Opportunity for ethanol production, exports growing
With so much attention on tariffs, harvest and the lapsed U.S. farm bill, you may not have heard a lot about corn ethanol recently. But the U.S. ethanol industry is alive and well, and offers promise, a biofuels specialist says.
"There are opportunities in ethanol," said David Ripplinger, North Dakota State University Extension bioenergy specialist.
Ripplinger spoke Oct. 29 in Grand Forks, North Dakota, at Extension's annual ag lenders' conference. Ag bankers from northwest Minnesota and northeast North Dakota attended.
Ethanol production accounts for about one third of the annual U.S. corn crop. But that doesn't mean ethanol production is stagnant. Corn production is rising, reflecting higher yields, and ethanol production is growing along with it, Ripplinger said.
Among positive developments in the ethanol industry:
• U.S. corn ethanol exports reached a record 1.4 billion gallons in the 2016/2017 marketing year, according to the U.S. Grains Council. "It's really a young market," Ripplinger said. "And it's only likely to continue to grow."
• U.S. ethanol production reached a record 15.8 billion gallons in 2017, according to the U.S. Energy Information Administration.
• The Trump administration has begun working on regulations to allow for the year-round sale of E15 (15 percent ethanol and 85 percent gasoline) fuel in the U.S.
• There's growing doubt that China will be able to meet its goal of increasing ethanol use by 2020, which could create opportunities for U.S. ethanol.
• California's Low Carbon Fuel Standard offers opportunities for corn from North Dakota and other Midwest states.
China is the world's largest motor vehicle market, so its fuel consumption is especially noteworthy. In September 2017, the Chinese government announced a nationwide mandate to sharply increase use of E10 fuel (gasoline containing 10 percent ethanol) by 2020.
So far, though, China "hasn't done much to show they will be able to achieve" its E10 goal, Ripplinger said.
The Low Carbon Fuel Standard, or LCFS, seeks to encourage the use and production of "cleaner low-carbon fuels in California" and consequently "reduce greenhouse gas emissions," according to the web site of the California Air Resources Board.
The LCFS has been in place for about five years, "but it's really starting to take told and function," most notably "sending incentives back to the supply chain, incenting refineries and corn farmers to grow their crops in certain ways," Ripplinger said.
For instance, producers who raise corn with no-till farming practices for ethanol used in California might receive a premium, he said.
Ripplinger plans to put together a short educational program about the LCFS to help ag lenders, extension officials and corn farmers learn more about opportunities from it.
More information on California's Low Carbon Fuel Standard: www.arb.ca.gov/fuels/lcfs/lcfs.htm.
On the downside for ethanol, the Trump administration has approved so-called "hardship waivers" in the Renewable Fuel Standards, leading to less ethanol blended with gasoline — and a reduction in the amount of corn used for ethanol.
It's difficult to predict what ultimately will happen with U.S. policy on hardship waivers, Ripplinger said.