Come Together: At NEC, a GM Executive Outlined Some Controversial Advice for the Ethanol Industry.

by Matt Thompson (Ethanol Producer Magazine) ...Collaborate with the automotive industry, the petroleum industry, fuel retailers and other stakeholders in the liquid fuels market to push for a national high-octane standard. “We’re advocating for a reasonable and manageable proposal—a new, national high-octane based fuel for all new vehicles,” said Dan Nicholson, vice president of global electrification, controls, software and electronic hardware at GM’s Global Technical Center.

But Nicholson pitched the standard with 95 Research Octane Number (RON) as the base, rather than the 98 RON, or higher, many in the ethanol industry would like to see. “Ninety-five RON is something both retailers and the oil industry can get behind right now,” he said. Nicholson explained that while he previously advocated for a 98 RON standard, he’s since come to believe that the fuel would be priced too high for consumers to be an effective starting point. “Ninety-eight appears too high of a cost hurdle for starters, and given our timing, and yours, the reality is the 98 RON as a base fuel is a bridge too far,” Nicholson said. “We should focus on what can be done now and continue to plan for the future.”

Doug Sombke, president of the South Dakota Farmers Union, said after the address that Nicholson’s proposal came as a surprise to him. “I really couldn’t believe what I was hearing,” he said. “Because he mentioned in his speech a couple years prior that 100 RON was the only way to go, and now, all of a sudden, he’s down to 95. It just doesn’t make sense.”

RFA President and CEO Geoff Cooper said a national high-octane standard is a common goal, but the standard needs to include provisions for using low-carbon fuels to meet the required octane level. “The refiners have acknowledged, and other studies that have been conducted show, that they could meet a 95 RON octane standard pretty easily with minor investments without using a drop more ethanol,” Cooper said during a meeting with the press at NEC. “Honestly, we’d be talking about 95 RON E10 without some form of environmental anti-backsliding provisions.”

Nicholson outlined the urgency of getting a standard in place and working with Congress to do it. “We encourage you to work with the legislators to improve and advance the 21st Century Transportation Fuels Act draft, developed by the previous congress.” He added that the industries should work together to fix the parts of the draft bill that don’t work.

That draft, introduced by Rep. John Shimkus (R-Ill.) and Rep. Bill Flores (R-Texas), creates a national high-octane standard, but also phases out the Renewable Fuel Standard. And Cooper said the RFA doesn’t endorse that approach. “That was our concern with the Shimkus-Flores package all along is that it didn’t really do anything to grow the market for ethanol,” he said during the press meeting. “The other key concern we’ve had with their proposal is it kills the RFS. It trades the RFS for an octane standard that really isn’t high enough octane to do much for our industry.”

And Cooper said working together is something RFA is willing to do. “It would be great if we could get to a point where we can sit down with the autos and oils and come to some agreement that works for everybody,” he said. “We’re not there yet and the Shimkus-Flores bill certainly was not representative of something that works for all of us.”

Cooper also said the RFA could potentially support a high-octane standard with 95 RON as the base, if the RFS remains intact. “We do think a high-octane standard—whether it’s 98 RON, 100 RON, maybe even if it is 95 or 96 RON—if it’s on top of an RFS, it could provide future growth for the industry, above and beyond what we see specified in the RFS,” he told the press at NEC.

Sombke said a 95 RON isn’t high enough. “It’s just not far enough, fast enough,” he said. He advocated for a 100 RON, E30 fuel.

In his address, Nicholson said he understands the desire for growth and believes there is opportunity to grow the ethanol industry with a 95 RON octane standard. But, he said, the industry should also plan for any potential declines. “I think there’s a path for growth, but there’s certainly not any guarantees. But I think you also have to think about scenarios which have not just growth, but actually declines. And on the current path, there are very likely scenarios for actual declines.” READ MORE