Potential Environmental and Economic Benefit s of Higher-Oct ane Gasoline

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Potential Environmental and Economic Benefit s of Higher-Oct ane Gasoline Raymond Speth, Eric Chow, Robert Malina, Steven Barrett, J ohn Heywood, W illiam Green CRC W orkshop, Argonne National Laboratory October 28, 2015 Website: LAE.MIT.EDU

Background Light-duty vehicles generate 17% of U.S. greenhouse gas emissions 991 x 10 9 kg CO 2 in 2014 Efficiency of spark-ignition engines is limited by knock Higher-octane fuels are more resistant to knock Refining high-octane fuels requires more energy and produces more GHG emissions Majority of lifecycle CO 2 emissions occur during vehicle operations Would increasing the octane rating of gasoline result in a net emissions decrease? Fuel Transportation Crude Oil Extraction Refueling Station Petroleum Refining Crude Oil Transport Vehicle Use GHG Emissions associated with gasoline consumption NETL 2005 Baseline 2

Knock & Octane Ratings Occurrence of knock depends on a combination of fuel properties, engine design, and operating conditions Knock resistance of fuels characterized using two tests: Research Octane Number (RON): 600 rpm, inlet air heated to 50 C Motor Octane Number (MON): 900 rpm, fuel/ air mixture heated to 150 C RON test includes effects of fuel vaporization; MON test does not Changes in engine design have s hifted relevance of the tests Mittal & Heywood, 2008 3

Potential of Higher-octane Gasoline Higher-octane fuels will allow for more efficient vehicles How much more efficient? Refining high-octane fuels requires more energy and produces more GHG emissions How much more energy? Ethanol blending reduces demand for high-octane petroleum blendstock, leaving refineries with spare capacity Increasing fuel economy leads to lower gasoline consumption and spare capacity Targeting RON only would increase refinery flexibility Interested in finding the octane standard that maximizes societal benefit (combination of reduced costs and reduced GHG emissions) 4

Effect of Octane Rating on Efficiency RON vs. compression ratio (r c ): Increasing r c by 1 requires 4 6 RON incr ease 1 Compression ratio vs. efficiency: Increasing r c by 1 gives a relative engine efficiency gain of 2.4% for naturally aspirated engines 2 and 3.9% for turbocharged engines Increasing r c allows engine downsizing, which increases fuel economy further Fuel economy increase for a 6 point increase in RON: 3.0 4.5% for naturally aspirated vehicles 4.9 7.1% for turbocharged vehicles 1: Russ, 1996; Okamoto, 2003; Kalghatgi, 2005; Duleep 2012 2: Nakata, 2007; Munoz, 2005; Chow 2014 5

Proposed Scenario Replace current octane specifications with 92 RON regular, 98 RON premium Adoption timeline: 2015 2020 2030 2040 Current day Manufacturers start introducing engines designed for higher-octane gasoline 100% of the vehicle sales are of the higheroctane version Examine fleet at a point where most onroad vehicles utilize high-octane gasoline 6

Fleet Model Describes the evolving characteristics of the future vehicle fleet: composition, size, vehicle kilometers traveled, fuel economy New Vehicle Sales km Traveled per Vehicle Market Penetration Rates Fuel Mix LDV Stock LDV Fleet km Traveled LDV Fleet Fuel Use Fleet CO 2 Emissions Survival Rate Vehicle Fuel Consumption 7

Light -dut y Vehicle Fleet Model High-octane (HO) vehicles in each class gradually displace standard engines HO vehicles become majority in 2034 75% in-use vehicles use high-ron fuel in 2040 8

Evolution of Gasoline Consumption Gasoline consumption based on vehicle and fleet modeling Current market is approximately 10% premium Baseline: overall consumption reduced by 27% in 2040 With higher-ron gasoline, consumption in 2040 decreases by 3.0 4.4% Growth in HO vehicles requires shifting production to 80% high octane in 2040 US Gasoline Consumption 9

Refinery Model Linear programming (LP) approach Linearized process model with process and product property constraints Determine refinery product slate to maximize profit Solved using Aspen PIMS (Process Industry Modeling System) Using modified Aspen Gulf Coast refinery model Fixed crude slate, capacity set to 100,000 barrels / day Added 10% ethanol blending for all gasoline grades Prices set using EIA estimates for 2040 Additional modifications considered in sensitivity analysis Compute results for 2040, comparing two cases: Reference case: 90% regular, 10% premium high octane : 20% regular, 80% premium 10

Environmental Analysis Well-to-wheels CO 2 emissions Consider a system consisting of the refinery and the consumers of all the refinery s products Changes in the refinery product slate are balanced by displacing imports or exports of other fuels Include the upstream emissions associated with these fuels Use social cost of carbon to monetize CO 2 emissions Current estimate for emissions in 2040: $66 per ton Equivalent to $0.59 per gallon of gasoline Evaluate total impact for the U.S. Attribute all changes in emissions and costs to the octane change Scale single-refinery results to match U.S. gasoline consumption 2040 baseline consumption: 7.2 million barrels per day 11

Baseline Scenario Result s Reduction in CO 2 emissions: 17 33 million tons / year Social cost of carbon: $1.2 2.2 billion saved Direct annual economic impact: between $1.1 billion cost and $5.1 billion savings Total value: $0.1 7.3 billion savings (Up to $37 per driver, per year) 12

Sensitivity: Octane Specification Increasing RON of premium results in a net societal loss Keeping current octane standards (AKI) results in a net societal loss, and lower CO 2 emissions reduction 13

Sensitivity: Ethanol Content & Octane Rating 14

Advanced Refinery / Increased Capacit y Refinery upgrades to allow production of additional high-ron gasoline: Relax capacity constraints: Coker Alkylation unit Hydrocracker Additional process units Propylene dimerization Higher GHG emissions associated with additional processing 15

Advanced Refinery Sensit ivit ies 16

Summary Higher-octane gasoline can give a modest boost to vehicle fuel economy Refineries should be able to produce more high-octane gasoline without significantly increasing GHG emissions Increasing ethanol blending to 15% would reduce changes to refinery operations and provide additional CO 2 reduction Small refinery capacity expansions could make up for reduction in gasoline production Realizing a significant economic benefit from high-octane gasoline requires switching from AKI to RON 17

Questions for Future Work How would the costs and benefits be distributed? Consumers (better fuel economy, but extra cost of premium currently exceeds fuel economy benefit) Refiners (high-octane fuel costs more to produce, but price of premium reflects other factors) Car manufacturers (high-octane fuel makes CAFE easier to meet, but vehicles may be more expensive to manufacture) What is the actual relationship between RON and fuel economy? How will differently-configured refineries behave? How would non-co 2 emissions change? 18

Acknowledgment s BP Jim Simnick Nick Gudde Ashok Bavishi Aspen Randy Field, MIT Energy Initiative 19

Laboratory for Aviation and the Environment Massachusetts Institute of Technology Raymond Speth speth@mit.edu W ebsite: LAE.MIT.EDU 20

Sensitivity to Product Prices 21

Sensitivity to Refinery Configuration 22

Refinery Inputs & Outputs Base rate kbbl / day Change kbbl / day % Change Crude Oil 100.0 - - Gasoline 55.0-3.80-6.9% Ethanol 5.5-0.25-4.5% Diesel 30.4 +0.89 +2.9% Jet Fuel 9.8-0.26-2.6% LPG 1.1 +0.48 +44.8% Fuel Oil 5.3-0.23-4.4% Light Naphtha 0.0 +1.52 - Coke (BOE) 3.8-0.0-0.1% Fuel Gas (BOE) 1.4 +0.01 +1.0% Total (liquids) 96.1-1020 -1.1% 23

Gasoline Blending Components 10% Premium 80% Premium Component vol. % RON vol. % RON Reformate 24.3 94.6 24.4 102 Alkylate 12.7 94.5 13.7 94.5 FCC Naphtha 10.8 93.7 16.7 93.8 Hydrotreated FCC Naphtha 26.4 90.7 22.1 90.8 Light Straight Run 7.7 66.2 0.0 - Isomerate 0.0-5.3 76.9 Hydrocracked Naphtha 3.7 80.5 3.9 80.5 Coker Naphtha 3.0 65 2.1 65 Iso-butane 1.4 98.6 1.7 98.6 Ethanol 10.0 129 10.0 129 Need RON increase of 4.2 points Baseline giveaway: 0.8 points Pool RON increased by 3.4 points Increased reformer severity: 1.8 points Isomerization of LSR: 0.6 points Exclusion of light naphtha: 0.7 points 24