Mexican Ethanol Optimism Returns after States Ask for Ban Repeal

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July 12, 2018

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(UkrAgroConsult) The Mexican ethanol market could have more room to grow as the states of Nuevo Leon and Jalisco have asked for a repeal of a ban on ethanol blending in their principal cities of Monterrey and Guadalajara, respectively.

“If our gasoline composition is right then ethanol can work,” said Alfonso Martinez, undersecretary of protection of the environment and natural resources in Nuevo Leon, in a Tuesday phone interview with S&P Global Platts. “We have nothing against ethanol, we just want to get pollution down,” he added.”

Mexico currently blends MTBE as its primary oxygenate.

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“We need to change the gasoline we’re using,” Martinez said. “We have done modeling and if we blend ethanol with US gasoline, emissions are lower. But blending our current gasoline with ethanol there is more pollution. We will need to reformulate our gasoline or import it.”

The Nuevo Leon and Jalisco asked for the ban to be lifted after modeling showed over 50% of pollutants in Monterrey and Guadalajara came from gasoline.

Mexico City is still doing modeling to determine the effects of higher ethanol blends and the bans in Monterrey and Guadalajara could remain in place until the capital makes its decision, according to Martinez.

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The states of Veracruz and San Luis Potosi have seen multiple ethanol plants being constructed. Those in Veracruz use sugarcane as a feedstock and those in San Luis Potosi are using sorghum.

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Mexico’s energy markets are currently undergoing a liberalization as the government allows private companies to participate.

Many US-based companies are looking at ways to increase exports to the country, including refined products such as gasoline.

Aligning the Mexican gasoline specification with the US’ could allow allow sellers to send gasoline already blended with ethanol straight into the country.

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Many US companies would consider sending gasoline with pre-blended ethanol a cheaper offering than current specifications blended with MTBE. READ MORE

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