ACE talks opportunities, challenges for ethanol demand in 2018

By Tim Albrecht | February 23, 2018

The American Coalition for Ethanol hosted a webinar Feb. 20 titled “Opportunities and Challenges to Increasing Ethanol Demand in 2018.” The webinar focused on ACE initiatives designed to ensure ethanol continues to grow in the U.S.

The two speakers on the panel were Brian Jennings, ACE CEO, and Jonathon Lehman, ACE’s Washington D.C. lobbyist.

ACE has been working with retailers through its Flex Fuel Forward campaign. Via support from its members and the corn industry, the organization plans to expand that campaign in 2018. The Flex Fuel Forward campaign includes paid advertising, social media, retailer-to-retailer outreach, an educational video series and a one-stop shop for retailers at the website.

Over the course of 2018, one of the most significant things ACE is doing with the campaign is releasing a series of short videos highlighting retailers that have already added E15, or higher-blend ethanol fuels, to their stations, Jennings said. “These videos demonstrate the success they’ve had after adding [E15 and flex fuels]. They address frequently asked questions other retailers have about adding these fuels, as well.”

ACE is also overhauling its website, which is primarily aimed at fuel retailers. The organization also has its website, which is targeted toward ethanol producers. The website will be more smartphone friendly as many people are gravitating toward doing more and more of their business on their phones, says Jennings.

“When it comes to some of the things we’re trying to accomplish we’re facing some headwinds, but in other areas we have some tailwind to help us,” Jennings said. “One area where the wind is absolutely at our backs is the market development work that we do.”

There are some other ways we’re trying to support increased access to ethanol both here in the United States and around the world. Another bright spot for the ethanol industry is on the export side of things, says Jennings. “We exported a record volume of product, approaching 1.4 billion gallons in 2017. U.S. ethanol is in demand for a variety of reasons. One, we’re the low-cost producer. Number two, U.S. ethanol is a clean source of high octane. And number three, most countries are trying to adopt some sort of greenhouse gas reduction when it comes to vehicle emissions. What they’re finding when looking at the life-cycle carbon footprint of ethanol from the United States is that we’re a very attractive option for them.”

Most projections call for another robust year for ethanol exports in 2018. ACE is trying to get more involved and supportive of export promotion activities, such as supporting the work of the U.S. Grains Council. The Grains Council asked ACE to participate in some of their trade missions, particularly in Mexico, says Jennings. “We hope to have more clarity with respect to Mexico. There’s an E10 nationwide opportunity in Mexico, except for the three large metro areas. It’s a huge export market opportunity for the future.”

On the public policy front ACE has put a priority on Reid vapor pressure (RVP) relief, octane demand, defending the Renewable Fuel Standard and market access through clean fuel policies, says Jennings.

“The most urgent priority we have is to finally address the Reid vapor pressure limitation. We have been pursuing both a legislative fix to this problem and a legal administrative fix at EPA. We were able to make some progress last year on the legislative front thanks to bipartisan support, but the votes weren’t there on the [Senate Committee on Environment and Public Works].”

One of the good things to come out of the EPW committee after the RVP legislation failed to garner the votes was Sen. Joni Ernst, R-Iowa, and Sen. Deb Fischer, D-Neb., leveraged a commitment from EPA Administrator Scott Pruitt to look at RVP and what they can do administratively, Lehman said.

“We’ve had continued dialog with the EPA since Pruitt acknowledged the openness to look at the legal analysis,” Lehman says. “We’ve been part of a collaborative effort looking at the Clean Air Act to get us to an RVP fix administratively. I think the conversation with EPA has been constructive and has been better than we’ve had with previous administrations. That analysis is ongoing and we continue to push the EPA.”

ACE is also focused on the ability to expand access for ethanol to the market place through the octane value of the fuel. The best way to do that is through some kind of greenhouse gas metric where automakers are required to improve fuel economy and at the same time reduce CO2 emissions from vehicles, says Jennings.

“EPA is looking at high octane and we have reams of test data to prove ethanol is a superior source for that high-octane fuel,” Jennings says. “And we have a program in place, the CAFE-GHG standard, that could be a vehicle by which we achieve an octane market. It’s more a matter of when we get the opportunity to get a higher octane fuel, rather than if we get that opportunity.”

On the legislative front in Washington, D.C., one of the big issues that’s engulfing the conversation regarding the RFS is renewable identification number (RIN) prices. Sen. Ted Cruz, R-Texas, is trying to leverage the nomination of Iowa Agriculture Secretary Bill Northey to the USDA to get changes within the EPA and addressing RIN prices. Philadelphia Energy Solution’s bankruptcy is being used by proponents of RIN price reform as the poster child as to why the RFS is bad, says Lehman. “What we look as a win-win is if we can get RVP reform done than we can increase the number of what gallons are used over a full calendar year. That will take pressure off compliance with purchasing RINs and that will lower the price nationally from a market based perspective.”

According to Lehman, Sen. John Cornyn, R-Texas, has been working on reform legislation to the RFS and has been keeping language pretty close to the vest. We’ve heard plenty of rumors when that reform is going to come. What we know is our supporters and champions in the Senate do not want to provide any life to it so they’re not engaging with Cornyn or negotiating with him. “The industry is in unanimous agreement that we don’t want to see any kind of reform legislation. We view efforts to touch the RFS as undermining the safety net and decreasing the mechanisms in place to guarantee we have from a blend percentage now. It doesn’t give us that foundation to grow in RVP, octane, etc.”

Between continued campaign initiatives, RVP fixes, octane demand and keeping the RFS in place, ACE is focused on increasing ethanol demand and keeping the ethanol industry moving in the right direction, says Jennings. “All these things are designed to expand market access for ethanol. Everything we’re working on is focused on those things.”