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Increasing the octane rating of the U.S. gasoline pool (currently ∼ 93 Research Octane Number (RON)) would enable higher engine efficiency for light-duty vehicles (e.g., through higher compression ratio), facilitating compliance with federal fuel economy and greenhouse gas (GHG) emissions standards. The federal Renewable Fuels Standard calls for increased renewable fuel use in U.S. gasoline, primarily ethanol, a high-octane gasoline component. Linear programming modeling of the U.S. refining sector was used to assess the effects on refining economics, CO2 emissions, and crude oil use of increasing average octane rating by increasing (i) the octane rating of refinery-produced hydrocarbon blendstocks for oxygenate blending (BOBs) and (ii) the volume fraction (Exx) of ethanol in finished gasoline. The analysis indicated the refining sector could produce BOBs yielding finished E20 and E30 gasolines with higher octane ratings at modest additional refining cost, for example, ∼ 1¢/gal for 95-RON E20 or 97-RON E30, and 3-5¢/gal for 95-RON E10, 98-RON E20, or 100-RON E30. Reduced BOB volume (from displacement by ethanol) and lower BOB octane could (i) lower refinery CO2 emissions (e.g., ∼ 3% for 98-RON E20, ∼ 10% for 100-RON E30) and (ii) reduce crude oil use (e.g., ∼ 3% for 98-RON E20, ∼ 8% for 100-RON E30).

This analysis uses linear programming modeling of the U.S. refining sector to estimate total annual energy consumption and CO(2) emissions in 2025, for four projected U.S. crude oil slates. The baseline is similar to the current U.S. crude slate; the other three contain larger proportions of higher density, higher sulfur crudes than the current or any previous U.S. crude slates. The latter cases reflect aggressive assumptions regarding the volumes of Canadian crudes in the U.S. crude slate in 2025. The analysis projects U.S. refinery energy use 3.7%-6.3% (≈ 0.13-0.22 quads/year) higher and refinery CO(2) emissions 5.4%-9.3% (≈ 0.014-0.024 gigatons/year) higher in the study cases than in the baseline. Refining heavier crude slates would require significant investments in new refinery processing capability, especially coking and hydrotreating units. These findings differ substantially from a recent estimate asserting that processing heavy oil or bitumen blends could increase industry CO(2) emissions by 1.6-3.7 gigatons/year.

This paper develops a two‐stage procedure for discounting the benefits and costs of environmental regulations that is a variant of the shadow price of capital approach. Under this approach, the capital costs imposed by a regulation are annualized using the marginal rate of return on capital and then both benefits and costs are discounted using the social rate of time preference. This approach yields results that differ significantly from those of conventional discounting when benefits occur with a substantial lag or when benefits are long term.

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