Up to Spec!

American Coalition for Ethanol

Annual Conference, August 17, 2017

Kristy Moore

KMoore Consulting LLC

Today’s Presentation Topics

• International Fuel Market Development

• Domestic Market Development

• Fuel Ethanol Technical Advisory Group

• ASTM International efforts

• Regulatory Update

• High Octane Fuels of the Future.

Mexico Energy Reform: Ethanol Opportunity

• 1938 – 2013: Absolute monopoly in the entire oil and gas value chain.

• 2008: Biofuels promotion and development law.

• 2013 Energy reform laws passed. Three new articles and 25 new constitutional acts created.

• 2016: Markets opened for gasoline and diesel imports by private entities.

• 2017: Gradual price liberalization (north to south).

• 2018: Free market.

Comision Reguladora de Energia (CRE) • Mexico Gov’t publishes a fuel specification

once every 10 years. • PEMEX, single oil company, had (has?) no

desire to use ethanol. • CRE posted draft specification Aug. 2016;

many comments submitted. • NOM-016-CRE-2016, National Fuel

Specification Publication October 2016. – Allowance of 5.8% ethanol blends in the “rest of

the country.” – Ban of ethanol in 3 major metropolitan areas

(Mexico City, Guadalajara, Monterrey) • This is due to lack of information / education on

ethanol effects to gasoline and motor vehicles. This three metro areas have significant air pollution.

– First time ethanol allowed in Mexico, ever.

National Fuel Specification Issues

• There were so many voiced concerns, CRE created 3 working groups to discuss concerns.

• CRE Work Groups: Fuel Quality, Fuel Markets and Public Health & Environment. – This has been an awesome experience

to watch the government work with industry to improve regulation.

• My collaboration with the U.S. Grains Council to bring experts and education to Mexico.

Our Proposal submitted April 2017 Proposal to Change the NOM with two goals:

#1 Increase the volume of ethanol from 5.8% to 10%.

#2 Remove the restriction on ethanol use in 3 Major Metropolitan Zones.

Justification: air quality, U.S. fuel, fungibility, octane, GHG reductions and lower cost.

Mexico Fuel Regulation Update!

• Emergency Rule to allow E10 blends in rest of country! (June 2017) – Not without legal challenges.

– Opposition from PEMEX, auto and MTBE industry…

• Ban for 3 metro area remains. – IMP is studying E10 vs. Mexico

Magna/ Premium, results due fall 2017.

– Results of this study could change E10 ban.

Next Steps: International

• Mexico market development: ethanol specification, logistics, retail station considerations.

• Ethanol Handbook being translated.

• Identify cache of experts.

Next Country??

Back to Domestic Market Development!

• E15 Market Growing, slowly…

• Regulatory Efforts supporting E15

–Need RVP parity.

• Advancing our goals for higher octane/ higher ethanol fuels.

• Standards and regulations that need addressed.

2012: American Petroleum Institute Map of E15

Restrictions

States With Laws / Regulations Restricting E15

States Not Restricting E15

*Illinois has delayed enforcement of Section 2.1.3 of 2011 HB 130 until May 1, 2013

*Texas adopted most recent version HB 130 effective September 1, 2011

Note: Does not include EPA RVP Waiver for Ethanol in Conventional Gasoline or Federal RFG Areas

Herman & Associates

www.HermanAssociates.com

May 2012

© 2012 Herman & Associates

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E15 Regulatory Impediments: Summer 2012

Legend

No regulatory restriction

Progress on impediment

Regulatory Restriction

Pending

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E15 Regulatory Impediments: Summer 2017

Legend

No regulatory restriction

Progress on impediment

Regulatory Restriction

Pending

NCWM Annual Meeting

• Annual meeting week of July 16, Pittsburg, PA.

• My two proposals to update ethanol flex fuel labeling marked as voting items had to be withdrawn. – American Petroleum Institute (API) created confusion with the

regulators in their quest to restrict E15 labeling, ethanol flex fuel labeling.

– API is very active opposing any and all efforts for >10% ethanol blends.

• Development of ideas how to best forward our agenda at the National Conference of Weights and Measures.

Fuel Ethanol Technical Advisory Group • Voluntary collaboration of ethanol

industry’s technical experts.

– Open to ethanol industry member.

– No financial obligation (future

research planned…)

– Regular communication on fuel

quality and regulatory issues.

• Build strategy on fuel quality, performance, emissions, and regulatory efforts for advancement of the ethanol industry.

Sulfate Concerns of the Oil Industry

• Suggesting a linear relationship with sulfate salt precipitation with increasing ethanol content.

• Proposing reduction of sulfate specification in ASTM D4806 for increasing ethanol content in gasoline (D4814.)

• Two research projects to address this concern:

– CRC has hired Desert Research Institute to evaluation sulfates in ethanol.

– FETAG is working with NREL to evaluate the potential for sulfate salt precipitation in various gasoline- ethanol blends.

ASTM Standards – Update 2017

• Stakeholder involvement

– Two face-to-face meetings per year,

voting rights throughout the year.

• Balanced stakeholder input

• Producer not more than User +

General Interest

• Levels of participation can vary

• Starts with $75 annual

membership

• Ethanol industry participation up to ~45 voting members, only 15-20 attend the meetings regularly.

• Oil industry filed several comments challenging the voting system.

• Our next steps will be to replace oil industry- legacy chairman positions.

• Move our agenda forward to support commercialization of high octane/ high ethanol fuel blends.

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ASTM - D02 Ethanol Related Standards

• D4806 – Denatured Fuel Ethanol Specification

• D4814 – “Gasoline” Specification

• D5798 – Ethanol Flex Fuel Specification (Formerly E85)

• D7794 – Blend Practice – Ethanol between D4814 and D5798

• D8011 – Natural Gasoline for D4806 and D5798

• D8076- 100 Research Octane Number Test Fuel for Spark-Ignition Engines

• Very active time at ASTM, standards and specifications changing multiple times each year, this trend is expected to continue.

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ASTM D02 Meeting • Several important ethanol efforts underway:

– Proposal to incorporate a statement on ethanol fuel blends and vapor pressure. This addresses state fuel regulations that adopt ASTM specs but have limiting language to E10.

– Proposal to expand the current octane methods to ethanol fuel blends above 25% ethanol by volume.

– Developing a test method with Marathon on DRA issues in denaturant/ ethanol flex fuels.

– Several gasoline BOB efforts underway to improve properties for ethanol blending.

– Meeting with several oil representatives to build relationships for export markets.

– Meeting with NREL staff to talk about Co-Optima, emissions, future projects.

Co-Optima Program

• Department of Energy’s Research Program to optimize fuels and engines.

• $30-40 Billion in cost savings due to improved fuel economy.

• 15% of fuels from biofuels by 2035.

• 500,000 new jobs.

• New fuels, technologies by 2025.

• 80% reduction in GHG emissions by 2050.

• Improve fuel economy by 50%.

2016 DOE Co-Optima End of Year

• Thrust I: Improve Spark Ignition efficiency. Identify desirable properties for bioderived or biomass components. 40 candidates. Evaluate the impact of discrete fuel properties.

– Merit of the Fuel Blend: RON/ Octane Sensitivity/ Flame Speed/ Heat of Vaporization/ Distillation/ Particulate Emissions.

– Ethanol is faring well in these comparisons.

• Thrust II: Medium and Heavy Duty Engines and Advanced Compression Ignition.

Ag Auto Ethanol

• Certification Fuel

• Engine Vehicle Testing

• Vehicle Credits

• Octane Team

• Specifications and Regulations

QUESTIONS?

THANK YOU!

Kristy Moore

KMoore Consulting LLC

Email: fueltechservice@gmail.com

Phone: 309.275.9433