Ethanol and Regulatory Perspectives

Coleman Jones Biofuel Manager, GM Powertrain

February 4, 2013 Michigan Corn Growers Annual Meeting, Lansing, MI

WIDE RANGE OF TECHNOLOGY DRIVERs

Regulatory Demands

Energy Security

Customer Requirements

Fuel Prices

Climate Change

AUTOMOBILE INDUSTRY

Technology Innovation

OUTLOOK FOR GLOBAL FUEL ECONOMY AND GREEN HOUSE GAS REQUIREMENTS

CANADA • Green Levy • 6.6L/100km (35.5 mpg) in 2016

KOREA • 140g/km (39.5 mpg)

CHINA • 6.9L/100km in 2015 (33.9 mpg) • 5.0L/100km by 2020 (46.8 mpg • Local taxation

EUROPEAN UNION • 130gCO2/km in 2015 (43 mpg) • 95gCO2/km in 2020 (58 mpg) • Local CO2 taxation

U.S. FEDERAL • 35.5 mpg in 2016 • 54.5 mpg by 2025 • Gasoline $3-4/gallon

CALIFORNIA • 80% CO2 reduction by 2050 • ZEV, PZEV rules

MEXICO • 10.8 km/l by 2015

INDIA • 150 gCO2/km by 2015

AUSTRALIA • 190 gCO2/km in 2015 • 155 gCO2/km by 2024

JAPAN • 29% CO2

2010 2015

US Fuel Economy Regs

¶ Automakers are regulated for fuel economy twice – Once by EPA for CO2 emissions (grams CO2/mile)

– 2012-2016 and 2017-2025 standards are set – Once by NHTSA for volumetric consumption (miles/gallon)

– First applied in 1978, now follows CO2 standards – NHTSA allows fines to be paid in lieu of compliance (several

manufacturers have historically paid fines) – Under the CAA, EPA non-compliance penalties are untested,

very large and punitive.

Electricity Actual 2025 Requirement for Smart Sized Vehicle

New EPA Standards

EPA CO2 “Flexibilities” ¶ EPA CO2 requirements are very stringent but allow the use of

available “flexibilities” that allow extra credit for favored activities – Switching to low GHG potential refrigerants – Improving air conditioning efficiencies – Use of technologies that reduce real world consumption but are

not completely evaluated during the test cycle (off-cycle)

¶ Alternative fuels have potential benefits – Electricity is heavily favored (0.0 g/mi well to tank) – E85 has reduced tailpipe CO2 emissions (~5%) – CNG and diesel also have reduced tailpipe CO2 emissions (~20%)

¶ Mono-fuel vehicles capture the entire benefit – Dual fuel CNG and PHEVs vehicles are presumed to use CNG or

electricity as much as possible and receive high alternative fuel utilization rates

– Flexfuel vehicles are presumed to use gasoline

NHTSA & Alternative Fuels ¶ EPA and NHTSA address alternative fuels differently

– NHTSA’s volumetric standard (MPG) must compensate for the lower energy content of alternative fuels relative to petroleum – A 40 MPG vehicle will get 30 MPG on E85, this is no incentive

– Thus NHTSA only counts 15% of the volume of the alternative fuel – A dedicated E85 gets: 30/0.15 = 200 MPG – Running 50% E85: 1/(.5/40 + .5/(30/.15)) = 67 MPG – Biodiesel and CNG have similar benefits

– This structure, with its 50% usage assumption, is a strong incentive and thus the total alternative fuel benefit was capped at 1.2 MPG – Starting in 2015 the total benefit decays by 0.2 MPG until it

reaches 0.2 MPG total in 2019, and 0.0 MPG in 2020 – This benefit is mirrored in the EPA regulation through 2015

– These NHTSA benefits can only be applied to the NHTSA obligation

EPA and Ethanol ¶ EPA uses actual tailpipe CO2 reductions to measure alt fuel

benefits • E85 is estimated to be 5% less than gasoline

– EPA has proposed to use “actual use” of alternative fuel as part of fuel economy calculation, beginning in 2016 MY

– Calculate a harmonic proportion of the two values • Example: 222 gram CO2 = 40 mpg for gasoline, 211 gram

CO2 = 42.1 mpg for E85, if 50% usage is assumed (NHTSA assumption) FE = 1/(0.5/40 + 0.5/42.1) = 41.0 mpg

What is Alt Fuel Usage?

¶ EPA presumes that E85 FFVs use 100% gasoline

¶ However, EPA has indicated that automakers are able to use the E85 certification CO2 emissions value to the extent that they can demonstrate that their FFVs actually use E85

¶ This demonstration can be on an individual vehicle basis – OEM must determine usage of a population of individual

vehicles (Statistical sampling of the refueling behavior of individual vehicles )

– This would be an intrusive approach

¶ Alternatively, demonstration can use a national average E85 use – EPA outlined this approach in the preamble of the 2012-2016

Final Rule

National Average E85 Use ¶ Basic Principal (Details are more complex)

– Total use of fuel ethanol in US – Minus fuel ethanol used in gasoline (E10, etc) – Yields amount used in E85 – This ethanol volume is divided by total fleet of FFVs – Yields E85 usage per vehicle

¶ A much simplified example: – Assume there are 20 billion gallons of ethanol used in the US – Of these 14 billion gallons are used in E10 – This leaves 6 billion gallons of ethanol used in E85 – This is roughly equivalent to 7 billion gallons of E85 – If there are 21 million FFVs, on average each uses 333 gallons

E85 per vehicle – If this delivers half of the annual miles driven by these vehicles

then the usage is 50% – The OEM can take a 50% E85 usage credit or 0.5 * 5% = 2.5%

in CO2 per vehicle

Ethanol GHG Comments and Result Request Requestor EPA Response SAE Calculation for Usage (Same as CNG and PHEVs)

25X25, ACE/CFDC Declined

Use lifecycle CO2 benefits 25X25, Forest Groups, others Declined Utilize 0.15 divisor as in EPCA

25X25, ACE/CFDC, Forest Groups, RFA

Declined

Use RFS2 Volumes 25X25, Alliance, ACE/CFDC, Growth Energy, NCGA, RFA

Declined

E30 Growth Energy, ACE/CFDC Ignored Incorporate RFS2 Growth Energy, MN, NCGA,

RFA Declined

Early Guidance 25X25, Alliance, Growth Energy

Maybe

“EPA plans to issue guidance, well in advance of each model year, but this guidance will be based on demonstrated E85 sales data from previous years, rather than projections of future E85 volumes.”

Future Flexfuel Credits? ¶ A 50% credit on a 222 gram per mile (40 MPG) car gives 217 grams

per mile (41 MPG)

¶ Pitfalls with this approach – Cars are designed many years in advance so decisions about

2017 cars are happening now – What will the credit be in 2017 and following years? – That depends on how much ethanol is used and how much

ethanol EPA decides has been used in base gasoline – Size of future FFV fleet is also a factor

– Automakers are facing stringent fuel economy standards – The average car fuel economy for 2018 is 38.8 mpg – The car fleet is diverse

– Compliance and product plans are being developed now

Octane, Ethanol, Certification, and Implementation

Octane ¶ Octane is a measure of the resistance of a fuel to auto-ignition due

to heat and pressure ¶ Octane is measured using two test methods developed in the

1920s – Hot and fast – Motor Octane Number (MON) – Cool and slow – Research Octane Number (RON)

¶ Modern, smaller engines respond best to RON

Component RON MON AKI Ethanol 109 90 99 Iso-Octane 100 100 100 N-Pentane 62 62 62 Toluene 118 104 112

Octane

¶ Octane is related to molar percent not volume percent – Ethanol is light compared to gasoline – This means that small volumetric

amounts of ethanol deliver large improvements in blend octane

¶ Heat of vaporization – The evaporation of fuel

produces a cooling effect – This is most effective for

direct injection engines – The cooling allows the fuel-

air charge to tolerate more temperature and pressure before knocking

Compound

Latent Heat of

Vaporization

Volume Adjusted

LHV

Gasoline 900 900 Ethanol 2380 3600 Methanol 3340 6260

Research Octane Changes with Ethanol

Ethanol significantly increases the octane of gasoline,

Particularly at lower addition rates

Particularly with lower octane gasolines

Application of Anderson & Kramer’s method, et al, Energy & Fuels, 2010, 24, 6576-6585

US Regular Grade

Research Octane Changes with Ethanol

For direct injected engines the charge cooling effect can add to already present chemical octane

Unlike chemical octane, the apparent octane that results from charge cooling should be proportional to the amount of ethanol added

Applying the findings of Milpied & Jeuland, et al, SAE 09PFL-0471, to Anderson & Kramer’s method

US Regular Grade

Extrapolation, not demonstrated

Higher Octane Gasoline ¶ Increased fuel octane can be used to increase efficiency by:

– Increasing compression ratio leading directly to efficiency improvements

– Increasing boost of turbocharged engines

¶ If the engines are fully optimized for the new fuel, improved efficiencies are possible – This is not a “flex fuel” engine that can operate on current base

gasoline

¶ Greater improvements are possible if very high load cycles are used – These cycles are not currently relevant to real world driving or

regulatory test cycles – It is possible that some hybrids could take better advantage of the

fuel

Efficiency Improvements • These depend on equipment characteristics

• Engine • Direct Injection? • Turbocharging? • Bore? • Structure? • Engine speed?

• Vehicle • Downsized engine • Downsized vehicle to match

• True optimization is a long road

What Is Right Ethanol Level? • Ethanol has diminishing returns for octane enhancement • Growth Energy proposed E30 in their comments to CARB • The UL mid-level dispenser is certified to E25 • Some automakers do not want to go very high

• E30, even with E15 for waived vehicles, will not distribute the RFS2

• E85 or non-ethanol renewable fuel usage is required

Mis-Fueling ¶ Vehicles have to be protected against all market fuels

¶ Historically, knock protection was done by using knock sensors and retarding spark, quick and effective – Spark retard results in power and fuel economy losses

¶ With engines fully optimized to a new medium ethanol, high octane fuel, spark retard will not provide protection – “Performance Management” will be required – This would be much more intrusive than retarding spark

– Reduced throttle, No boost, Forced downshifts – Mis-fueling with regular unleaded will produce noticeable

performance deterioration – A fully optimized engine may have only “limp home”

capability on conventional gasoline

How to Implement a New Fuel?

Optimized Vehicles

Universal Retail Availability

Certification Fuel

Mis-fueling Control

Equipment Upgrades

Guaranteed Supply

Regulatory Barriers

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LDT 2 PC/LDT 1

50K

LEV

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150K

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California LEV II and LEV III Fleet Averages by Model Year

0.098 0.095 0.093

0.085

0.076

0.062

0.055 0.05

0.047 0.043 0.043

0.117 0.106

0.095 0.084

0.074 0.062

0.052 0.041

0.030

0.070 0.068

0.062

0.053 0.049

0.046 0.043

0.040 0.038 0.035 0.035

0.094 0.081

0.068 0.055

0.044 0.041 0.038 0.035 0.030

Pending LEV 3 Rules Will Drive Manufacturer Fleet NMOG Requirements Substantially Lower

LEV2 Based on 50k Std.

LEV3 Based on 150k Std.

Axes don’t ratio directly

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0.030

0.060

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0.150

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0.210

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0.270

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0.330

0.360

0.000

0.020

0.040

0.060

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0.100

0.120

LDT 2 PC/LDT 1

50K

LEV

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150K

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California LEV II and LEV III Fleet Averages by Model Year

0.098 0.095 0.093

0.085

0.076

0.062

0.055 0.05

0.047 0.043 0.043

0.117 0.106

0.095 0.084

0.074 0.062

0.052 0.041

0.030

0.070 0.068

0.062

0.053 0.049

0.046 0.043

0.040 0.038 0.035 0.035

0.094 0.081

0.068 0.055

0.044 0.041 0.038 0.035 0.030

LEV 3 Fuel Requirements Challenge the Viability of FFVs Going Forward

ULEV2/B4 0.040 (0.07 NOX)

SULEV2 0.0085 (0.02 NOX)

LEV2 0.075 (0.07 NOX)

LEV3160

ULEV3125

ULEV370 ULEV350 SULEV330 SULEV320

Majority of FFVs certified here

LEV2 Based on 50k Std.

LEV3 Based on 150k Std.

Axes don’t ratio directly: LEV2 = LEV160

ULEV2 = ULEV125 SULEV2 = SULEV30

Everything BEGINS & ENDS with GREAT PRODUCTS

We should all be concerned about the future because we will spend the rest of our lives there.

– Charles Kettering 29 Aug 1876 - 25 Nov 1958