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Draft Legislation Proposes Transition from Renewable Fuel Standard to High-Octane Fuel

In a sweeping effort to change the way Washington regulates both fuels and vehicles, Reps. John Shimkus (R-IL) and Bill Flores (R-TX) of the House Energy and Commerce Committee’s Subcommittee on Environment have released a discussion draft of new legislation entitled the 21st Century Transportation Fuels Act. The most significant provision is the requirement, beginning with the 2023 model year, that all new cars and light trucks be designed to run on high-octane fuels. The discussion draft also facilitates the introduction of these high-octane fuels by making it easier to incorporate greater amounts of ethanol into the gasoline supply. Ethanol can be used to enhance octane levels in gasoline and is currently the cheapest means of doing so, though the discussion draft does not specify that refiners must use it to make high-octane fuel.

This will be a dramatic change for consumers. The “regular” 87-octane gas, currently the most commonly purchased fuel, will no longer work in new vehicles starting in five years. It will be gradually replaced with a higher-octane fuel—roughly equivalent to today’s 91 octane—to be used in the new vehicles optimized to run on it. Doing so will very likely raise the per gallon price of gasoline, though proponents assert that the cost of driving will remain the same or possibly decline due to improved fuel efficiency.

At an April 13, 2018 hearing, automakers, refiners, and fuel retailers expressed guarded optimism with the high-octane concept as an alternative to what they see as a highly problematic future under existing laws and regulations—especially after 2022 when the Environmental Protection Agency has wide discretion on setting the targets under the Renewable Fuel Standard (RFS). However, supporters of the RFS were strongly opposed to any of these changes, and were not persuaded by the claim that widespread use of high-octane fuels could lead to greater future ethanol use than under the RFS.

The discussion draft sketches out a transition from the RFS to high-octane fuels, starting with a repeal in 2023 of the requirement met by corn ethanol. However, the rest of the RFS, including the problematic cellulosic biofuel and biodiesel provisions, won’t fully sunset until January 1, 2033. A hearing on the discussion draft is scheduled for December 5, 2018.