Post-Pandemic Opportunities Emerge for Ethanol

As the COVID-19 pandemic continues, the U.S. Grains Council is working diligently to engage international stakeholders to convey the continued availability of U.S. ethanol. As travel restrictions ease, strategic in-country engagement will resume.
By Brian Healy | June 12, 2020

Around the world, the impact of COVID-19 is astounding. From the substantive human health toll and economic stagnation it has levied on all of us, to changing how we interact with each other and accomplish what were simple daily tasks, its impacts will be lasting to us as individuals and collectively as a society and industry. Most of the impacts are still unknown.

The world is going through an unprecedented level of disruption, where every individual and industry is impacted by global restrictions set in place to reduce new cases of COVID-19. Travel bans have an impact on fuel demand in the near term, but the impacts of job losses, middle-class growth stagnation and a readjustment period from social distancing will continue to put downward pressure on demand beyond 2020.

Compounding the overall global demand decline, the lack of an agreement on crude production between the 13 Organization of the Petroleum Exporting Countries (OPEC) and swing producers, specifically Russia, sent shock waves across global energy markets that continue to reverberate.

Despite a tentative agreement to reduce overall output, the agreed upon 10 percent reduction in crude production is a drop in the barrel for markets forecasting 50 to 60 percent declines in gasoline demand in the near term, averaging over the calendar year to 20 percent year-over-year reductions. The collapse in demand, coupled with marginal decreases in supply, contributes to shortages in a critical component to the ethanol industry: storage.

During this unprecedented decline in demand, the world will experience the sharpest decline in global emissions since the Great Recession, or even further. As the world returns to a new normal of economic activity and emissions-as-usual, the economic cost of abatement over this period, and other climate impacts, will be measured and discussed with renewed interest, providing a pathway to increased ethanol use as a here-and-now environmental solution for the transport sector. 

At the same time, many are seeing their cities more clearly due to the decline in particulate matter emissions, further feeding into the human health narrative. During this current global crisis, to date, hand sanitizer has fostered most of the discussion around human health benefits as governments, hospitals and households look to meet the drastic uptick in demand. Ethanol producers in the United States, and globally, have responded to meet this expanded demand.

As the COVID-19 pandemic continues, the council is working diligently to engage international stakeholders to convey the continued availability of U.S. ethanol. We continue to promote the environmental benefits of expanded ethanol use, while also promoting non-fuel applications, such as its use in hand sanitizer. As travel restrictions ease, the global footprint of the council aligned with strong industry partnerships means we are positioned to follow up with in-country engagement and to resume strategic programming that supports the expanded use of ethanol in a new era as the world reemerges, post COVID-19.

 

Author: Brian Healy
Director of Global Ethanol
Market Development
U.S. Grains Council
202.789.0789
bhealy@grains.org