Global Ethanol Use to Grow Dramatically, Says USGC Analyst
China, Brazil, and the United States will help drive a dramatic global increase in ethanol consumption in the next 10 years, said a U.S. Grains Council analyst on Monday. However, the Sino-U.S. trade war will blunt the opportunity for ethanol from the United States, the world’s largest exporter, to win a share of the Chinese market in the near term.
Ethanol production hit 110 billion liters in 2018 and could expand significantly in the next decade, said Mike Dwyer, chief economist for the export-promoting Grains Council, at the Global Ethanol Summit. Some 400 people from 60 nations attended the conference in Washington.
“We think that number (110 billion liters) is set to grow dramatically, especially with developments in China, Brazil, and the United States itself as we make our transition to mid-level blends and higher,” said Dwyer.
Farm groups and ethanol makers expect ethanol sales to rise now that E15 can be sold year-round. Until this year, sales of E15, a 15% blend of ethanol into gasoline, were banned during the summer. The traditional ethanol blend is 10%, which Grains Council president Ryan LeGrand called “just a starting point. It will work in any vehicle.”
About 10% of global ethanol production is sold on the world market, with the United States holding a 61% market share. Brazil, second to the United States as a producer and also second in exports, accounts for one fifth of sales.
Speakers at the ethanol summit extolled ethanol as an octane-enhancing fuel that reduces air pollution and could help nations meet their pledges under the Paris Accord to reduce greenhouse gas emissions. The biofuel also reduces dependence on petroleum, they said. Five dozen countries have policies that encourage use of biofuels.
China, the world’s most populous nation, says it will adopt E10 beginning in January. But it can produce only one-third of ethanol that is needed to meet its goals, so large-volume imports may be necessary, said Dwyer.
“That is what is so unfortunate about the trade war we are having with them right now. The United States could provide more ethanol to China, but we face 70% duties,” he said. If the trade war tariffs were removed, “we could find a pretty good home in China,” even with the previous 30% tariff.
Brazil’s RenovoBio policy, taking effect in the new year, will encourage use of E100, said Dwyer. Over time, it could increase ethanol use by 20 billion liters annually, enough to nearly double consumption.
In the near term, Asia offers the greatest potential for growth, because of a rising middle class and low ethanol consumption at present, followed by Central and South America, said Dwyer.
About 35% to 40% of the U.S. corn crop is used to make ethanol. The USDA says corn-for-ethanol has hit a plateau of around 5.4 billion bushels a year. Domestic ethanol consumption declined for the first time ever in 2018.
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