USGC looks to ethanol potential in Asian markets

By U.S. Grains Council | January 27, 2016

A team of U.S. Grains Council staff and two ethanol industry representatives traveled to Japan, Korea and Taiwan last month to review the ethanol markets in these countries and evaluate potential for ongoing U.S. ethanol export promotion programs in the region.

The team visited quasi-governmental organizations, government agencies, industry experts and representatives to both network and discuss possible in-roads for U.S. ethanol.

“The United States exported more than 870 million gallons of ethanol during the 2014/2015 marketing year, but there is room for more,” said USGC Chief Economist Mike Dwyer. “Asia—and particularly Japan, Korea and Taiwan—offer some exciting opportunities for U.S. ethanol exports. However, demand doesn’t happen on its own, we have to build it from the ground up.”

While in Japan, the group’s discussions dove into greater depth on constraints that had been uncovered during past missions and potentials ways to overcome them.

“We once again examined the requirements of the Japanese sustainability standards, looked at ways to overcome infrastructure concerns and scrutinized our core messages for ways to overcome misperceptions of renewable fuels,” Dwyer said.

“We believe through workshops, seminars and building relationships with key stakeholders in the Japanese market, we can generate potential interest for U.S. ethanol exports there. However, this may take time, and we have to be cognizant of the market environment, particularly as Japanese gasoline usage is actually expected to drop in the next decade.”

The group also visited Korea where a national mandate calling for 2.5 percent biodiesel blending was put in place as of July 31, 2015.

“When we first began ethanol promotion, Korea had no fuel blending mandate,” Dwyer said. “While the new requirements don’t specifically require ethanol, we believe with some basic USGC programming, such as trade teams, we can develop Korean interest in U.S. ethanol and create demand for it as a fuel source.”

The group's final stop was in Taiwan, which has primarily been using fuel ethanol produced from sugarcane from other global exporters.

“We hope to start providing targeted messaging to our key contacts in Taiwan to build this market’s confidence in the United States’ ability to provide a clean-burning renewable fuel source,” Dwyer said. “However, with recent elections in Taiwan, this messaging may be most effective when the newly-elected officials take office later this year.”

This mission to Asia was part of an effort to ramp up ethanol promotion programs managed by the Council and its partners at Growth Energy, the Renewable Fuels Association and USDA’s Foreign Agricultural Service. Across the globe, this group is undertaking work to establish contacts and initiate efforts to increase commitments to biofuels as well as to address regulatory barriers to U.S. ethanol imports and build public confidence in ethanol as a desirable renewable fuel source.

Click here to read past Global Update articles on ethanol.