Business Briefs

Market data and business announcements from the April issue of Ethanol Producer Magazine, including record-breaking E15 sales in Minnesota, Gevo signing on to Summit Carbon Solutions, all-time high export values reached in 2022, and more.
By Ethanol Producer Magazine | March 11, 2023

Cooper testifies at national CFP committee hearing
Renewable Fuels Association President and CEO Geoff Cooper testified at a hearing of the U.S. Senate Committee on Environment and Public Works in late February, telling lawmakers that a national Clean Fuel Program that incorporates a market-based, technology-neutral approach could be critical to decarbonizing the U.S. transportation sector.

“While policies such as the Renewable Fuel Standard, the Inflation Reduction Act, and light-duty vehicle fuel economy and tailpipe standards will play a vital role in reducing greenhouse gas emissions from transportation, other complementary solutions will also be required to truly decarbonize the sector by mid-century,” Cooper said. “If properly structured, a national Clean Fuel Program (sometimes called a Low Carbon Fuel Standard or Clean Fuel Standard) offers the best potential to rapidly accelerate the decarbonization of the transportation sector.”

Minnesota E15 sales volume hit record in 2022
Sales of E15 hit a record 171 million gallons in Minnesota in 2022, according to a recent Renewable Fuels Association analysis of data from the Minnesota Department of Commerce. This represented a 31 percent increase over the prior year due to a combination of more stations offering E15, ethanol’s cost-competitiveness, and steps taken by the Biden administration to avoid obsolete restrictions on summertime E15 sales nationally.

RFA has estimated that American consumers saved $57 million in 2022 due to U.S. Environmental Protection Agency waivers allowing E15 to be sold between June 1 and September 15 in conventional gasoline areas, at a time when retail gasoline prices hit a record high. The trade group warned, however, that E15 sales will be severely limited this coming summer unless the EPA takes action soon to allow year-round availability.

Gevo adds future SAF plant to Summit Carbon Solutions pipeline
An alcohol-to-jet fuel plant under construction near Lake Preston, South Dakota, has signed on to join the proposed Summit Carbon Solutions pipeline. Colorado-based Gevo broke ground on its $800 million Net-Zero 1 plant last year, beginning dirt work while finalizing project finance. When built, the plant will produce 55 MMgy of ethanol-based SAF, possibly starting in 2025. A wind-energy project is being developed to supply carbon-neutral electricity to the plant, which may also be used to produce green hydrogen from water and renewable natural gas.

Summit reached a major project milestone in February, achieving landowner agreements for more than 60 percent of the proposed pipeline route across five states—Iowa, Minnesota, Nebraska, South Dakota and North Dakota—a total of 4,000 total landowner agreements.

Ethanol, DDGS achieve record export values in 2022
The Renewable Fuels Association reported in February that the value of the U.S. ethanol industry’s exports soared to a record level of $7.2 billion in 2022. Ethanol exports strengthened to 1.35 billion gallons, the fourth-highest level on record, and distillers grains registered at 11.0 million metric tons, down slightly from 2021. While volumes shipped were not unprecedented, the cumulative sales values of both products were all-time highs.

Ethanol exports increased 9 percent over 2021—the highest volume since 2019—and the value of U.S. ethanol exports surged to $3.77 billion, a record high and an increase of $1 billion over 2021. Distillers grains exports in 2022 represented nearly a third of total domestic production. While export volumes were down slightly year-over-year, the product’s value surged to a record $3.4 billion.

Illinois governor signs bill establishing SAF tax credit
Illinois Gov. JB Pritzker on Feb. 3 signed the Invest in Illinois Act. The legislative package, in part, creates a $1.50 per gallon sustainable aviation fuel (SAF) purchase tax credit to support the supply and use of SAF within the state.

The SAF tax credit will become effective June 1, 2023, and remains in place through Jan. 1, 2033. The credit applies to SAF sold to or used by an air carrier. To be eligible for the credit, SAF must achieve a 50 percent lifecycle greenhouse gas reduction when compared to petroleum-based jet fuel using either the lifecycle methodology for SAF developed by the International Civil Aviation Organization or the most recent version of Argonne National Laboratory’s GREET model.

USDA-ERS predicts increased ethanol demand through 2030
USDA Economic Research Service analysts, using EIA data, recently predicted that by 2030, international (non-U.S.) ethanol use, under "historical" blend rates, will increase by just 7.4 percent. However, under “targeted” blend rates, international ethanol consumption could increase by 173 percent by 2030, due mostly to demand growth in Canada, Brazil and China.

U.S. gasoline consumption could either decrease by as much as 3.3 percent or increase by as much as 5.3 percent, causing domestic ethanol consumption to grow between 1.4 percent and 10.4 percent by 2030.

“The projected increase in ethanol consumption across all scenarios—despite falling gasoline consumption in some scenarios—is due in part to EIA’s assumption that the Renewable Fuel Standard will increase total U.S. consumption of renewable fuels,” said the ERS researchers in the report.