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Fuels Institute Paves Path to Drive Change

Third annual meeting brings insights on innovation, consumer behavior and changes in the transportation marketplace.

Tags: Alternative Fuels; Vehicles; Octane

September 28, 2015

​INDIANAPOLIS – Last week the Fuels Institute held its third meeting in Indianapolis, bringing together a diverse group of more than 75 transportation industry stakeholders to discuss the overall retail fuels and vehicles landscape.

Recognizing that very little is possible in the advancement of new fuels, vehicles and the energy sector without innovation, attendees from the fuels retailing, auto manufacturing, technology, alternative fuels and equipment sectors came together to step outside of their areas of expertise to share ideas, barriers and opportunities for driving both innovation and ultimately, change in the market.

Kicking off the discussions, Department of Energy Deputy Assistant for Transportation Rueben Sarkar shared what’s on the horizon for Project Optima and gained valuable feedback from the group about the government’s efforts to bring new liquid fuels and combustible engines to market. “The goal is to bring better fuels and better vehicles to consumers, sooner,” Sarkar said, while also recognizing that the enormous task of changing fuel and engine options is a considerable undertaking that involves automotive, fuel and transportation industry stakeholders.

With the objectives of Optima in mind, attendees came together to talk about possible strategies for bringing not only new fuel to market, but also the potential for consumer adoption. Three questions served as focus areas: 

  1. What performance characteristics should a new fuel possess?
  2. What questions must be answered about a new fuel to determine its value?
  3. What are the most important factors that must be considered and resolved for a new fuel to gain market share?

For the first question, attendees agreed that safety, affordability, compatibility with current infrastructures and the overall consumer fueling experience must be taken into consideration. For the second question, the potential for misfueling, providing consumer education, and aligning with federal, state and local regulations need to be addressed. And for the third question, responses varied from automaker warranties to retailer incentives to sell a new fuel, and the overall ubiquity of a new fuel (must be available on every street corner) generated valuable discussions and attendee feedback. 

Most agreed that it all comes down to two factors: consumers and cost, with price ultimately controlling demand at the pump.

The meeting also took a deep dive into hydrogen with a recap of the Hydrogen Fuel Cell Vehicle Refueling Summit, hosted by the Fuels Institute and Department of Energy on September 22–23. The summit brought together stakeholders in the automobile, hydrogen fuel and retail sector, industry investment companies, market analysts and government officials, to evaluate market development strategies that enable a viable return on investment for fuel retailers investing in hydrogen refueling infrastructure. As an emerging alternative fuel source, hydrogen is driving fuel cell vehicle innovation.

Sunita Satyapal, director of the Fuel Cell Technologies Office at the Department of Energy, said that H2 Summit participants brought forth valuable insights on the need for more retailer perspectives regarding hydrogen refueling infrastructure, as well as the need for developing a long-term business case for retailers to offer hydrogen. In terms of bringing hydrogen refueling into a retail location, Catherine Dunwoody of the California Air Resource Board and Bill MacLeod of Hyundai appreciated hearing from retailers about concerns and potential restrictions associated with branding. 

Tom Leone, technical expert at Ford Motor Company, and Bill Woebkenberg, transport fuels technical and regulatory specialist at Aramco Research Center, led a discussion on the benefits of octane and how sufficient levels of octane could be economically available to consumers. With vehicle innovation driving the need for higher octane levels, consumer adoption is paramount.

However, speakers stressed that when it comes to refueling, consumers typically choose what they know and trust, and they typically don’t think about E10 or octane levels. Changing a fuel takes time and consensus among different industry stakeholders, as well as a lot of consumer education and a compelling reason for them to use it.

Scott Shepard, research analyst at Navigant, and Ben Wrightsman, COO and chief engineer at the Battery Innovation Center, talked about the state of the electric grid and the impact of electric vehicles. Shepard suggested that utilities aren’t as concerned about the amount of energy being used to power EVs, but they are very concerned about amount of power EVs will require to recharge. And as the amount of EVs increase across the United States, the problems for utilities to keep up will become more relevant. Wrightsman commented the slow adoption of energy storage to accommodate higher amounts of EVs outside of California is cost, reliability and expectations. Large scale deployment of EVs has only been realized in the last five years, but since most of these vehicles are leased, the grid hasn’t truly been tested yet.

Speaking more about the science and behavioral process of choice, closing speaker Matthew Willcox, executive director of the Institute of Decision Making, explains in his book, “The Business of Choice,” that businesses fail or succeed based on products or services chosen by consumers. Marketers spend a lot of time and money learning about the things that can affect choice, such as the path to purchase and branding. However, businesses often spend little time thinking about how choices are actually made and how they’re guided by the instinctual aspects of human behavior.

In fact, the way we make choices is deeply engrained, suggesting that humans are a product of a long string of choices that have been right more often than they were wrong. He explained that choice has become more complicated, but how choices are made is through quick and efficient mental shortcuts. It’s also through gut feelings, which appear quickly and aren’t fully understood.

Willcox shared that 50%–90% of innovations fail, and it’s not because the innovations aren’t good enough it’s just very difficult to get people to change their behavior. He talked about the need for a sufficient ecosystem behind the innovation, which makes it easier for consumers to adopt a new product or service.

The biggest barrier to innovation, Willcox said, is a simple one. Quoting behavioral economist Richard Thaler: “If you want to encourage someone to do something, make it easy.”

The Fuels Institute, founded by NACS in 2013, is dedicated to evaluating the market issues related to vehicles and the fuels that power them. Join the Fuels Institute on April 27–29, 2016, for its spring meeting in San Francisco. More information about the Fuels Institute, its research and upcoming events is available online at fuelsinstitute.org.