Bioethanol Use Growing in International Markets
Bioethanol is a growing fuel solution in international efforts to grow our production and use of low-carbon energy. Efforts are ramping up worldwide, with nations not only creating targets for bioethanol use but taking tangible steps to implement those targets.
The U.S. Grains Council (USGC) is working to keep these efforts moving by providing expertise and resources to those countries.
Headquartered in Washington, D.C., the Council has nine international offices and a presence in over 27 countries around the world. The Council’s bioethanol efforts are focused on demonstrating the environmental and human health benefits of U.S. bioethanol, working with government and local stakeholders to develop policies for increased bioethanol use, addressing trade barriers and logistical constraints to U.S. bioethanol imports, and demonstrating bioethanol’s value as a source of high-octane, low-carbon fuel.
The Council’s bioethanol work expands across the globe, and recent initiatives are addressing the challenges and opportunities facing bioethanol export markets in the short- and long-term.
U.S. Exports Remain Strong
U.S. bioethanol continues to play a large role in international biofuel markets.
Bioethanol exports for the marketing year 2022/23 totaled 1.25 billion gallons, making it the fifth-largest marketing year on record. These 1.25 billion gallons were valued at $3.5 billion and were equivalent to 423 million bushels of corn.
Bioethanol remained a robust and diversified market, with 77 countries purchasing U.S. bioethanol in 2022/23. Record exports to Canada, the European Union, and UK helped placed them as the top three markets, followed by South Korea, India, Mexico, Peru, Colombia, Jamaica, and
Bioethanol exports in the first month of the current marketing year (MY 2023/24) so far total 120.5 million gallons, up 30.7 million gallons, or over 34% from last year.
Canada Clean Fuel Regulation Boosts Use, Demand
Building on the momentum of MY 2022/23, U.S. bioethanol exports to Canada are up 43 percent year-on-year, totaling 60.4 million gallons in the first month of MY 2023/24, its third-highest monthly export total on record.
Canada’s provincial bioethanol standards, coupled with their recent Clean Fuel Regulation issued in July of 2022, are creating market demand for low-carbon fuels like bioethanol. U.S. producers can generate compliance credits in the Canadian market, further creating margin opportunities for low-CI producers.
In addition to credit generation and high-value markets, the Clean Fuel Regulation is expected to support an upward trend in the average nationwide Canadian blend level and growth in U.S. bioethanol imports.
Multiple Efforts Underway in Japan
Japan is another critical victory within the last year.
Starting with a joint announcement from the Japanese and United States presidents to double domestic bioethanol consumption in Japan by 2030, Japan has been crafting policy and initiatives that would further increase bioethanol blending in the country.
Japan has taken over 11 million gallons of U.S. bioethanol exports so far this market year. While Japan currently blends bioethanol in the form of ethyl tertiary-butyl ether (ETBE), in the equivalent of a 1.7% bioethanol blend nationwide, certain retailers piloted an E7 direct bioethanol blend during the summer of 2023 in central Japan.
Furthermore, a domestic refinery, ENEOS, has outlined a mid-term strategy towards E10 by 2030. Japan’s Ministry of Economy, Trade and Industry has also developed a proposal for a 10 percent sustainable aviation fuel (SAF) requirement for international flights out of all Japanese airports, with stakeholders eagerly looking to secure feedstock to reach this directive.
Strong Progress, New Initiatives from U.K. and EU Member States
Combined, the U.K. and the EU imported 223.9 million gallons in marketing year 2022/23 with further increases expected in MY 2023/24.
The U.K. successfully transitioned from E5 to E10 in 2022, with Northern Ireland and the Republic of Ireland transitioning shortly thereafter. Norway, Poland, and Austria are among EU member states that committed to E10 in the first and second quarters of 2023.
The year-on-year EU bioethanol blend rate has gradually increased since 2019, reaching an average bioethanol blend rate of 6.8 percent, according to the latest monthly reporting for August 2023. Similarly, the bioethanol blend rate in the UK has also increased, especially following its national E10 rollout in September 2021, with an average blend rate of 8.5 percent. As more countries roll out an E10 blend level and initiative, this represents a key market opportunity for U.S. producers looking to source into the region.
Asia, Latin America Key Players
Many other opportunities are emerging around the world, with India announcing their desired goal to reach E20 by 2025. India has impressively reached a nationwide E12 within four years of implementing their policy. Additionally, South Korea announced that it intends to create a Renewable Fuel Standard and launch a bioethanol pilot program in 2024.
Within Southeast Asia, the Philippines has released their fuel specification for a discretionary E20 blend to be finalized before 2024, while Indonesia is in the midst of an E5 pilot program in Jakarta and Surabaya with plans to increase to E7 in 2024. Vietnam is also looking to expand its E5 offerings to all fuel grades at the pump.
In the Latin American region, many countries are pursuing bioethanol implementation objectives, with Costa Rica, Panama, the Dominican Republic, and Guatemala announcing the start of bioethanol blending programs in 2024. Jamaica, which is the only country in the Caribbean with an E10 blend mandate, is looking to go even further and pursue E15 and emerged as a top ten bioethanol export destination in the market year 2022/23, purchasing a record 28.8 million gallons. Colombia, despite retaining the countervailing duty on U.S. bioethanol imports, remained a top ten market in MY 2022/23, with imports totaling 42.3 million gallons, rebounding from its five-year low in MY 2021/22, and is looking to stabilize its bioethanol blend level, gradually going back to its E10 mandate in the coming year.
Grains Council Looks at Multiple Avenues for Bioethanol Growth
While the Council is heavily focused on fuel applications, it also looks to opportunities beyond the on-road environment with bio-based chemicals and sustainable aviation fuel.
The U.S. bioethanol industry has some challenges competing in international markets. A strong dollar, relatively high feedstock costs, and tariff barriers can make U.S. bioethanol uncompetitive towards other domestic fuels or other export competitors. However, the message carried by U.S. bioethanol — as a measure to reduce inflationary pressures, improve human health, and contribute to decarbonization efforts — is resonating throughout the globe. More countries are seeking to implement higher biofuel standards and use bioethanol to the fullest potential within their fuel supply.
The Council — with the support of the U.S. bioethanol industry and supply chain — is able to provide resources, technical expertise, industry consultants, and critical mission participants within the various regions where its team operates. The organization will continue to advocate for strong policy, market access, and best practices for bioethanol consumption.
The momentum continues to grow, and through partner assistance, we can work together to expand dynamic opportunities in this growing international field for American-made bioethanol.