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Released August 29, 2018 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--U.S. farmers became casualties of President Donald Trump's trade wars when China increased tariffs on soybean imports. But now they are fighting to preserve another market: corn.
Under Trump, the U.S. Environmental Protection Agency (EPA) has continued to expand the refinery-waiver program--thus eliminating more than one billion gallons of fuel ethanol from the EPA's initial 2018 mandate , corn advocates have said. The actions could subdue fuel-ethanol companies' demand for corn just as farm profits dwindle. Industrial Info is tracking three active ethanol projects worth $407 million now under construction and nine projects worth $1.9 billion that are expected to kick off in the next 12 months.
Under the renewable fuel standard (RFS) set by Congress in 2007, the EPA must set annual requirements for the volume of renewable fuels that oil refiners and other fuel companies must blend into their petroleum-based products out to 2022. For 2019, Congress mandated the use of 28 billion gallons of biofuels. The EPA instead proposed requiring 19.88 billion gallons to account for poor results from making ethanol from cellulosic materials such as wood fibre.
At the same time, the agency's plan would have boosted the renewable fuel blending obligation for the refining industry to 11.76% from 10.88% to offset volumes lost under the EPA's refinery-waiver program, which has been expanded, and keep overall blended volumes on target.
The waiver program allows the EPA to exempt smaller refineries from the blending requirements if they can prove that complying with the regulation would cause them financial stress. In the past two years, these exemptions have alarmed the biofuels industry. According to the EPA, such "hardship" waivers cut the equivalent of 1.5 billion gallons from the 2018 mandate.
Click on the image at right for an EPA chart showing Congressional volume targets for renewable fuel.
For 2017 and 2016 combined, exemptions representing some 2.25 million gallons worth of biofuel were granted, according to the EPA. That includes waivers covering 1.46 million compliance credits--called renewable identification numbers (RINs)--in 2017, the agency further noted. According to the National Corn Growers Association about 30% of all U.S. corn is used for ethanol fuel. When combined with its production byproduct, distiller dried grains with solubles (DDGS), that figure rises to nearly 40%. With that in mind, corn growers and ethanol producers continue to battle petroleum refiners to sustain and grow ethanol production.
Trump has proposed a plan to boost the amount of ethanol in the nation's gasoline supply to 15%, but it may surpass its window of opportunity to be of any benefit to farmers this year. Iowa Senator Charles Grassley has said that any E15 change won't take effect until at least 2019. The higher fuel-volatility rating, or Reid Vapor Pressure, of E15 fuel prevents it from being sold in the summer months from May through August when fuel demand is at its peak. Year-round, most of the U.S. gasoline supply contains 10% ethanol, but allowing 15% blends to be sold would raise demand for corn ethanol and help farmers weather a difficult global grain market.
The American Petroleum Institute, the largest U.S. trade association for the oil and natural gas industry, has said it is willing to support selling higher 15% blends of ethanol in gasoline year-round, which the ethanol producers want, but only if the ethanol industry goes along with sunsetting the RFS program before 2022.
Farmers have complained that Trump's own trade policies are hurting the market for grain. Their complaints forced the president to push the E15 ethanol plan to the forefront in July after announcing a $12 billion assistance package meant to help farmers cope with higher tariffs imposed by China and Europe. See Industrial Info's May 16, 2018, article - Trump's Proposed Ethanol Policy Could Upend Fuel's Future for more information.
Ethanol consumption, which helped fuel the agricultural-equipment sales boom from 2005-2013, has flatlined, but exports continue to prop up its overall production, according to the most recent estimates by the U.S. Energy Information Administration (EIA). In the 2006-2016 period, U.S. fuel-ethanol production more than doubled, at the end of which 72% of the country's ethanol output came from six states.
Fuel-ethanol exports to Brazil increased for the fourth consecutive year, reaching 450 million gallons in 2017 and accounting for nearly one-third of all U.S. fuel ethanol exports, EIA data showed. Like the U.S., Brazil is among the largest producers and consumers of ethanol, but the country has incurred supply issues in recent years.
Canada remained the second-leading destination of U.S. fuel ethanol, receiving nearly 330 million gallons in 2017--5% higher than the level exported in 2016.
In 2016, China was the third-leading destination for U.S. fuel ethanol, but U.S. exports to China declined by 88% last year, mainly because of China's increase in the tariff on U.S. ethanol from 5% to 30% at the start of 2017.
Other U.S. trading partners that realized larger fuel-ethanol import volumes were South Korea and Colombia--up 41% and 194% year-over-year, respectively.
Growth in ethanol production in the 2006-2016 period has been linked to the introduction of the Renewable Fuel Standard in 2005 and, in recent years, burgeoning export markets. Government data from the Renewable Fuels Association (Washington, D.C.) shows that U.S. ethanol exports through June stood at 927.7 million gallons, up 33% from the first half of 2017 and on pace to break last year's record of 1.38 billion gallons.
With actions by the EPA "undermining domestic ethanol demand," robust export markets are more important now than ever before, according to the RFA.
At the beginning of 2018, U.S. ethanol capacity topped 16 billion gallons per year, or 1.06 million barrels per day (BBL/d), EIA data showed. That level of output translates to growth of 5% or more than 700 million gallons per year between January 2017 and January 2018. Part of the rise stems from a number of plants operating above capacity, which was made possible by plant improvements and process modifications, EIA data showed. These changes range from equipment upgrades to plant expansions and improved maintenance routines. Strong demand augmented that growth.
Click on the image at right for a chart showing the EIA's ethanol production statistics.
Of the top 13 fuel ethanol-producing states, 12 are located in the Midwest. That region was responsible for 14.8 billion gallons per year at the beginning of 2018 (967,000 BBL/d), a 5% increase, or more than 650 million gallons per year between January 2017 and January 2018. The top three states in output are Iowa, Nebraska, and Illinois. In total, they contain more than half of the nation's total ethanol production capacity.
Iowa is the leading ethanol state with more than 102 million barrels of fuel-ethanol production capacity, followed by Nebraska with a capacity of more than 50 million barrels per year and Illinois with some 40 million barrels per year. Minnesota is the leader in terms of E85 refueling stations, with nearly 400 operational facilities. Illinois had 262 and Iowa had 256. E85 typically contains between 51% and 83% of ethanol.
Among the largest active fuel-ethanol projects being tracked by Industrial Info is New Energy Investors' (Leola, Pennsylvania) construction of an ethanol plant in Spiritwood, North Dakota. Construction is planned to kick off in the third quarter of 2019 and be completed in late 2021. The plant will produce 13.5 million gallons per year of advanced fuel ethanol and 90,000 tons per year of lignin. The facility will use cellulosic material--corn stover, wheat straw--as feedstock. Inbicon A/S (Fredericia, Denmark) is providing technology for the ethanol portion of the facility. For more information, see Industrial Info's project report.
POET LLC (Sioux Falls, South Dakota) plans to build a grassroot fuel-ethanol plant that will process corn feedstock into 75 million gallons per year of ethanol in Shelby, Indiana. Construction is planned to kick off in next year's first quarter and be completed in mid-2020. POET Design & Construction Incorporated is performing design-build work. For more information, see Industrial Info's project report.
In Cadiz, Ohio, Harrison Ethanol LLC (Adamsville, Ohio) plans to kick off construction of a grassroot, 23 million-gallon-per-year ethanol plant that will use corn and sweet sorghum as feedstock. The facility also will have a 7.5-megawatt biogas combined heat and power unit. Construction is expected to begin in the third quarter of 2019 and be completed in late 2020. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle TM, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com
Under Trump, the U.S. Environmental Protection Agency (EPA) has continued to expand the refinery-waiver program--thus eliminating more than one billion gallons of fuel ethanol from the EPA's initial 2018 mandate , corn advocates have said. The actions could subdue fuel-ethanol companies' demand for corn just as farm profits dwindle. Industrial Info is tracking three active ethanol projects worth $407 million now under construction and nine projects worth $1.9 billion that are expected to kick off in the next 12 months.
Under the renewable fuel standard (RFS) set by Congress in 2007, the EPA must set annual requirements for the volume of renewable fuels that oil refiners and other fuel companies must blend into their petroleum-based products out to 2022. For 2019, Congress mandated the use of 28 billion gallons of biofuels. The EPA instead proposed requiring 19.88 billion gallons to account for poor results from making ethanol from cellulosic materials such as wood fibre.
At the same time, the agency's plan would have boosted the renewable fuel blending obligation for the refining industry to 11.76% from 10.88% to offset volumes lost under the EPA's refinery-waiver program, which has been expanded, and keep overall blended volumes on target.
The waiver program allows the EPA to exempt smaller refineries from the blending requirements if they can prove that complying with the regulation would cause them financial stress. In the past two years, these exemptions have alarmed the biofuels industry. According to the EPA, such "hardship" waivers cut the equivalent of 1.5 billion gallons from the 2018 mandate.
For 2017 and 2016 combined, exemptions representing some 2.25 million gallons worth of biofuel were granted, according to the EPA. That includes waivers covering 1.46 million compliance credits--called renewable identification numbers (RINs)--in 2017, the agency further noted. According to the National Corn Growers Association about 30% of all U.S. corn is used for ethanol fuel. When combined with its production byproduct, distiller dried grains with solubles (DDGS), that figure rises to nearly 40%. With that in mind, corn growers and ethanol producers continue to battle petroleum refiners to sustain and grow ethanol production.
Trump has proposed a plan to boost the amount of ethanol in the nation's gasoline supply to 15%, but it may surpass its window of opportunity to be of any benefit to farmers this year. Iowa Senator Charles Grassley has said that any E15 change won't take effect until at least 2019. The higher fuel-volatility rating, or Reid Vapor Pressure, of E15 fuel prevents it from being sold in the summer months from May through August when fuel demand is at its peak. Year-round, most of the U.S. gasoline supply contains 10% ethanol, but allowing 15% blends to be sold would raise demand for corn ethanol and help farmers weather a difficult global grain market.
The American Petroleum Institute, the largest U.S. trade association for the oil and natural gas industry, has said it is willing to support selling higher 15% blends of ethanol in gasoline year-round, which the ethanol producers want, but only if the ethanol industry goes along with sunsetting the RFS program before 2022.
Farmers have complained that Trump's own trade policies are hurting the market for grain. Their complaints forced the president to push the E15 ethanol plan to the forefront in July after announcing a $12 billion assistance package meant to help farmers cope with higher tariffs imposed by China and Europe. See Industrial Info's May 16, 2018, article - Trump's Proposed Ethanol Policy Could Upend Fuel's Future for more information.
Ethanol consumption, which helped fuel the agricultural-equipment sales boom from 2005-2013, has flatlined, but exports continue to prop up its overall production, according to the most recent estimates by the U.S. Energy Information Administration (EIA). In the 2006-2016 period, U.S. fuel-ethanol production more than doubled, at the end of which 72% of the country's ethanol output came from six states.
Fuel-ethanol exports to Brazil increased for the fourth consecutive year, reaching 450 million gallons in 2017 and accounting for nearly one-third of all U.S. fuel ethanol exports, EIA data showed. Like the U.S., Brazil is among the largest producers and consumers of ethanol, but the country has incurred supply issues in recent years.
Canada remained the second-leading destination of U.S. fuel ethanol, receiving nearly 330 million gallons in 2017--5% higher than the level exported in 2016.
In 2016, China was the third-leading destination for U.S. fuel ethanol, but U.S. exports to China declined by 88% last year, mainly because of China's increase in the tariff on U.S. ethanol from 5% to 30% at the start of 2017.
Other U.S. trading partners that realized larger fuel-ethanol import volumes were South Korea and Colombia--up 41% and 194% year-over-year, respectively.
Growth in ethanol production in the 2006-2016 period has been linked to the introduction of the Renewable Fuel Standard in 2005 and, in recent years, burgeoning export markets. Government data from the Renewable Fuels Association (Washington, D.C.) shows that U.S. ethanol exports through June stood at 927.7 million gallons, up 33% from the first half of 2017 and on pace to break last year's record of 1.38 billion gallons.
With actions by the EPA "undermining domestic ethanol demand," robust export markets are more important now than ever before, according to the RFA.
At the beginning of 2018, U.S. ethanol capacity topped 16 billion gallons per year, or 1.06 million barrels per day (BBL/d), EIA data showed. That level of output translates to growth of 5% or more than 700 million gallons per year between January 2017 and January 2018. Part of the rise stems from a number of plants operating above capacity, which was made possible by plant improvements and process modifications, EIA data showed. These changes range from equipment upgrades to plant expansions and improved maintenance routines. Strong demand augmented that growth.
Of the top 13 fuel ethanol-producing states, 12 are located in the Midwest. That region was responsible for 14.8 billion gallons per year at the beginning of 2018 (967,000 BBL/d), a 5% increase, or more than 650 million gallons per year between January 2017 and January 2018. The top three states in output are Iowa, Nebraska, and Illinois. In total, they contain more than half of the nation's total ethanol production capacity.
Iowa is the leading ethanol state with more than 102 million barrels of fuel-ethanol production capacity, followed by Nebraska with a capacity of more than 50 million barrels per year and Illinois with some 40 million barrels per year. Minnesota is the leader in terms of E85 refueling stations, with nearly 400 operational facilities. Illinois had 262 and Iowa had 256. E85 typically contains between 51% and 83% of ethanol.
Among the largest active fuel-ethanol projects being tracked by Industrial Info is New Energy Investors' (Leola, Pennsylvania) construction of an ethanol plant in Spiritwood, North Dakota. Construction is planned to kick off in the third quarter of 2019 and be completed in late 2021. The plant will produce 13.5 million gallons per year of advanced fuel ethanol and 90,000 tons per year of lignin. The facility will use cellulosic material--corn stover, wheat straw--as feedstock. Inbicon A/S (Fredericia, Denmark) is providing technology for the ethanol portion of the facility. For more information, see Industrial Info's project report.
POET LLC (Sioux Falls, South Dakota) plans to build a grassroot fuel-ethanol plant that will process corn feedstock into 75 million gallons per year of ethanol in Shelby, Indiana. Construction is planned to kick off in next year's first quarter and be completed in mid-2020. POET Design & Construction Incorporated is performing design-build work. For more information, see Industrial Info's project report.
In Cadiz, Ohio, Harrison Ethanol LLC (Adamsville, Ohio) plans to kick off construction of a grassroot, 23 million-gallon-per-year ethanol plant that will use corn and sweet sorghum as feedstock. The facility also will have a 7.5-megawatt biogas combined heat and power unit. Construction is expected to begin in the third quarter of 2019 and be completed in late 2020. For more information, see Industrial Info's project report.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle TM, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com
