Trade Talks

FROM THE DECEMBER ISSUE: The Global Ethanol Summit in Washington, D.C., focused on worldwide markets and opportunities.
By Matt Thompson | November 18, 2019

Ryan LeGrand, president and CEO of the U.S. Grains Council, said ethanol is his organization’s top priority. To that end, the USGC, along with the Renewable Fuels Association and Growth Energy, hosted the first Global Ethanol Summit Oct. 13-15 in Washington, D.C. Presentations from industry leaders, including Stephen Censky, U.S. Department of Agriculture deputy secretary, as well as ample time dedicated to networking, attracted over 400 participants from more than 60 countries.

And trade was indeed the focus. During his keynote presentation on the first full day of the summit, LeGrand said, “We’re gathered here in the spirit of global collaboration and access to free trade, to see the increased use of ethanol worldwide, and the role it plays in improving human health around the world.”

Following LeGrand’s remarks, Mike Dwyer, USGC chief economist, presented a global outlook of ethanol that outlined several countries’ recent efforts toward greenhouse gas (GHG) reduction and ethanol blending. Dwyer spoke about Brazil, Canada, China and Japan, among others, and told attendees the USGC sees Asia as the most promising market in the coming years. “We found one of the best new markets is going to be over in Asia, largely because ethanol usage is low, fuel demand is growing at some of the fastest rates in the world and the air quality is bad and getting worse in many of the major cities in Asia,” he said. “We’ve left out some other countries. That doesn’t mean Africa, the Middle East and Europe can’t benefit. They clearly can.”

Emily Skor, CEO of Growth Energy, said, “This is the first time we’ve had a global conference of this scope, that’s all about ethanol, with this level of participants. I think we’ll have good U.S. government attendance as well. So I think that really speaks volumes for the appetite of this type of exchange, the importance of the in-person dialogue.”

She added that global trade meetings like the summit are important for the U.S. ethanol market. “We had record-breaking export years in 2017 and 2018, but we’re not going to have that in 2019. We’re feeling that. That’s part of the pain we’re feeling right now. If we were trading with China, things would look and feel differently, so we very much want to get that back on track. We know that part of that is making sure that we have free market relationships,” she said. Building those relationships only happens in person at meetings like the summit, Skor added.

Global Advantages
While in-person meetings were part of the programming, so too were presentations ranging from the health benefits of ethanol, to the value of ethanol’s octane, to retailer perspectives on selling higher ethanol blends. All of those sessions were conducted with an eye toward expanding global ethanol use.

“We need smart domestic energy and climate policies, but also smart global strategies and smart trade policy,” RFA president and CEO Geoff Cooper said. Renato Domith Godinho, with Brazil’s Ministry of Foreign Affairs and presenter on a panel called “Policies Continue to Remain Critically Important for the Future of Renewables,” said environmental and renewables policies are crucial to the goal of increasing global ethanol use. Godinho agreed with Cooper on “the need to have smart policies and a global strategy to bring about the desired results that we want for the climate, for energy security, for the world,” Godinho said.

During the panel, Miguel Ivan Lacerda Oliveira, director of biofuels for Brazil’s Ministry of Mines and Energy, discussed ethanol’s role in the electrification of vehicles. “The future is electric,” Oliveira said. “There’s no denying electric cars are going to grow up. But I think biofuels could play a major role in electrification of the transportation sector.”

One way that may happen is through the use of electric hybrid vehicles that run on ethanol. Toyota has recently released such a vehicle in Brazil, he said. “So you pour ethanol in the car, and it reforms and takes off the hydrogen and runs and it’s an electric car.”

The event also included a panel titled, “Air Quality and Human Health Consequences: The Cost of Inaction.” Sadaf Sobhani, a postdoctoral researcher with the Lawrence Livermore National Laboratory, began the panel discussing her research in relation to the environmental impacts of ethanol and gasoline. “Where I really want to take us is to understand that the emissions that you see are directly linked to the composition of the fuel and to the combustion technology itself,” she said.

She added that “one of the most important factors contributing to particulate matter is the aromatic content of the fuel.” However, she said using ethanol as a replacement for aromatics has the advantage of lowering particulate matter in emissions, which offers many health benefits.

The health benefits are also realized when ethanol is used as a cooking fuel, said Brady Seals, cofounder of Garner Advisors LLC. She said that in some developing countries, the fuel sources for cooking are wood or coal, and burning those fuels has a serious negative health impact. “3.8 million people die every year from one of the most basic tasks, which is cooking,” she said.

Ethanol, however, has been used in some areas to alleviate those issues. “Because we’ve been able to put ethanol stoves into the hands of consumers, we’ve been able to start to study the health impacts of cooking with ethanol,” she said. In addition to reducing particulate matter, Seals said ethanol stoves can reduce carbon monoxide emissions by 82 percent in homes that had been using traditional fuel sources.

Another panel focused on the industrial uses of ethanol. Rakesh Bhartia, CEO of India Glycols, which uses ethanol as a feedstock for the manufacture of industrial chemicals, said that while most of the focus globally is on ethanol’s role as a transportation fuel, there is room for growth in the industrial sector. “When I picture the use of ethanol globally, I think there’s a tsunami of the mandatory blending of ethanol; of fuel. None speak about ethanol being used for any other purpose and that’s where companies like ours, which are engaged in the use of industrial ethanol, are too tiny to be considered at a global scale.”

However, despite the challenges, Bhartia said companies like Coca-Cola have made great strides in using ethanol-derived chemicals in their packaging.

Also taking part in the panel was Olaoluwa Bamikole, chief agro-ethanol consultant for the Zenith Group, a Nigerian company. “This is an oil-rich country,” he said. “A lot of people don’t have access to affordable energy.” The country is also committed to mitigating climate change, and these factors make ethanol an attractive fuel for cooking, lighting and heating, he said.

Continued Momentum
The second day of the summit included a keynote address by Censky, as well as brief remarks from Daniel Whitley, associate administrator of the U.S. Department of Agriculture’s Foreign Agricultural Service.

Censky said advances in production and farming practices show promise for the environment in the U.S. “We think, with the technologies and efficiencies that are being achieved at ethanol plants today—as well as on the farm by U.S. farmers themselves by using no-till and cover crops and producing more with less—that we can actually have a 70 percent reduction [in GHGs] by 2022,” he said.

During a brief meeting with members of the press, Censky said events like the summit are important to U.S. farmers, as well as ethanol producers. While 90 percent of the ethanol produced in the U.S. is used domestically, “that 10 percent that we’re exporting is very, very important to the health of the industry—and to corn farmers and sorghum farmers and others—and it’s something that we aim to grow as well and we see some real potential in working with our partners around the globe to expand the sale of ethanol around the globe.”

Whitley briefed his audience on the FAS’s role in promoting the global use of ethanol. He spoke about collaboration between the ethanol industry in the U.S. and the USDA and FAS. “I can’t tell you how proud we are of what our private sector has done with ethanol,” he said. “Two decades ago, ethanol production in this country, the trade and import of ethanol, was miniscule. But in a very short time they have become the world’s best producers of ethanol and a leader in our ethanol trade initiatives around the world.” He added that ethanol is the fastest-growing agricultural export in the U.S.

Whitley also echoed the sentiments of other summit presenters, saying the reason for the meeting in Washington was not just to find a home for more U.S. ethanol exports. “The agency that I represent—the Foreign Agricultural Service—we spend a lot of time collaborating,” he said. “Many of you in this room today have collaborated with us.”

Retailer POV
Michael E. Lorenz, executive vice president of petroleum supply for Sheetz, spoke about E15 and his company’s experience selling higher blends of ethanol. With 44 percent of Sheetz’s convenience stores offering E15 and E85, Lorenz said his company is the largest E15 retailer in the U.S. “We know how to sell gasoline, and we know how to sell higher blends of ethanol,” he said. He highlighted the benefits of ethanol from a retailer’s perspective, saying that because gasoline is a commodity, it’s typically marketed based on its price. But ethanol allows a retailer the opportunity to differentiate. Because ethanol is cheaper, it does lower the price of gasoline, but it is also cleaner burning and offers higher octane.

Lorenz also offered guidance for retailers who want to sell higher ethanol blends. The first step, he said, is determining if the convenience store’s tanks, pumps and piping couplings are compatible with ethanol. Ethanol supply and whether stores will splash blend or receive preblended fuel is the second consideration. He also told his audience to consider what the competition is doing with respect to ethanol. “You don’t want to be following the competition,” he said. “You want to be leading. We did it because it just actually simply made sense.”

In addition to the panels and presentations, the summit schedule also included time for business-to-business meetings, designed to connect suppliers with those looking to purchase ethanol, or to answer questions about the supply chain. Following the meetings in Washington, D.C., delegates also had the opportunity to tour ethanol plants and farms in the Midwest.

Skor, Whitley and others made clear that the intent of the summit was not just to find a home for more U.S. ethanol exports. One of its true goals was to promote the use of ethanol globally, and to collaborate with other governments, Whitley said. Skor said the summit’s sponsors want countries “to dial up [their] own capabilities internally,” adding that she hopes U.S. ethanol can help meet those countries’ goals.

Author: Matt Thompson
Associate Editor, Ethanol Producer Magazine