The U.S. renewable fuels industry is a global powerhouse, leading the world in supply and demand. With 16.1 billion gallons in 2018 output, the United States produced double the volume generated by Brazil—the world’s second largest producer. And in the U.S., ethanol blending for transportation use continued to outpace the rest of the globe. Meanwhile exports swelled 20% to a new record high of over 1.6 billion gallons, finding a home for roughly 10% of American ethanol production in 2018.
Brazil and Canada remained our top customers for the fourth straight year, accounting for half of all U.S. ethanol exports. However, Brazilian trade barriers caused U.S. ethanol shipments to vacillate significantly throughout the year following a peak draw in February. In addition, increased protectionist policies by China and a continuation of European Union barriers combined to shift the U.S. trading landscape further. As a result, U.S. shipments also were dispersed to several smaller and mid-sized markets like India, South Korea, and the Philippines. As a result, U.S. shipments also were dispersed to several smaller markets like India, South Korea, the Netherlands, and the Philippines.
Meanwhile, U.S. ethanol imports pressed below the 100-million-gallon mark for the fifth year in a row. Brazil shipped 60 million gallons of sugarcane ethanol—roughly 20% less than last year, taking advantage of the favorable treatment under the California Low Carbon Fuel Standard (LCFS) and RFS.
New opportunities within the global market are on the horizon in 2019. A new Japanese biofuel policy allows U.S. corn ethanol to meet up to 44% of the estimated ethanol required to make ETBE. This updates Japan’s existing sustainability policy in which only sugarcane ethanol was eligible for import and production of the oxygenate.
RFA continues to watch the unfolding of the implementation of Brazil’s RenovaBio, a new national biofuels policy approved in December 2017. This policy will likely encourage significant growth in biofuels consumption in the country. In 2019, RFA will be collaborating closely with the Brazilian government to establish a fair–trading platform. The primary focus will be to ensure the carbon intensity scoring of biofuel pathways under the program is transparent and science-based. If done correctly, RenovaBio could provide substantial U.S. ethanol export opportunities.