Fuel For Thought
January 2021

Fuel economy of U.S. vehicle fleet slightly lower for MY 2019

▪ Fuel economy of U.S. vehicle fleet slightly lower for MY 2019

The U.S. vehicle fleet’s fuel efficiency for model year (MY) 2019 declined slightly to 24.9 miles per gallon (mpg), according to the U.S. Environmental Protection Agency (EPA) annual Automotive Trends Report, which was released in early January.

The report provides the public with a single source of information about new light-duty vehicle greenhouse gas (GHG) emissions, fuel economy, technology data, and auto manufacturers’ performance in meeting the agency’s GHG emissions standards. 

The report shows that fuel economy has slipped slightly from the record pace set in previous years. 

Fuel economy for Model Year (MY) 2019 was lower than MY 2018 by 0.2 mpg. Since MY 2004, when the fleet averaged 19.3 mpg, fuel economy, and CO2 emissions have improved in 12 out of 15 years, the EPA said.

The report also assesses compliance performance for individual automakers, and for the U.S. fleet, with the GHG emissions standards for light-duty vehicles. This year’s report once again shows that only three large manufacturers complied with MY 2019 standard based on technology factors of their vehicles alone. When accounting for credits, however, the report shows all large manufacturers are in compliance. Eleven out of 14 large manufacturers used a combination of technology improvements, banked credits, and purchased credits to maintain compliance in MY 2019. Automakers with better fuel economy performance than the mandatory minimum requirements can sell their excess credits. 

The shift to larger vehicles was the biggest factor hurting fuel economy. In 2019, 44% of the fleet were cars and 56% were light-duty trucks. Light-duty trucks include sports utility vehicles (SUVs), which account for almost 50% of U.S. vehicle production in 2019.

Average vehicle weight and horsepower also reached record levels in 2019. Horsepower is up 79% since 1975 for all vehicles.

Key highlights of this report include:

Due to a combination of technology, innovation and regulatory flexibility, the average new MY 2019 vehicle sold in the U.S. was near record low GHG emissions and near record high fuel economy.

New vehicles continue to make progress on GHG emissions while providing consumer choice for Americans. For example, sport utility vehicles reached record high market share, while also achieving record high fuel economy and record low CO2 emissions.

Manufacturers continue to have a large bank of credits to use toward compliance in future model years, however, about two-thirds of the current credits will expire after model year 2021.

To read the full Automotive Trends Report, visit https://www.epa.gov/automotive-trends

▪ “ARA” becomes “ARDA” – Refining + Storage & Distribution

The African Refiners & Distributors Association has officially changed its acronym and official logo from “ARA” to “ARDA” to formally reflect the increasingly important role of Africa’s Storage & Distribution (S&D) infrastructure in ensuring energy security across the continent. In 2017 the Association formally changed its name from the “African Refiners Association” to the “African Refiners and Distributors Association to reflect the complete downstream supply chain which includes not only refiners, but also ports, oil terminals and depots, pipeline operators, rail and truck operators, distributors, marketers and regulators. 

As ARDA strives to promote a sustainable African transition to cleaner fuels, and subsequently a lower carbon environment, it is imperative that an urgent, robust, coherent roadmap is developed to promote investments in world-class refining, storage, distribution assets, and operations, to safely and efficiently transport cleaner fuels across Africa. The new ARDA now has dedicated Storage & Distribution, Refining & Specifications, and Sustainable Financing Work Groups that will develop the necessary framework to complement the AFRI Fuels Roadmap and ensure financing for the implementation of integrated solutions to deliver the cleaner fuels which will reduce urban pollution and the consequent health defects in Africa. 

▪ Indian Oil Corp. introduces India’s first 100-octane gasoline

India’s state-owned oil and gas company, India Oil Corp., has launched a high-octane gasoline, with an octane number of 100, in what the company described as a “potential game-changer” in the domestic fuel retail market. Currently, the petrol grade being marketed in India is 91 octane. Branded as XP100, the high-octane gasoline was launched across 10 cities by no less than India’s Minister of Petroleum & Natural Gas and Steel, Dharmendra Pradhan.

An octane rating, or octane number, is a standard measure of the performance of an engine or aviation gasoline. The higher the octane number, the more compression the fuel can withstand before detonating.

“With this fuel, India has joined the league of select countries worldwide where petrol with 100 or higher octane number is sold. Launch of world-class products such as XP100 prove that we are focused on providing better energy solutions to all. The fact that these solutions are being deployed with home-grown technology developed by our scientists is a matter of pride. This is yet another step in the direction of the Atmanirbhar Bharat initiative which our Government is keenly implementing in the energy sector, in line with our PM’s Energy Vision,” Pradhan said.

Indian Oil is the first oil company in India to launch this high-octane gasoline, which automakers have long claimed they need to achieve better performance and higher fuel efficiency of modern engines. XP100 premium was produced at Indian Oil’s Mathura Refinery using the indigenous OCTAMAX technology developed by Indian Oils’ R&D Centre.

IndianOil’s premium grade petrol with 100 Octane is designed to rev up the engine, give faster acceleration, significantly boost engine performance, give better drivability, enhanced fuel economy and engine life. It exceeds IS-2796 specifications and is also an environment-friendly fuel with much reduced tailpipe emissions.

Indian Oil plans to roll-out XP100 in 15 cities across the country in two phases. In the first phase, it has been made available at select retail outlets on Dec 01, 2020, in Delhi, Gurgaon, Noida, Agra, Jaipur, Chandigarh, Ludhiana, Mumbai, Pune and Ahmedabad. In the second phase, the availability of this fuel would be extended to Chennai, Bangalore, Hyderabad, Kolkata and Bhubaneswar. These cities have been selected based on their aspirational demographics and availability of high-end vehicles in these cities.

▪ PETRONAS Dagangan launches new 97-octane petrol in Malaysia

Malaysia’s PETRONAS Dagangan Bhd (PDB) officially introduced its new high-performance petrol, Primax 97 with Pro-Race. The new petrol replaces the previous Primax 97 which has been sold in the domestic market since August 2015.

PETRONAS Dagangan Bhd, a subsidiary of state-owned Petroliam Nasional Bhd (PETRONAS), is involved in the distribution and sale of finished petroleum products and operations of service stations for the domestic market.

The new fuel formulation includes the world’s first advanced dual friction modifier, which is 25% more efficient in reducing friction. Additionally, the new petrol has better deposit control, the company claims.

PETRONAS Dagangan Managing Director and CEO Azrul Osman Rani said the new Primax 97 with Pro-Race is the group’s best fuel offering so far. The new fuel formulation is designed to cater to advanced engine technologies and meet the high-performance driving requirements of today’s customers.

“Having translated our fluid technology from track to road, we are very excited to finally let our customers experience an effortless drive, achievable through the three in-one benefit comprising power, responsiveness and efficiency,” he said.

The fuel was developed by its fuel technology experts based on learnings from seven Formula One (F1) World Constructors’ Championships and its technical partnership with the Mercedes AMG GmbH Petronas F1 team.

Speaking at the virtual launch, F1 world champion Lewis Hamilton said the new Primax 97 with Pro-Race is the fuel that gives your car the power as and when it is needed the most.

“The competitiveness on the racetrack is intense. I need a fuel that gives me the power to move beyond when I accelerate, when I take corners and when I need to get ahead of the pack. I know what power means and you should too,” Hamilton said.

The new premium petrol is now available at all PETRONAS stations nationwide. It is currently priced at MYR2.08 (USD 0.51) per litre until December 25, under the weekly fuel pricing format.

▪ Future developments in the fuel additives market

In November 2020 F+L Daily released a comprehensive study on the global fuel additives markets and their expected future developments. The authors were Dr. Raj Shah, David Forester, Stanley Zhang. The full article with charts and illustrations as well as other references can be found here.

The following is a compilation and extract of the main points, made in the report:

Fuel additives are chemical compounds formulated to enhance performance and correct the deficiencies of fuels used in motor vehicles. In a broad sense, they can be classified as either performance additives, distribution additives, or fuel quality additives.

Performance additives are designed to improve engine performance by:

(1) removing and preventing deposits in fuel injectors, valves, and combustion chambers

(2) boosting lubricity

(3) improving combustion efficiency

(4) improving low temperature properties

(5) reducing undesirable emissions

In contrast, fuel additives classed in the distribution category combat corrosion, foam, filter plugging, and microorganism contamination. Fuel quality additives, on the other hand, help to maintain fuel quality by inhibiting oxidation, reducing fuel degradation, and improving long-term fuel storage stability. Determining the optimal combination of additives to use is integral to long-term engine durability and lowering vehicle tailpipe emissions.

Fuel additive use has grown in popularity due to government regulations which impose stringent environmental regulations to limit greenhouse gas (GHG) emissions. Organisations like the U.S. Environmental Protection Agency (EPA), the California Air Resources Board (CARB) and the European Union (EU) have pushed the market to focus on cleaner and more efficient fuels in the United States, the U.S. state of California, and Europe, respectively. Along with efforts to reduce vehicular emissions, the implementation of gasoline direct injection (GDI) engines, the rise in demand for ultra-low sulphur diesel fuel (ULSD), and the overall expansion of the automotive industry are key factors contributing to the projected growth in fuel additives use into 2021 and the next decade.

Current applications of fuel additives

According to the U.S. EPA, the typical passenger vehicle emits about 4.6 metric tons of carbon dioxide per year. With passenger vehicles composing 93% of the estimated 1.2 billion vehicles globally, the amount of carbon emissions from passenger vehicles alone climbs to a concerning total. Carbon emissions have risen rapidly since the Industrial Revolution, with global GHG emissions from the transportation sector at around 4.62 metric gigatons in 2016. Consequently, fuel additive manufacturers have  focused on improving  their additive formulations to meet fuel economy and emissions standards of commercial fuel blends.

In 1996, the U.S. EPA introduced the Lowest Additive Concentration (LAC) standard, which required a minimum amount of fuel detergent to be used in all gasoline sold in the United States. However, many automakers believe this minimum level of additives failed to provide adequate protection against deposit accumulation and their associated complications, like detonation, pre-ignition, incomplete combustion, reduced fuel economy, and increased exhaust emissions. In response, eight automakers — Audi, BMW, General Motors (GM), Honda, Fiat Chrysler Automobiles, Toyota, Mercedes-Benz, and Volkswagen — established Top Tier in 2004. This voluntary program introduced a higher standard for gasoline detergent additives and increased the concentration of certified detergents in fuels for the purpose of raising fuel quality and optimising engine performance.

According to a study conducted by the American Automobile Association (AAA), the use of Top Tier gasoline resulted in 19 times fewer intake valve deposits (IVDs) compared to non-Top Tier gasoline. Additional research showed that the long-term use of non-Top Tier gasoline could lower fuel economy savings by 2-4%. Outstanding results from the use of Top Tier gasoline convinced 54 fuel retailers to offer Top Tier gasoline around the world. Participating retailers include major players, such as ExxonMobil, Chevron, BP, Shell, and Sunoco. At these locations, gasoline across all grades, from regular to premium, must comply with Top Tier specifications.

The future of fuel additives from 2021 and beyond

The growth of the automotive industry, and as a consequence the growth in global fuel consumption, drives fuel additives demand. The United States is expected to dominate the fuel additives market moving forward into 2021. This is supported by the fact that the United States is the second largest market for vehicle sales and production globally. According to the U.S. Energy Information Administration (EIA), the U.S. consumed about 3.39 billion barrels of motor gasoline in 2019. Meanwhile, diesel fuel consumption by the transportation sector was 1.1 billion barrels, accounting for 15% of total petroleum consumption in the country. These numbers are expected to grow in 2021, with corresponding growth in the fuel additives market, despite the hiccup in 2020 due the global Covid-19 pandemic. Other markets, such as China, Europe, India, and South Korea are expected to grow as well, although the growth of electric vehicles could have a negative impact on fuel demand.

In the past, more stringent environmental regulations have boosted demand for fuel additives. The U.S. EPA plays a key role in the monitoring and commercialisation of fuel additives. In March 2020, the U.S. EPA and the National Highway Traffic Safety Administration (NHTSA) issued new standards regarding greenhouse gas emissions and fuel economy requirements for passenger vehicles and light-duty trucks. Dubbed as the Safer Affordable Fuel Efficiency (SAFE) Vehicles Rule, the new standards, which are being challenged in court by several U.S. states, require automakers to improve fuel efficiency by 1.5% annually from model years 2021 to 2026. By 2025, automakers must reduce CO2 emissions to under 202 grams per mile and improve fuel economy to at least 39.8 miles per gallon for cars and light trucks. This new rule is actually a setback from the previously established standards by the Obama administration of 5% annual fuel efficiency improvements, with an objective to reach 46.7 miles per gallon by 2025.

Gasoline consumption is expected to pick up again post-Covid 19 to meet the requirements of evolving gasoline engine technology. Currently, the use of deposit control additives and octane improvers in gasoline are major contributors to rising additives consumption because of the need for more efficient fuel for modern engines. GDI systems have become the standard in newer, high-performance vehicles with internal combustion engines. In contrast to traditional port injection fuel delivery systems, GDI engines have injectors placed directly inside the combustion chamber, which yields improved combustion, enhanced performance, better fuel mileage, and lower vehicle tailpipe emissions. However, GDI engines are prone to carbon deposit build up on intake valves because the gasoline is directly injected into the cylinder. This necessitates the use of higher amounts of deposit control additives.

In addition, the development and commercialisation of fuel additives from renewable resources is expected to generate new opportunities for the fuel additives market. The French-German company, Global Bioenergies, has been producing two high-performance fuel additives, namely, isooctane and ethyl-tert-butyl ether (ETBE), from bio-based isobutene. Isooctane and ETBE are utilised in gasoline blends as octane improvers with high octane ratings equal to or higher than 100, yielding high-renewable-content fuels with better knock resistance.

▪ S-Oil unveils new strategy, following Korea’s 2050 carbon neutral pledge

CEO Hussain A. Al-Qahtani announced S-Oil’s “Vision 2030”, its long-term growth strategy, in response to rapidly changing global trends, including energy conversion and net carbon emissions. “Vision 2030” consists of a vision, strategic targets and an investment roadmap to be prepared for uncertainties in the future management environment while maintaining the company’s competitive advantage. 

As one of the strategy targets to achieve Vision 2030, the S-Oil has established an investment roadmap to minimize carbon emissions by 2030, in line with the South Korean government’s pledge to be carbon neutral by 2050.

S-Oil said it will consistently pursue its investment in chemical expansion so that its chemical portion can be doubled compared to current chemical production volume. Currently, S-Oil has 1.8 million tons of paraxylene annual capacity and 705,000 tons of olefin annual capacity in Ulsan, South Korea. 

Following the completion of the KRW5 trillion (USD4.6 billion) residue upgrading complex (RUC) and olefin downstream complex (ODC) project in 2018, S-Oil plans to implement a new project called “Shaheen Project” to boost its petrochemical production volume to 25%, from the current level of 12%.S-Oil’s plan is strategically aligned with parent Saudi Aramco’s strategy to expand its petrochemical business, where future demand is expected to remain robust. S-Oil has built an impressive oil and petrochemical complex. In addition to its paraxylene and olefin capacity, S-Oil has 669,000 barrels per day (bpd) of oil refining capacity in Ulsan. 

In 2019, the company reported total sales of KRW24.4 trillion (USD22.3 billion), with KRW19 trillion (USD17.4 billion) from its oil refining business and KRW3.9 trillion (USD3.5 billion) from its petrochemical business. 

The strategies set out to achieve Vision 2030 suggest that the S-Oil will maximize profitability of existing refining, petrochemical and lube businesses by maintaining global competitiveness. At the same time, S-Oil plans to enter new businesses such as hydrogen, fuel cell, and recycling to drive S-Oil’s sustainable growth. 

Along with these strategies, S-Oil stated its strong commitment to environmental, social and governance (ESG) management, which will pursue eco-friendliness, transparency and integrity in all management activities.

Regarding future businesses, the S-Oil CEO said “We will make sure to achieve Vision 2030 by exploring potential opportunities for growth through continuous strategic reviews.” 

In late October, South Korea pledged to become carbon neutral by 2050. According to the International Energy Agency (IEA), South Korea is the world’s seventh-largest emitter of carbon dioxide in 2017. South Korea relies on coal for about 40% of its electricity generation, with renewables making up less than 6%. It still has seven coal power units currently under construction.

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