Maritime Fuels: Will Corn Sail on the Love Boat or the Titanic?

by Doug Durante (Clean Fuels Development Coalition/Governors' Biofuels Coalition) ... The NCGA (National Corn Growers Association) report identified three key areas to increase demand for corn—E15, marine fuels, and biobased products. We have all heard the promise of Sustainable Aviation Fuels (SAF), adding Marine fuels to that along with a renewed push for biobased products are admirable goals for sure. Particularly since NCGA and the entire ethanol industry has voluntarily capped itself out of the promise of high octane in the US motor fuel market by agreeing to hold the line to 15% volumes.

With little hope of getting to E20 or more if current legislation passes both houses, someone has convinced someone that we can make up volume with these two highly competitive, regulatory dependent markets, thereby creating the newest shiny object to chase.

Just as is the case with aviation fuels, corn ethanol is just one of the pathways to low carbon—not exactly a priority with the current Administration and Congress. The long-awaited 45Z tax credits may or may not apply to marine fuels, and the value may or may not be fully passed on from the ethanol producer to the feedstock suppliers, i.e corn growers. (We learned that during all the years of the ethanol excise tax exemption when the petroleum industry received the actual incentive.) 45Z and other incentives are term limited and only authorized for a few years.

The push for decarbonization comes from the International Maritime Organization’s (IMO) Net Zero Framework, requiring all ships worldwide to meet ghg emission reductions or be subject to fines, fees or sanctions. The Trump Administration immediately rejected such proposals and threatened retaliatory measures to ships entering US ports. As a result, the proposal stalled out and given the Trump factor, who knows if it will go forward.

Moreover, as is the case with SAF, there are lots of other fuels and technologies that will compete for market share, several are doing quite well already. Methanol, ammonia, hydrogen, various renewable diesel fuels, and other emerging technologies are all lining up. Ethanol’s low BTU value is a demerit, although mixing ethanol and methanol shows promise.

So back to the NCGA vision of increased demand. The new report suggests that the marine market represents a potential for 3 billion bushels if corn ethanol captured a modest 10% of the market, 10% of the SAF market would be another 1.7 billion bushels. These are reasonable targets, RFA’s Geoff Cooper recently estimated a 4-5 billion gallon demand from marine use if just 5% of that market could be tapped. Compare that to moving to an E20-30 blend that could increase corn demand by a new 5 billion bushels and 10-15 billion gallons.

I stress that aviation and marine use is promising but there are significant regulatory, market, and technical challenges that must be recognized. If Trump’s war on renewables and carbon mitigation programs carries over to the next Administration and Congress, and the Supreme Court maintains their finding that carbon emissions are not a danger to public health, I sure wouldn’t want to bet the farm on anything that requires carbon-based incentives. The EU and many other countries remain stuck on land use and opposes both corn and soybeans as fuel feedstocks.

Where I would focus, and its not too late for NCGA to fix the RVP legislation and add a 4th goal of full rvp relief and truly high octane, is on the 130-billion-gallon gasoline market right in front of us, and the hundreds of billions of gallons globally that need octane.

More than 50% of new cars either require or recommend premium gasoline—meaning 91 AKI or above. The retail spread of regular to premium is substantial—anywhere from 60 cents to one dollar. Yet the rack, or wholesale price differential has averaged about 13-15 cents for decades. The tax, transport, and marketing costs are the same for premium as they are for regular—that huge spread in the billions of dollars goes in the pocket of oil companies. With ethanol’s historical price advantage, why wouldn’t we want to get into that market? Jim Lane is the editor/publisher of the Biofuels Digest and a lot smarter than I am. He also has written extensively on the value of octane and leans towards even higher margins between premium and regular. I encourage anyone to go to the Digest site and research octane—you will come away a lot more informed.

There is a reason ethanol has had such great success in penetrating the gasoline market and that is because it is so compatible with engines, distribution systems, and supply. That compatibility has yet to be established with a marine market. Putting all our resources and political clout on to a boat and heading out could be trip on the Titanic if carbon programs are pulled and incentives disappear.

The gasoline market, with its staggering profit margin on premium gasoline, is right in front of us, right now. Lets not make it hard on ourselves by picking just one thing to go after—lets do them all and for goodness sake, not ignore the high octane market, not just bringing 84 blendstock to 87/88 with E15. READ MORE