When It All Matters

by Katie Schroeder (Ethanol Producer Magazine) In August, the American Coalition for Ethanol held its 36th Annual Conference, themed “Everything Counts,” featuring speakers covering topics ranging from selling higher blends of ethanol to export markets and decarbonization.

Members of ACE leadership, Dave Sovereign, board president; Brian Jennings, CEO; and Ron Lamberty, CMO; updated attendees on policy developments, ethanol markets and a hybrid efficiency flex-fuel vehicle study. Sovereign discussed the savings he has seen from higher ethanol blends at his local gas station in Iowa, ranging from E15 to E85.

Jennings explained how the industry’s policy priorities were conveyed to lawmakers on the Hill during the 2023 ACE Fly-In; ACE delegates met with members of Congress about securing year-round E15, the roll-out of the Next Generation Fuels Act, proper implementation of the RFS, and ensuring that farmers and ethanol producers are considered in climate policy decision making.

Jennings also addressed the volume target decrease EPA instituted in the RFS Set ruling earlier this year in response to comments from the oil industry, and he emphasized vigilance in making sure the RFS is implemented the way Congress intended. He explained that ethanol producers need to lean into the low carbon appeal of their product to expand the market.

To help farmers and ethanol producers quantify the value of climate-smart farming practices, ACE plans to build a non-proprietary tool that allows anyone in the industry to see what carbon credits certain farming practices—low- and no-till farming, for example—should receive. “In short, future demand is going to hinge on driving down our carbon score,” Jennings said.

Lamberty took the stage to discuss ACE’s efforts to help retailers learn how to access federal funding from the Higher Blends Infrastructure Incentive Program for renewable fuels infrastructure.

He also discussed the misconceptions that Americans have about how widespread electric vehicles really are. One poll demonstrated that one-fifth of Americans believe that 20 percent of vehicles on the road are electric, when the reality is much lower—less than 1 percent, according to J.D. Power.

“Even the most optimistic predictions say that by 2035, 75 million of 295 million cars will be electric,” Lamberty said. “So, even if electric cars do take off, and there’s a place for them … we’ll still have a lot of room for our fuel.”

ACE has sought to demonstrate the value of ethanol through its Hybrid Electric Flex Fuel (HEFF) project, which took a hybrid Ford Fusion and converted it to use E85 instead of E10 or gasoline not blended with ethanol. Lamberty talked about his experience driving the vehicle and shared that he saved nearly $150 using E85 in the hybrid over the course of one test period. “The beauty of this thing, the eFlexFuel converter, is keeping us from where we’re only losing 17 percent [or], on the high end, 20 percent using a fuel that has about 25 percent to 28 percent less Btu content,” Lamberty said.

Tom Kloza, global head of energy analysis with Oil Price Information Services, or OPIS, outlined the petroleum price outlook and discussed some of its impacts on ethanol markets.

Most of the U.S. oil supply is light shale oil, which is good for gasoline, but not as efficient for turning into diesel, the oil industry’s most lucrative product right now. Kloza explained that it takes roughly 3 million barrels of shale oil to make 1 million barrels of diesel. “Refineries can make more gasoline than they want and much less diesel than they want,” he said. With OPEC implementing cuts primarily on medium and heavy distillate oil, the market for renewable diesel is “incredibly fertile.”

The volume of gasoline usage in the U.S. seems to have peaked between 2016 and 2019, Kloza said. “We averaged 9.3 million barrels a day in gasoline demand in those years; we’re probably going to average about 8.8 or 8.9 this year,” he said. Improved mileage, lower numbers of commuters and higher vehicle miles traveled (i.e., less short-distance, urban driving) are all contributing to this shift.

California is a challenging location for oil refiners, Kloza explained, citing the fact that the state is in the process of developing a methodology for determining if refiners are making an unreasonable profit. He said it’s likely that some refiners may choose to close their plants and leave California due to the hostile regulatory environment. “There’s probably a really compelling case that could be made for more ethanol in California fuel,” he said. “But they seem absolutely averse to considering that.” READ MORE