BFC keynote addresses policy, technology, economy

By Lisa Gibson | September 27, 2017

Geoff Cooper, senior vice president of the Renewable Fuels Association, told attendees at the Biofuels Financial Conference Sept. 27 in Minneapolis that it’s tough to predict the future. “Predicting the future is hard work, and it’s almost guaranteed you’re going to be wrong and the only certainty is there is no certainty.”

Cooper went on to discuss market trends and their effects on biofuels policies, as one of three speakers on the keynote panel of Christianson PLLP’s BFC, now in its 13th year. Social trends that will make a difference in vehicle ownership include the new “shared economy,” he said. The young millennial generation is “owning less and sharing more.” That generation also is prioritizing environmental and social impacts in their purchasing decisions, but sometimes, even more so, price and value.

Emerging energy technology trends include electric vehicles, autonomous vehicles, advanced internal combustion engines, new oil and gas recovery methods, continued innovation in biofuel production, and agricultural productivity gains. Perhaps most worrisome to ethanol producers is the emergence of electric vehicles. “The jury is still out on how fast and how significant the rise of electric vehicles is going to be,” Cooper said.

In transportation market trends, U.S. gas demand is expected to fall significantly over the long term, he said. The price of oil has gone down, but ethanol remains the lowest-cost source of octane.

Cooper also pointed out that, globally, areas with growing populations have lower car ownership figures per capita. The middle class is growing in areas such as China, India and Malaysia, all areas with low car ownership. But those figures could go up as that middle class grows, he points out.

Even with information on these types of market trends, predicting the future of biofuels policy and regulation is probably an impossible task, Cooper said. Factors to consider include long-term objectives, energy conservation and efficiency, energy supply, environmental protection, energy security, economic growth and affordability.

Among other regulations, Cooper specifically addressed the Renewable Fuel Standard, as well as the fuel economy and tailpipe CO2 standards. “Meeting those standards will require revolutionary changes in vehicle technology.” A midterm review of the tailpipe standards is underway, and the use of high-octane fuel like E25 has emerged as a promising way to meet them, he said.

Foreign trade policies also have significantly affected the U.S. ethanol industry in the past year. Brazil has implemented a 20 percent tariff on all U.S. ethanol imports above 600 million liters (158.5 million gallons) per year, likely taking it out of its ranking as a top export destination. “We’re probably done with Brazil for this year,” Cooper said. China’s ethanol tariff increased this year, too. “That shut us out of that market.”

More ethanol is coming, Cooper said, adding the U.S. will produce more than 17 billion gallons next year. “We’ve got to have growth in the export markets.”

Other speakers on the BFC keynote panel were Warren Preston, deputy chief economist with the U.S. Department of Agriculture, who shared farm price and production trends, and Dustin Kotrba, manager at Christianson PLLP, who discussed technology. The conference continues through noon Sept. 28, at the Radisson Blu in Minneapolis.