Increasing Demand For Ethanol: Ships, Planes, Trains–Have We Forgotten About the Automobile?

Doug Durante, Clean Fuels Development Coalition

There is an old saying usually attributed to politicians that isn’t exactly the king’s English, but the message is clear: “Dance With the One That Brung Ya” – meaning stay with what got you there.

In the case of ethanol, the one that “brung ya” is as motor fuel for automobiles. Calling it the fuel of the future, Henry Ford designed the Model T to run not just on ethanol, but ethanol from agricultural products. The ethanol industry renaissance that began with Clean Air Act programs and continues via the RFS reached current levels by being put in gas tanks of cars.

Despite that phenomenal growth, we seem to forget who “brung ya “and what could continue to “bring ya.” There are no technical, logistical, financial, legal or other obstacles to keep us from putting more and more ethanol into the gasoline market, yet we seem to be pursuing markets where all of those questions need to be addressed. It’s like coming to a fork in the road where one side is smooth, paved and well lit, and the other is a dark, muddy, unmarked gamble, but we choose that one

The promise of Sustainable Aviation Fuel using ethanol is at best puzzling and at worst a game in which ethanol may be out of its element. The practicality of marine, rail and other applications of ethanol are unknown. What is known is that we can blend any volume of ethanol we want into gasoline. Sure, the RVP issue is terribly frustrating, and it is preposterous to interpret the 1-pound waiver as being limited to 10 percent volumes. E15 doesn’t increase vapor pressure and truly higher blends like E20 and E30 can take vapor pressure increases down to zero. At those higher volumes, ethanol’s value is linear with an opportunity to significantly monetize octane and carbon benefits. The perception is that 15 percent is the end game when it should be just the start in terms of moving beyond E10. Because of that perception, we seem to be looking at these other, far more challenging markets.

We continue to see a post-Covid bounce in U.S. gasoline consumption with an increase last year back to nearly 140 billion gallons and increasing amounts of that are high octane premium grades, which is a strength of higher ethanol blends. Yet a recent trade press article proclaimed in a bold headline that SAF represented a “Massive New Market for Corn Ethanol of 3 Billion Gallons.” Considering that nationwide E15 could be an additional 5-7 billion gallons and E30 would be doubling today’s demand with another 15 billion gallons, I think we have a different definition of “massive.”

And boy, do we need that demand now. At CFDC, we have been doing our best Paul Revere imitation for the past decade warning that the Brazilians are coming! Well, in the context of competing with them for exports of both corn and ethanol, they are here. Argus Media reports Brazil now has 41 corn ethanol plants, with more under construction and more corn being grown. Even under normal circumstances Brazil may be taking our customers. Combined with potential losses from Trump trade wars and it presents some ugly scenarios for corn growers, and agriculture in general.

So, what should farmers be doing? For starters do not let ethanol be buttonholed to 15 percent and not use up so much political capital and resources pursuing an SAF market that might, maybe, perhaps increase corn demand by 1 billion bushels. And in the case of SAF, even getting to the table is going to be a challenge for corn. There is far from international recognition of corn ethanol’s GHG benefits with European countries in particular still hung up on land use and net energy, water and chemical inputs. Furthermore, SAF is not a defined product, any number of fuel feedstocks and processes are competing. Renewable diesel already had a headstart and now renewable natural gas is being converted to liquids –including ethanol – through the Fischer-Tropsch process. And of course, the tax incentives that are critical to economic viability are in the crosshairs of the Trump administration. What’s the life expectancy of a tax incentive whose justification is to fight climate change when the president of our country says climate change is a hoax?

If aviation fuel is indeed a new market, then great, lets pursue that, but not at the expense of ignoring other opportunities. That opportunity is to go big in terms of volume. If E15 is a base fuel and we make premium off that with simple splash blending, ethanol could step into the void that will exist as EVs continue to level off.

Decarbonizing the gasoline market by blending 20-30 percent ethanol requires no legislation, no tax incentives and under current law is completely permissible given that ethanol is an approved additive in certification fuel and can be used at any volume. It would replace benzene-based octane additives at a much lower cost and demonstrate both climate and health benefits that could save consumers and the government billions of dollars annually.

Importantly, it could be a shot in the arm for corn growers and all farmers at a time when there are no immediate prospects for growth. The pathway can still be the Next Generation Fuels Act which needs to be reintroduced in this Congress. It would raise octane; ensure octane additives meet GHG reductions and that corn ethanol’s CI is approved; once and for all correct the RVP issue and remove a number of other obstacles that are purely regulatory and punitive. It is a “Buy America” approach that would provide the incredible range of benefits the RFS brought us and fit into the vision of the Trump administration and continued reliance on liquid fuels.

Mike Dwyer of the U.S. Grains Council said at an event recently that “exports are the future of our industry, even more so than E15.” Whether he meant corn or ethanol, or both, I respectfully disagree. Nearly 2 billion gallons in exports is nothing to dismiss but the future is here. The future is now. So, let’s dance with the one that brung ya. Take the easy road and the one with the least amount of obstacles by simply putting more ethanol into our automobiles, using our abundant corn resources and capture the full potential of ethanol.