oil, automakers and renewable fuels companies can get behind as the wave of the future for fuels, it may have been the Next Generation Fuels Act pushed to the forefront by former Rep. Cheri Bustos, D-Ill., in 2021.

The bill would have required automakers to phase-in vehicles that burn higher-octane fuels by 2031. It would create a clean-octane standard that would require sources of additional octane to result in at least 40% reductions in greenhouse gas emissions compared to gasoline.

It would have set new limits on the use of hydrocarbon aromatics in fuels while improving vehicle fuel efficiency.

Although Bustos has retired from Congress, she said during a panel discussion at the national ethanol conference in Orlando, Florida, on Wednesday that the measure still is alive in the 118th Congress.

The chances of passing the measure as a stand-alone bill, however, may be small, Bustos said.

"I think it's probably going to have to go on some kind of rider," she said about the act. "It's just going to have to be attached to something else."

With Republicans now controlling the U.S. House of Representatives and a slew of freshmen representatives coming to Washington, Bustos said the opportunities are there to create a whole new coalition of biofuels supporters in Congress.

The several-day vote for speaker of the house, she said, may prove beneficial to agriculture interests.

"There's a side benefit to it," Bustos said.

"There's a very big freshman class and there's a point I want to make from an ag perspective, very good freshman class, both on the Republican side on the Democratic side. And what my friends (in Congress) who have been out there for a number of years said is that that long vote series (for speaker) gave them an opportunity to get to know their brand new members of Congress. And so I share that with you because I think there's an opportunity from renewable energy and renewable fuels perspective."

On the House Ag Committee, for example, there are 50 members on the committee and only 28 are members that have been around for more than one term. Bustos said that means there are 22 new representatives on the committee.

"The extremes are not going to be successful either on the far right or the far left," Bustos said.

"So that allows first of all room for compromise and if there's a willingness to compromise, that is an opportunity to teach, to mold."

Bustos told ethanol producers to spend time with new members of Congress, "invite them to your family farm, invite them to your ethanol plant, show them what you're doing, and tell them why renewable fuels are so important."

In the current Congress, Bustos said Rep. Angie Craig and Sen. Amy Klobuchar have taken up the mantle on the Next Generation Fuel Act.

"And so the whole idea here is that you bring together the right interests, you write good legislation," Bustos said.

FINDING COMMON GROUND

Dating back to the passage of the first Renewable Fuel Standard in 2005, ethanol and oil interests have butted heads in disagreement on a number of policy fronts.

When it comes to a move toward a low-carbon, high-octane future, however, differences are harder to find.

Frank Macchiarola, senior vice president of policy, economics, and regulatory affairs for the American Petroleum Institute, said the API and Renewable Fuels Association have found common ground on a number of issues.

That includes mutual support for a legislative fix on year-round E15, carbon pipelines and carbon-reduction standards.

"I'm cautiously optimistic about all of it," he said.

"I can just say from my experience, I've been at API for seven years and this is the closest aligned that we've been on a whole host of issues with RFA than I've ever seen."

Macchiarola said he too believes the new Congress provides a number of opportunities in setting future fuels policies.

"Divided government doesn't necessarily mean stalled government," he said.

"Now, certainly the administration we've seen take more aggressive approach on the regulatory agenda, and we're feeling that API already in the new Congress."

The 2007 Energy Independence and Security Act, for example, was passed into law with a Democratic-controlled Congress and a Republican president in George W. Bush.

"So, we're hopeful that a divided Congress could actually bring some smart bipartisan legislation," Macchiarola said.

The ethanol, oil and auto industries have found common ground in increasing the use of domestic fuels, improving the environment and cutting emissions.

"We share those common interests among our industries," he said.

"And so, as I think about what's next, we're focused on the common areas where we have agreed that other associations obviously, we're all working hard to lower emissions. We're all working hard to provide affordable, reliable fuels for the American people."

Chris Hessler, founding partner of AJW, Inc., said the RFS is an example of why it's important to get a significant consensus when it comes to passing and implementing new energy legislation.

"One of the things that it has provided is a stability in terms of national policy, and the underpinning reason it has been stable is because it passed the Senate with 70 votes, well above the 60 threshold," Hessler said.

"It's never been a policy that was at risk of one subset of constituents destroying, swinging in a different direction. Fundamentally the underlying law was really solid, politically solid."

Future efforts to pass energy legislation, Hessler said, will require the same approach of building a consensus across industries.

"You get to the consensus by looking to the various key groups, some of them represented right here," he said, "who have a huge stake, a huge long-term investment stake in the outcome."

Dan Bowerson, senior director of energy and environment for the Alliance for Automotive Innovation, said although liquid fuels will continue to be a big part of the nation's transportation sector for years to come, automakers' move toward more electric vehicles can't be ignored.

"We're committed to decarbonization and committed to a transition to electric," Bowerson said.

"The automakers are putting significant bets on electrification to the tune of $1.2 trillion globally in the next four years. That all being said, we still see a significant role for liquid fuels. There's around 270 million or so light-duty vehicles on the road today. About 1% of those are currently electric."

Since new vehicles stay on the road for about 12 years, he said, new vehicles purchased in 2023 will be on the road up to 2035.

"So, there is a significant opportunity here still to improve the light-duty fleet to decarbonize the existing fleet," Bowerson said.

"But time is quickly running out."

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

(c) Copyright 2023 DTN, LLC. All rights reserved.