After Dieselgate, renewables more critical to diesel’s future than ever: survey

Americans respond more to environmental messages on renewable diesel fuels than energy security or economic impact, according to a survey undertaken by the Diesel Technology Forum and presented last week by DTF’s Tom Fulks at the National Biodiesel Conference & Expo.

The complete slide deck is here.

But here’s the money slide.

In the national sample of the DTF study, 50% of respondents responded most positively to “better for the environment” words and phrases that described diesel fuel. The economic efficiency of diesel was a strong positive for 24%, by contrast, and the importance of diesel as a reliable source for the energy future or as part of a diversified energy mix lagged far behind.

Respondents liked “cleaner-burning” more than “renewable” as a descriptor, by far, 36% to 17%, while phrases such as “environmentally friendly” and “Can be created with trash / garbage” trailed far behind.

The study was undertaken in the wake of the VW Dieselgate scandal, and DTF found that by November 2016 that 53 percent of Americans say that the VW scandal has negatively impacted their view of diesel. And the scandal’s impact is growing: only 10% said in November 2015 that the scandal impacted their feelings about diesel as a whole — back then, the “reputational impact was focused as more of a VW issue than a clean diesel issue”.

The Clean Energy Economy: Vital as ever

The study found strong US support for continuing to move towards clean energy economy: 70% of respondent found this statement compelling: “America must move toward a clean energy economy that includes a mix of new energy and fuel sources and improved sources of existing energy and fuels.” Overall, the phrases rated by respondents as the most compelling, in association with energy and fuel technology, were “cleaner”, “energy-efficient,” “more miles per gallon” and “cleaner more renewable energy future” — all of which Fulks noted point towards diesel.

Negatives? The big ones were fossil fuel and synthetic fuel. Let’s highlight that to a number of companies that are using “synthetic” in their company names or messaging.

Here’s some bleak news, though, on diesel or even clean diesel without a renewable component, and presented without context: Americans aren’t sure if diesel is part of the solution, or part of the problem. According to the DTF survey, 59% see “diesel” as “part of the solution” to America’s energy needs, and 41% as “part of the problem”.

Clean diesel, unaided and without being coupled to a concept like “renewable”. It’s not better, it’s worse, and there we are seeing the impact of the VW scandal. 56% see “clean diesel” as “part of the solution” to America’s energy needs, and 44% as “part of the problem”.  In other words, clean diesel rates worse than diesel.

Now, let’s look at adding some context. Specifically, the researchers added context about energy efficiency, and “renewable biofuels produced from a variety of waste sources”. In that case, 72% saw diesel as part of the solution, and only 27% saw it as part of the problem.

Who spikes the most for or against diesel fuels. Breaking down this last 72/27 split, we see some troubling but not threatening spikes in “part of the problem”. First time voters spike to 36%, young women 18-34 spike to 34%, “Liberals” to 34% and “white, Democratic voters” to 33%. Support for “part of the solution” spikes to 79% among slightly older (35-44) voters, “conservatives” at 78% and “White males” at 77%.

The Middle Ground

In the survey, respondents were asked to place themselves in one of three groups — one, who thought we should begin transitioning immediately and urgently to renewable energy sources now, regardless of impact on costs or availability, a second group that believed that America should be investing and moving to alternative energy but should continue to rely on “existing, abundant and low cost fuels like natural gas and clean diesel” until the alternatives are more abundant and less costly; a third option focused on relying on proven, reliable and abundant energy and fuel sources and avoid tax incentives and regulations that force consumers to use alternatives that do not yet meet market demands.”

In this content, 61% of Americans placed themselves in the “shift gradually” middle ground, while 29% percent placed themselves in “proven and reliable” Group C, and 10% placed themselves in “shift now” Group A.

The Trump Effect

Yet, we see Trump voters veering strongly towards the status quo. 41% of Trump supporters opted for Group C, the “proven/reliable”. compared to 52% support for the gradualist Group B approach, and 7% for the fast-shift Group A.

Interestingly, it points to a voter who supports change in Washington, but not so much in the economy.  Less intervention overall is the theme — whether it is clean energy, health care, or making trade agreements.

Suggesting in a way that may be troubling to some readers that there’s really no contradiction between statements like “I love ethanol” and “repeal the Renewable Fuel Standard” for many people. It’s not the fuel that presents the problem, for most — that is, it is less about reliability or performance than about public policy intervention to give alternative fuels a market.

For many voters, and we see a spike in the Trump camp, the shift toward renewables is seen as a government-sponsored effort to “force consumers to use other alternative energy sources that do not yet meet market demands”.

The Bottom Line

Some conclusions to share.

1. A correlation between affordability and scale of production is not getting through to voters. If biofuels producers take the view that without a large-scale market to serve, they will not be able to get prices down, they have not made that argument successfully to much of the population, and the incoming Administration will be highly responsive to the wrong side of that belief set.

2. We don’t see much evidence that voters believe there is insufficient competition in the fuel marketplace to justify broad market interventions — in part, this is a success of the Renewable Fuel Standard, but also the rise of electric cars and CNG vehicles.

3. Clean diesel as a fossil fuel concept has been killed by the VW scandal. To the extent that diesel will be seen “as part of the solution”, it will have to be through renewables for some time to come.

4. Here’s a broader conclusion that we see some supporting evidence for in the survey: In some ways, we see that consumers are preferring choice in the market not through fuel choice at the pump, but through vehicle choice. We’ve seen electric vehicle sales flatten considerably in the US, off a small base to begin with, as oil prices have relaxed — suggesting that electrics were seen as a way of escaping fuel price volatility, for some drivers.

Suggesting that while fossil/biofuel blends will be the workhorse for some time for the adoption of renewable fuel, there may well be a second market for optimized “super-vehicles”, that offer extra unique performance — perhaps on cost, perhaps on emissions, could be something else — and obligate the consumer to use a given fuel at the outset — as we see with CNG and electrics.