USGC: COVID-19 Weighed on 2019-’20 Global Ethanol Trade

(U.S. Grains Council/Ethanol Producer Magazine) At the close of the most recent marketing year, U.S. ethanol exports were down 12 percent year-over-year according to data from the USDA, weighed on by COVID-19 and the global issuance of stay-at-home orders.

Over the course of the marketing year (September 2019-August 2020), U.S. ethanol exports, which account for nearly 60 percent of global trade, faced losses in fuel markets while staying relatively flat in industrial-use markets. New markets did emerge as ethanol demand increased in support of human health for sanitizing applications.

“In a typical year, about a quarter of U.S. ethanol exports are destined for industrial use markets. For some months in 2020, that shot up to half,” said Brian Healy, USGC director of global ethanol market development. “While the full effects of the pandemic have not been realized, stay-at-home orders were just reissued in many European Union (EU) member countries, and policy developments continue to move forward in critical markets that will drive ethanol demand in the future.”

For fuel markets, stay-at-home orders led to an overnight demand loss in the United States and around the world. The initially hopeful V-shaped recovery remains to be fully realized as a long tail of recovery that includes working from home, a patchwork of government stay-at home-orders and a lack of a vaccine hamper recovery.

Translated to global fuel ethanol demand, U.S. exports are down in all top 10 fuel ethanol export markets READ MORE

Excerpt from Ethanol Producer Magazine/Renewable Industries Canada: All of this is to say that the market will worsen before it gets better, and trade will have a lens increasingly focused on domestic markets first. Although it’s safe to assume that some governments may take an “anything and everything” approach to defend local markets, global trade opportunities still exist. To help us get there, we need to address domestic goals.

1. Look at markets that are continuing to grow. Despite some lingering bilateral trade disputes, worldwide, many jurisdictions are looking to increase renewable fuel use. Proposed or expanded ethanol mandates exist in Canada, India, Philippines, Japan and Vietnam, which recently reduced its ethanol tariff.

2. Ensure policies support stable trade. For example, Canada’s Clean Fuel Standard should be committed to low carbon fuels’ market development on a level playing field. This includes treating CCS in biofuels production equally (i.e., domestically and abroad) and recognizing any sustainable products, such as American biofuels, with aggregate compliance to favor continued trade flows that are of mutual benefit.

3. Build with resiliency in mind. Many jurisdictions are continuing to tackle their environmental challenges during COVID. Now more than ever, we have to keep advocating, so the proper regulatory signals are put in place to ensure resilient and meaningful biofuels policies. This includes enforceable renewable fuels blending mandates, an obligation for fuel to reduce carbon intensity, and ending exemptions that erode the market for ethanol.

It’s been a turbulent, difficult year. The global economy will look a lot different for some time to come. Working to keep supply and trade links open, ensuring sound policymaking, and our industry’s reliability under pressure will continue to be ethanol’s advantage in the global marketplace and key to making opportunities out of these challenging times. READ MORE