Ethanol sales may not be hurt by EPA decision on Renewable Fuel Standard

corn ethanolAre you producing and selling an alternative fuel that’s getting tangled up in regulatory limitations? No worries – just sell it overseas. While ethanol and other biofuels producers have been frustrated with delays in the Renewable Fuel Standard decision by the US Environmental Protection Agency (EPA), exports of corn ethanol have increased 31% this year and have reached their highest level since 2011.

Ethanol used in gasoline will probably never hit the 15% ethanol E15 target that the EPA had been considering; and the 10% ethanol mark may be reduced by pressure being placed on the EPA by oil refineries and producers. Exporting petroleum products with the additive ethanol blend has been a big growth sector for petroleum products and ethanol in the past few years. The US passed Russia in 2010 to become the dominant exporter of petroleum products, and ethanol sales have increased with that growing overseas demand.

Archer-Daniels-Midland Co., Green Plains Renewable Energy Inc., and Valero Energy Corp., three of the four largest U.S. ethanol companies, say that ethanol exports have been a significant part of their revenue growth. “If we can’t sell it here, we’ll sell it someplace,” said Bob Dinneen, president and CEO of biofuels industry group Renewable Fuels Association (RFA). “We’re going to focus overseas.”

Exporting fuel has been a bit more difficult for liquefied natural gas (LNG). So far, the US Dept. of Energy (DOE) has approved each export application, but the approval process has been complicated. Some analysts worry that strong demand for US-drilled natural gas may drive up the price for LNG and compressed natural gas, but so far it remains stable for users of natural gas vehicles.

The shale-oil boom in the US has created a stream of oil and gas products being sold overseas; ethanol is seeing a record level of crops being grown for these exports. The US is now producing about 66 million metric tons more corn than 10 years ago; that’s nearly as much as the rest of the world will export this year. Overseas demand is keeping ethanol sales strong even though the EPA has been easing off the ethanol mandate for the past year.

Ethanol trade lobbyists have traveled to Peru, Panama, Japan, and South Korea and trips are planned to Thailand, Malaysia and the Philippines this month to gain support for more overseas ethanol sales, according to RFA. A Commerce Department-sponsored trade mission to northern Brazil last year won sales contracts valued at $29 million, the RFA says. If the EPA mandates a lower volume of ethanol sales in US fuel, it probably won’t matter much for the ethanol industry.

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