By Keith Reid
The Fuels Institute is a non-advocacy research organization dedicated to studying transportation energy. It was founded by NACS in 2013 as a 501(c)(4) nonprofit social welfare organization. It publishes fact-based research projects designed to answer relevant market questions. The organization celebrates its 10th anniversary this year. In The Lead looks at the accomplishments of the Fuels Institute over the past decade by interviewing its director, John Eichberger.
What was behind the creation of the Fuels Institute?
Around 2011, the NACS Executive Committee expressed frustration that the industry sells 85% of the fuel in the United States, yet fuel policies are being developed in a dysfunctional way. Everybody’s in their silos—refiners, biofuel producers, auto manufacturers, oil companies. They’re not working on a coordinated strategy, whether it be a business or a policy. The idea was that NACS should take a leadership role and try to bring these groups together to have a more cohesive outcome.
A second factor was to understand better where the market’s heading. A lot of the research we were accessing was conducted to support a desired outcome. The executive committee really wanted objective insight into where the market was heading.
We realized the need for a separate organization, since we would not have had the diversity of participation if we were under the NACS umbrella. Then, over the course of a year, NACS President and CEO Henry Armour and I started putting something together, talking to people, coming up with new ideas and building a structure. We had several organizations willing to support it, an economic model, the objectives and the structure. The executive committee approved it, and we launched it in February 2013. I left my position as a NACS lobbyist to be the director of the organization.
How is it funded?
NACS provides a grant every year from operating capital, but the primary funding comes from individual companies that want to be part of this group. We’re not a membership organization, even though we call them “members.” Each participant contributes a certain amount of money, and they get certain benefits in terms of insight, the ability to work on research projects, the eligibility to serve on our board of advisors and such. Then we get research grants from the NACS Foundation, from the SIGMA Fuel Foundation and other entities to really support our research. They contribute because they believe in a collaborative, objective voice, and they want to have a say.
The Fuels Institute is not an advocacy organization, so describe the collaborative process and what that accomplishes.
We have a board right now of more than 60 companies, and that board reviews every publication. So, if anybody on the board thinks something is biased or factually incorrect, they’re going to flag it. And they’re not going to let us publish it until we resolve the bias. So, when you think about that, our board has oil companies; retailers; distributors; equipment manufacturers; ethanol, biodiesel and renewable diesel producers; electric vehicle charging companies; engine manufacturers; vehicle manufacturers; national laboratories—they’re going to be watching for anything that may be tainted. Also, most of our grant money comes from 501(c)(3) foundations, so the research must be in the public’s interest, otherwise we can’t use the money.
You produce a lot of research. What have been some of the key papers and reports that the Fuels Institute brought to the industry?
One of the first ones we did was called “Tomorrow’s Vehicles.” It was a statistical forecast of vehicles sales and operations through 2023. And we’re getting ready to do a reflective paper on that one, because the forecast in 2013 for this year is not consistent with where the market is. That report generated a lot of attention and gave us an opportunity to have conversations about market scenarios and directions.
Another one was an analysis of how the U.S. infrastructure for fuels distribution works. The motivation behind that was having lobbied for so long on fuels policy, I know policymakers don’t understand it. They don’t understand fungibility—that products from different refineries go in the same pipeline to the same terminal and then they’re blended with ethanol or biodiesel—any of that stuff. So we put that paper together to explain that when a hurricane hits the Gulf Coast, it is going to affect supplies in New England and the Pacific Northwest, and here’s why. And that was extremely helpful when we had supply disruptions.
More recently we did a huge paper on octane. There’s a big push to go to a 95-octane national standard, which would be today’s premium. We commissioned the study because higher octane fuel in an optimized engine can improve fuel efficiency by up to 8%. How do you do that? Let’s look at how the refining industry can produce a higher-octane fuel. How long would it take to convert the refining production? And then, ultimately, how do you get it to the customer? While the initiative has stalled, it was a 200-page report that is instrumental to our understanding of what’s required for significant fuel transitions.
We did a life-cycle comparison analysis last year between combustion engines and battery electric vehicles, which clearly delineated that an EV is not as clean in a coal state as it is in a renewable-electricity state, for example. And that deploying EVs where it makes the most sense environmentally is a better strategy than putting them everywhere right now. I think that paper, and the one right before that called “Impact of Transportation-Related Environmental Initiatives,” which did a survey of carbon taxes and low-carbon fuel standards and electrification and internal combustion engine bans, kind of set the Fuels Institute on a new track. Rather than focusing on a specific fuel, we’re really looking at global objectives with initiatives like decarbonization. The Fuels Institute doesn’t weigh in on what such objectives should be, but rather how we can address them.
What are some reports on the horizon?
We’ve got several new papers. Two are on electric vehicles. One covers demand charge mitigation. How do you basically accelerate profitability of a charger? Another one is a driver survey. We are also looking at how you decarbonize combustion engines. And then we’re working on putting together a program where we can evaluate the market readiness for more chargers and evaluate the profitability of charging stations and what consumers actually do while charging their vehicles.
The end goals for the Fuels Institute have recently become more focused on legislative bodies. What drove that?
We think the work we’re doing is high quality and helpful. We want the right people to understand it and utilize it so that we can have a better transportation market going forward. So, we brought on two new people last year to help build our communications and marketing capabilities. And we integrated a direct-to-policymaker outreach program where we’re using a database of legislative contacts in Washington, D.C., as well as in state capitals and with local government officials. When we publish a research paper, we are able to use that database and find individuals within government at all levels who are interested in that topic and send the paper to them.
You offer ESG Integrity, an ESG solution for the industry. Tell us about that.
It’s a joint venture outside of the Fuels Institute’s normal structure that is a for-profit enterprise that will then make contributions to a research fund in a legal, tax-free manner. We know environmental, social and governance reporting requirements are increasing, whether they be mandated by government, mandated by banking or information that your customers require. ESG reporting is growing in intensity in terms of who’s asking for it. What we created was a module for fuel retailers and distributors and fleet operators to simply collect their data and incorporate it into a platform that then produces a report. It is much less expensive than contracting with outside consultants.
The Fuels Institute also has an annual meeting. What are the main benefits for attendees?
We usually have a target attendance of 150 to 175 stakeholders, with representatives from vehicle manufacturers to every energy provider or resource you can think of. The diversity is huge. If you have any questions about the market, there’s going to be somebody in that room who can answer it. The experience, the breadth of perception, the knowledge is unparalleled. And because we’re not pushing an agenda and we don’t publish the transcripts, the conversations are much more honest and much more insightful. Our next meeting, Fuels’23, is scheduled for May 22-24 in St. Louis, Missouri.
You have been instrumental in driving the Fuels Institute forward, but it’s hardly a one-person job. Tell us about the Fuels Institute staff.
Jeff Hove is our vice president. He’s an ambassador for the brand, and he brings in some needed technical experience, especially on the environmental side. He also is a strong fundraiser, and his primary role is to help with the operational strategic growth of the organization and find new ways to continue bringing more resources to the institute so that we can do more research.
Amanda Appelbaum is our director of research. [Editor’s note: Amanda recently left to pursue other opportunities.] Amanda’s job is to make sure our research is processed properly. She brings together the task groups to help develop the scope of work. She manages RFPs and the vetting of proposals from outside research firms to do the work. Amanda helps coordinate the execution of the research throughout. And then she manages the peer-review process to make sure everybody has an opportunity to engage. She oversees the production all the way up to distribution. Also, because she’s been here the longest, she’s a key strategic advisor.
Marjorie Kass came on board in January of last year. She’s our marketing and communications director. Marjorie came in to help us get our message out. How do we get financial services analysts to pay attention to us? How do we get our research to be more tangible to more people? And that’s led us to a brand reevaluation.
And then we brought in Amanda Patterson in June last year. She’s our marketing and projects coordinator. Her job is to help keep the trains running. She’s been doing a lot of design work. She manages our social media. Amanda’s managing our direct communications to legislators and public policy officials. She’s really been kind of a jack-of-all-trades when you need a doer.