General Motors to ethanol: Focus on 95 octane fuel standard, or “miss the window altogether”
In Florida, General Motors VP Dan Nicholson told delegates at the National Ethanol Conference that “High octane is essential to realize better efficiency and greenhouse gas emissions,” but warned the US ethanol industry to get behind the 95 octane fuel standard, warning that 98 RON is a bridge too far,” referring to the cost hurdles, and urged delegates to “focus on what can be done now and prepare for the future. Do 95 and get the infrastructure deployed. An advocacy effort with little reality based on waiting and hoping around RFS resets and RFS reform will remove real opportunity.”
Nicolson’s passionate address on the future of octane, ethanol and liquid fuels prompted significant pushback from the delegates, who said that the Renewable Fuels Association was highly active in high octane fuel talks, but there were severe challenges for the US ethanol industry. RFA’s new CEO Geoff Cooper said that it didn’t look like there was an opportunity from growth with the 95 octane standard and that RFA members were looking for growth.
GM’s Nicolson, said that customers “more than ever” are demanding performance, affordability, safety and more, and pointed to surge in electrification R&D at General Motors in response to the shifts in sentiment.
“5 years ago, we had 8000 people and our unit was called GM Powertrain and it was 100 percent ICE (internal combustion engine) focused. A few years later we renamed at Global Propulsion Systems and our team was 70% ICE and 30% electrification. Today, we are 30% ICE, and 70% electrification. I am a proponent of higher octane in the US market, and a real ethanol fan, but developed nations will see a double digit drop in ICE engines by the 2040s. Looks like less in the US, and we have to think through a reasonable approach. The good news, there will be peaceful coexistence between ICE and electrification for some time, and high octane is essential to realize better efficiency and greenhouse gas emissions.
But we need to work now, and work together. We can’t wait for more debate. All elected officials want and expect us to work this out. Recognize it is time to revise legislation including the consumer. Let’s not wait or be distracted by other factors. The timing and opportunity exists to bring positive outcomes possible for all stakeholders. The oil industry is involved in biofuels and see the market value of biobased products. Our collective future is about oil and ethanol sectors working together to resolve outstanding issues.
“The standard should be 95 RON for all new vehicles. All retailers support it, and we get 3 percent better fuel efficiency. A national 95 RON standard will require another 7 billion gallons of high octane fuel. Europe has had it for decades. Meanwhile, we are still using more or less the same unleaded fuel from the 1970s, even though everyone else is innovating quickly [across the value chain].”
GM”s pathway? Legislative reform. “We believe in a legislative approach,” Nicolson said. “We are advocating for a new high octane base fuels and a new octane performance standards, with a 95 octane base standard and a high efficiency performance grade of 98 octane.
Audience questions and comments focused on the potential for the global oil industry to utilize petroleum to raise octane levels, cutting off the market for low carbon fuels. Questioners noted that any greenhouse gas emissions reductions from engine efficiency gains could be lost by a switch-back to higher carbon petroleum as a base fuel. Not to mention the catastrophic potential impact on US ethanol producers and the impact on ethanol investor and partner confidence.
Nicholson contended that “the oil industry could invest to make more octane, but you are the low cost provider of octane, and ethanol is the low cost solution for high octane.”
Nicolson said, “business as usual will not lead to positive results. We had to shift from not engaging, to being leaders, to keep the best of the current and define the future. It is time to jump into the effort to bring forward this new fuel and will add 3 percent efficiency. Please focus on a more achievable RON level, we need you at the table now or we will miss the window altogether.”