Guess who has overtaken Brazil to become the top export market for United States ethanol?
“Our top trading partner right now is Canada, our friends to the north,” Growth Energy chief executive officer Emily Skor said in a recent webinar.
Canada imported 1.23 billion litres of the biofuel in 2020, topping Brazil’s 757 million litres and India’s 719 million litres, according to the Renewable Fuels Association.
The move up the ranks wasn’t because Canada imported a bunch more of the fuel than usual. In fact, volumes were nearly identical to the previous year.
It was due to plummeting sales to Brazil, which fell by 40 percent due to the pandemic as well as the country introducing a tariff and a tariff rate quota on imported product.
Skor said U.S. ethanol sales to China have also dropped due to a trade war, while exports to customers in the Arabian Gulf have plummeted due to lower blending economics.
But sales to Mexico have doubled because of higher demand from the country’s industrial sector, while shipments to India have benefited from the country’s six percent ethanol blend rate.
Skor said there would be enormous opportunities if other countries around the world shifted to a 10 percent ethanol mandate (E10) like the U.S.
That would result in an estimated 20 billion litres of new demand for U.S. ethanol, with China leading the way with 5.7 billion litres of that demand.
She said Canada is a great example of a country that could be moving in that direction.
“They are working on a Clean Fuel Standard to move the national to an E15 blend by 2030,” said Skor.
Chris Bliley, senior vice-president of regulatory affairs with Growth Energy, said there are still a lot of details that need to be worked out with Canada’s CFS but boosting the federal ethanol mandate is on the table.
“E15 is certainly one of the compliance options being modelled,” he said.
Even if Canada moved to an E10 mandate, that would create the potential for an additional 2.46 billion litres in annual imports from the U.S., according to a Growth Energy analysis.
Not much ethanol flows the other way across the 49th parallel. The U.S. imported just 82,590 litres from Canada in 2020.
Skor also spoke of new threats and opportunities in the U.S. market that have emerged since the inauguration of President Joe Biden.
“We have seen since Jan. 20, the public and the policy dialogue around climate has just exploded,” she said.
There have been executive orders and major announcements by companies regarding the climate file.
Some of those announcements pose a threat to the ethanol industry, such as General Motors pledging to completely phase out vehicles using internal combustion engines by 2035.
Skor said the question she gets the most is how big of a threat electric vehicles are to the ethanol sector.
She said even under the most aggressive projections for electric vehicles, the internal combustion engine will still be the most dominant type of engine by 2040.
In the meantime, biofuel is the most immediate and practical solution for reducing greenhouse gas emissions.
Growth Energy estimates that a move to an E15 mandate from an E10 in the U.S. marketplace would reduce carbon dioxide emissions by 17.62 million tonnes, the equivalent of taking 3.85 million cars off the road each year.
“That’s something that we can do today,” said Skor.
She said women, millennials and people living on the East Coast of the U.S. are the most likely to buy E15 fuel and should be the target of ethanol advertising campaigns.