We Can’t Ignore Warning Signs, Farmers Need Growing Markets in 2025 Says IRFA’s Shaw

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February 12, 2025

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(Iowa Renewable Fuels Association) Focused on Fuels of Opportunity at the 2025 Iowa Renewable Fuels Summit -- While it is easy to glance over incoming challenges, the renewable fuels industry must face those hurdles head-on and not let change deter the destination. That was the message from the 2025 Iowa Renewable Fuels Summit where Iowa Renewable Fuels Association Executive Director Monte Shaw today told the audience, “If our desired destination is Fuels of Opportunity, then we must beware of letting anyone take the wheel who only looks in the rearview mirror.”

“What’s the solution?” Shaw asked. “Simple. Build demand. Of course, saying ‘build demand’ is easier than actually doing it. As we look at all the possible demand drivers, what can actually grind up five billion bushels of additional corn over the next two decades? I see one thing – renewable fuels. But they are not necessarily the renewable fuels one sees in the rearview mirror today.”

Shaw noted that new markets, export opportunities and policy changes are all things that will help build demand. However, he mentions the nearest term demand driver should be year-round E15.

“E15 is the near-term demand driver that American agriculture needs,” Shaw said. “It should create demand for 5 to 7 billion gallons of additional ethanol over the next several years. It will give consumers a chance to save 15 to 20 cents per gallon at the pump. And it will be a key part of American energy dominance.”

Further noting the importance of growing new markets for American farmers, Shaw believes those new markets are within reach.

“Yes, it might require doing things differently…from how we farm to sequestering carbon at our biofuels facilities.” Shaw said. “But why should change deter us? American agriculture is always changing. We either grow or we die.”

The text of Shaw’s full remarks can be found here.

The Iowa Renewable Fuels Association represents the state’s liquid renewable fuels industry and works to foster its growth. Iowa is the nation’s leader in renewable fuels production with 42 ethanol refineries capable of producing 4.7 billion gallons annually – including 34 million gallons of annual cellulosic ethanol production capacity – and 10 biodiesel facilities with the capacity to produce 416 million gallons annually. For more information, visit the Iowa Renewable Fuels Association website at: www.IowaRFA.org. READ MORE

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Ethanol Poised for Success if Exports Sustain (Co-Bank)
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Ethanol Exports Offer Industry Opportunities (Energy.AgWired.com)

Excerpt from Co-Bank:

Policies in Canada, the European Union and Colombia will determine whether these ethanol super buyers will continue to drive record export figures.
Nationwide E15 approval may not meet the desired demand increase without oil industry support for regulatory changes to use existing infrastructure.
Increased electric vehicle sales and lower Corporate Average Fuel Economy (CAFE) standards will have opposing impacts on the overall gasoline demand that drives ethanol inclusion.

With growing world ethanol demand and higher domestic blend rates, the ethanol industry is positioned for continued growth. However, political uncertainty clouds the outlook for international and domestic inclusion levels of biofuel blends. At home, the new administration’s Environmental Protection Agency will decide on pending Small Refinery Exemptions, establish the Renewable Volume Obligations under the Renewable Fuel Standard, and implement low carbon fuel tax incentives such as the Clean Fuel Production Credit, known as 45Z.

Despite overall declines in agricultural trade, last year's U.S. ethanol exports reached 1.91 billion gallons, surpassing the 2018 peak of 1.7 billion gallons. The anticipated increase of ethanol exports of more than 510 million gallons in 2024 over 2023 had a greater impact than the incremental increases in domestic use of higher-level ethanol blends. Annual ethanol exports could reach 2 billion gallons in 2025 and 2026.

Higher crude-oil-to-corn-price ratios, paired with low-carbon fuel standards in Canada’s Clean Fuel Regulations and Europe’s Renewable Energy Directives, have created strong ethanol demand.

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The EU saw substantial growth in US ethanol imports, due to the growth of the gasoline pool and expansion of E10 and E85 in some EU member states. Exports were up 280% September - November 2024 compared to the same period the year prior. India has also increased its nonfuel ethanol imports, up 84% for September – November versus the same time a year earlier, according to the U.S. Grains Council. The U.S. Department of Agriculture anticipates India to have a feedstock shortage and its ethanol blending rate for 2024 to drop to 11.5%. In April 2023, India initially reached its current ethanol blending target of E12 but will be hard pressed to reach E20 by 2025.

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Japan’s government recently laid out a roadmap to encourage blending with E10 by 2030 and E20 by 2034.

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Although ethanol used for higher-level blends is projected to increase annually, it constitutes only a small portion of overall ethanol demand due to the market's size. Domestic ethanol consumption surpassed the 10% blend wall in recent years, but last year’s levels reached only 10.35% of total fuel gasoline use and is estimated to reach 10.39% in 2025 and 10.42% in 2026. Last year, higher ethanol blends, mainly E15 and E85, accounted for approximately 670 million to 740 million gallons of additional ethanol demand above the blend wall. Private sources expect some growth in 2025 and continued steady growth in future years. Drivers typically save between 10 to 30 cents per gallon when filling up with E15 and can save over $1/gallon for E85 in California.

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California is the last state across the country that doesn’t currently allow the sale of E15. In an effort to lower gasoline prices, California Gov. Gavin Newsome has urged for the approval of the ethanol blend in the state. Bipartisan bill AB 30 was recently introduced in the California state legislature to require the California Air Resources Board to complete a rulemaking to approve E15 by July 1, 2025, or deem the fuel to be approved by the board and authorize it to be sold in California.

E85 sales in California continue to grow to help consumers offset the additional taxes imposed on gasoline sold in the state. However, E85 sales nationwide have likely moderated somewhat from 2023 as Renewable Identification Numbers (RINs) have come off their highs.

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The CAFE standards set the average fuel efficiency of vehicles sold in the United States and can have a greater impact on gasoline demand than EV sales. In 2011, President Barack Obama pledged to double the average fuel economy of vehicles by 2025, to almost 55 miles per gallon. In his last term, President Trump vowed to roll those back and is already taking aim at regulations the Biden administration implemented to bring average fuel economy to 50.4 miles per gallon in model year 2031.

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The EPA traditionally sets the RFS annual standards at levels that can be met with current ethanol blend levels.

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The RFS allows for small refiners to request exemptions for their volume obligations if they can demonstrate disproportionate economic hardship. During President Trump’s first term, the EPA approved 88 waivers to small refiners from their blending obligations under the RFS, which removed 3.11 billion gallons of biofuel demand.

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SREs will lower RIN prices further and discourage some additional higher-level blend sales above E10.

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Although the blender’s tax credit disappeared years ago for the ethanol industry, the creation of the Clean Fuel Production Credit, 45Z, offers a new way for ethanol producers to possibly capture tax credits if the carbon intensity of the ethanol produced is low enough. The Biden administration released initial guidance before leaving office, but the future fate of the program rests in the hands of the Trump administration and Congress.

Since 2005, the overall carbon intensity of ethanol has decreased by 23%. Ethanol’s CI score today is 53.6 grams of carbon dioxide equivalent per megajoule of ethanol produced (gCO2e/MJ), 42% lower than unblended gasoline. Corn ethanol does not qualify for the 45Z credit using a newly proposed defaults of 45ZCF-GREET (Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation), as its score is just over 50kg CO2e per mmBTU.

Carbon capture, utilization and storage provides a reduction in CI for ethanol to obtain credits under 45Z as well as 45Q, but not both. Ethanol facilities with access to the geology to directly pipe carbon dioxide underground or send via a pipeline — including the Tall Grass Pipeline in Nebraska and Wyoming as well as the proposed Summit Pipeline in Iowa, Minnesota, Nebraska, South Dakota, and North Dakota — can decrease their CI scores by 20-30 points under the recent 45Z guidance.

Climate-smart agriculture has the potential to push corn ethanol under the threshold based on USDA’s proposed technical guidance for practices such as no-till and cover crops.

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45Z is currently set to expire at the end of 2027 and new demand for alcohol-to-jet sustainable aviation fuel is unlikely to be realized in this period. READ MORE

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White House Transportation Fuels Policy tax policy Sustainability small refinery exemption (SRE) RINs price RINs (Renewable Identification Numbers) renewable volume obligation (RVO) Renewable Fuel Standard (RFS and RFS2) Renewable Energy Directive (RED/RED II/RED III) Regulations-Federal oil refineries markets/sales market forces LCFS (Low Carbon Fuel Standard) Jetfuel (Sustainable Aviation Fuel (SAF)) Japan Iowa India import/export gasoline price fuel prices European Union (EU) EPA (Environmental Protection Agency) E85 price E85 E20 E15 price E15 E10 Department of Agriculture (USDA) cover crops Corporate Average Fuel Economy (CAFE) standards corn/maize Colombia co-products climate smart/conservation agriculture Clean Fuel Standard/Policy (CFS) carbon/CO2 sequestration carbon pipeline Carbon Intensity (CI)/Carbon Footprint carbon capture and storage (CCS) Canada California BioRefineries/Renewable Fuel Production BioChemicals/Renewable Chemicals Aviation Fuel/Sustainable Aviation Fuel (SAF) aviation fuel (SAF) tax credit alcohol-to-jet (ATJ)/ethanol-to-jet (ETJ) 45Z Clean Fuel Production Tax Credit 45Q Carbon Oxide Sequestration Tax Credit

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