The U.S. Grains Council is investing a “remarkable amount of time” exploring avenues to better fit environmentally friendly U.S. ethanol into varying compliance programs around the globe, says Hagan Rose, USGC’s ethanol advisory team leader.
The process is time-consuming, the game is long, but the payouts are worth it. The U.S. ethanol industry set a new export record in the 2023-’24 marketing year—exceeding 1.75 billion gallons. Impressive, given the change in top markets in the past few years. Back in 2017 and 2018, Brazil and China were U.S. ethanol’s two largest importers. In 2023-’24, though, both imported miniscule amounts.
“We’re setting a new record without exporting much at all to those two biggest markets that were around in the 2017-’18 marketing year,” says Cary Sifferath, vice president of USGC. “That alone shows the benefit of the work.”
Canada, by far the largest market currently, implemented its Clean Fuel Regulations in July of 2023. “Some of the work we did two or three years back helped lead to that,” Sifferath says, citing the allowance of an aggregate U.S. ethanol carbon intensity score, versus plant-by-plant.
Sifferath is quick to point out that new markets are not just USGC wins—the council works with local governments, industry associations and U.S. government affiliates on foreign soil to develop relationships that benefit U.S. ethanol. It’s about diplomacy—local partnerships increase the chances of support, he says, as many governments aren’t likely to change policy based on foreign input.
“We like to work with like-minded people on the ground ... having discussions on the benefits that ethanol blending can have on [reducing] air pollution and meeting carbon reduction goals,” Sifferath says.
Emphasis On SAF
In early 2024, Mark Ingebretson joined USGC as its sustainable aviation fuel consultant, a first for the council. “Mark has worked with lots of major petroleum markets, so having his expertise on staff for us has been a really big positive,” Sifferath says.
In his first year in the role, Ingebretson has been working to identify the low-hanging fruit in export markets for alcohol-to-jet fuel (ATJ), focusing first on Asia, specifically South Korea, Taiwan, Thailand and Japan. “We feel Asia is probably the ripest area,” he says. “We’ve talked about ATJ, what their priorities are, and really just an introduction and starting to get those conversations going.” His meetings have included trade groups and potential SAF producers in those countries.
Ingebretson is also exploring India, the European Union, South America, Mexico and more. He is casting a wide net in this education and connection phase, he says.
Canada is also a focal point for SAF market development, as British Columbia has already implemented a 1% SAF mandate that increases to 2% in 2025. The amount of ATJ used to meet that target will likely be limited initially, Sifferath says. “But it’s great to have a province in a country like Canada that’s already putting in those mandates.”
But Canada, like many European countries, is prioritizing second-generation feedstocks in its SAF programs. Ingebretson argues that waiting for those feedstocks to be economically viable slows progress. “These first-generation feedstocks are available now, they have abundant supply, there’s a mature supply chain available to them. I think we can all agree that second-generation feedstocks are a good thing, but don’t slow down progress ... [they should] consider using corn ethanol as a feedstock for producing SAF now.
“We have to sell the message that we’ve got to use first-generation as a bridge, with the hope, then, that it will always be in the mix.”
Sifferath says it’s paramount to address any global policy mandates that preclude ethanol from contributing to carbon reduction goals.
One of the largest hurdles Ingebretson is up against is the international use of CORSIA versus the U.S.’s new 40B GREET model. “From an international perspective, they still rely on CORSIA, which has some issues and overstates carbon emissions from indirect land use change (ILUC) and does not allow for some new technologies like carbon capture, like climate smart agriculture, things of that nature,” he says. “[SAF is] going to be a continued large priority and it’s just a matter of sticking with it and going through this sometimes bumpy ride and finishing it out.”
Global GREET
Ingebretson hopes third-party studies and papers on ILUC and the merits of ATJ will enhance his key points in foreign markets for SAF and perhaps even promote 40B GREET use internationally.
“They will have to stop being so rigid on their objection to first-generation feedstocks, look at the actual data, start allowing that as an acceptable feedstock and get more organizations to start pushing [the International Civil Aviation Organization] to accept another model like the 40B GREET alternative or update CORSIA.”
Even for on-road fuels, the requirements for greenhouse gas reduction, globally, are tightening, Rose says. “We see more stringent requirements in Canada [and] Europe—and I believe Central America will follow the lead in Europe. So to really show the environmental benefits of ethanol is key for our continued growth in export markets.
“The ethanol of 10 years ago is simply not going to be the competitive supply in the world going forward. We have to show the benefit we already provide.”
In the 2023-’24 marketing year, the U.S. missed out on export gallons to the European Union as a result of lack of compliance with International Sustainability & Carbon Certification mandates. Of a potential 550 million gallons, the U.S. exported about 330 million, with Brazil stepping in to meet the remainder of the EU’s demand. “The EU paid more for their ethanol because we didn’t meet compliance,” Rose emphasizes. “That’s a missed opportunity.”
The EU requires a GHG reduction of better than 50%, proven through ISCC compliance. But with the ethanol industry collectively looking toward carbon reduction tactics, Rose says, “We’re heading in the right direction. We have to do everything we can to make it as easy as possible from the farmer through the ethanol producer. It has to align and recognize the benefit it brings for the export market.”
Promising Destinations
Rose says a promising export market needs three factors: political will, economics and logistics. “[USGC] can help with a couple of those,” he says. “We can help show the value of the material in the fuel blend, we can show the technical aspects of blending and the benefit of the molecule from an economic and environmental standpoint. But we don’t build tanks around the world, so logistics is something we all have to figure out together.”
When Rose searches for potential export markets, he looks for logistics. “Having tanks to store ethanol is a huge piece of what I look for on the commercial side. I’m immediately energized when I find that ... they’re ready to blend.”
USGC has sent three delegations to Nigeria in the past year, visiting the Dangote Refinery in Lagos. “The one thing that really stood out in that visit to the Dangote refinery was that they have tanks,” Rose says. “They built 30,000-cubic-meter tanks, and on those tanks it says ‘ETHANOL.’ They’re ready for what is to come.”
Nigeria is absolutely one of the top promising export markets, Rose and Sifferath agree, and Dangote has the potential to blend and refine for domestic use, as well as for re-export to surrounding countries and even the EU. “That’s a big, big potential growth market going forward,” Sifferath says.
“We still have some work to do to confirm there’s a blend policy,” Rose says. “USGC has had technical staff in Nigeria. So providing that resource, then knowing the opportunity is there to start moving the fuel is really exciting.”
The Philippines is already a top 10% export market for U.S. ethanol, with its 10% domestic mandate and new discretionary blend up to 20%. Indonesia and Vietnam are also starting to blend at lower levels. “These are large and growing gas markets where there is potential for policy changes going forward that can open up those markets in the coming year or two,” Sifferath says. Some ethanol is going to Singapore, a primary octane market, today that is then blended for Indonesia.
Japan holds both future promise and past success, as the country has updated its policy to allow 100% of its ETBE to come from U.S. ethanol, Sifferath says. “We’re working closely with Japan and hope to see them [move] towards direct blending of ethanol at a higher level than today with just ETBE in gasoline.” The U.S. is moving about 100 million to 120 million gallons of ETBE from ethanol to Japan.
In Central America, Guatemala and Costa Rica are showing a commitment to move toward a sustainable blend, Rose says. “I see that as an opportunity with those Central America countries looking at programs similar to ISCC. As they send their product to the EU, we are able to backfill.”
USGC sent a delegation to Scandinavia in 2024 as well. “We went to understand better what’s changed since the Ukraine war, what are the opportunities to grow those blends and what’s the European policy as a whole,” Rose says.
Sifferath adds, “Those countries are very much in favor of renewable fuels and reducing carbon, but it’s part of the front as we battle with Europe on how much grain-based ethanol can meet their growing fuel-grade or on-road ethanol demand. They do have a cap on how much can be grain-based.”
“We’ve been fortunate to see pretty remarkable growth in the last year, with some of our existing markets: Canada, EU, Colombia,” Rose says. Despite the counter-duty case in Colombia, the country sits at No. 5 on the U.S. export list. The EU is the fourth-largest market today, with work ongoing to certify more ethanol plants to export there, Sifferath says.
Canada, of course, remains a focal point for USGC, as its provinces implement and expand blending mandates. “We see potential for continued growth as Canada looks to increase blending levels, province by province, possibly as high as E15 in some bigger gas-demand provinces,” Sifferath says.
Mexico, with new President Claudia Sheinbaum, looks promising, as she has a background in science and engineering, and has been a voice for the benefits of renewable fuels for Mexico. “We’re hoping Sheinbaum’s administration will have a friendlier view on renewable fuels and having ethanol be part of that moving forward,” Sifferath says.
Rose says Mexico could become a 300 million-gallon market. “It can be a good market for U.S. ethanol if we can get the policy to fit right and allow for 10% ethanol blending across the Mexico market,” Sifferath says.
Clearly, the global demand exists and, if all of USGC’s focus markets align, U.S. ethanol could be on its way to becoming a 2 billion-gallon export market, Rose says.
Meanwhile, the work continues, with key USGC staff and leaders traveling the world and continuing to lay the groundwork for new and expanded opportunities. The emphasis on aligning guidance and mandates will remain.
“We need to find ways for our programs to align with the world,” Rose says. “We’re never going to have the same spec everywhere. But we should be able to get closer to global agreement on carbon.”
Author: Lisa Gibson
lisa.gibson@sageandstonestrategies.com
