Globalization of Ethanol Impacts US Industry

by Ryan Strickland (Ethanol Producer Magazine/Eco-Energy) It’s a big world out there and ethanol is primed to explore it—finding new markets through competitive pricing, high octane and low-carbon advantages that no other fuel on the planet today can match. The proliferation of international ethanol trade during the past decade has been impressive to watch. The current global market for ethanol stands at 30 billion gallons, with 1.2 billion gallons trading hands overseas. There is no denying the globalization of ethanol that is taking place and the impact it has on U.S. production margins. The U.S. has been a net exporter of ethanol since 2010. With 15 billion gallons of annualized production and 14.2 billion gallons of domestic demand, it’s clear that growing export markets should be a primary focus for our industry.

Mandated foreign markets short on domestic production are allowing for a ratable flow. However, growth opportunities for our industry lie where economics, environment and relationships are the deciding factors. In nonmandated markets, price and octane are the primary selling points for U.S. ethanol. Ethanol is an octane booster for gasoline as well an attractive option in programs to reduce greenhouse gas emissions.

However, if the government intends to enforce its current E10 mandate, or expand it nationwide, China will likely need to import as it is opposed to the depletion of corn stockpiles. Domestic employment and social stability are the primary policy drivers for China’s government, which frames the party’s negative view of imports. Nonetheless, air pollution mitigation is increasingly becoming a strong driver to expanding ethanol blending. READ MORE and MORE / MORE (Reuters)