In August, the American Coalition for Ethanol held its 36th Annual Conference, themed “Everything Counts,” featuring speakers covering topics ranging from selling higher blends of ethanol to export markets and decarbonization.&nbsp;&nbsp; Members of ACE leadership, Dave Sovereign, board president; Brian Jennings, CEO; and Ron Lamberty, CMO; updated attendees on policy developments, ethanol markets and a hybrid efficiency flex-fuel vehicle study. Sovereign discussed the savings he has seen from higher ethanol blends at his local gas station in Iowa, ranging from E15 to E85.Both he and Jennings emphasized the importance of ethanol producer advocacy in Washington D.C., and the value of informing politicians about the industry’s needs, position and potential in the clean energy transition. Jennings explained how the industry’s policy priorities were conveyed to lawmakers on the Hill during the 2023 ACE Fly-In; ACE delegates met with members of Congress about securing year-round E15, the roll-out of the Next Generation Fuels Act, proper implementation of the RFS, and ensuring that farmers and ethanol producers are considered in climate policy decision making. “These priorities remain vital as we meet here today, and the motivation behind our advocacy for these priorities is really not very complicated at all—we’re trying to expand ethanol use,” Jennings said. “We need to expand ethanol use.”The battle for year-round E15 usage in the Midwest has lasted much longer than it needed to, Jennings said. “What should have been a straightforward undertaking to allow retailers in Midwest states to permanently sell E15 ... turned into a 16-month odyssey,” he said. “The foot-dragging has led the attorneys general of two of these states, Iowa and Nebraska, to file a lawsuit [in early August] to compel [EPA] to act—and we applaud their proactive leadership—but it shouldn’t come to this.”Jennings also addressed the volume target decrease EPA instituted in the RFS Set ruling earlier this year in response to comments from the oil industry, and he emphasized vigilance in making sure the RFS is implemented the way Congress intended. He explained that ethanol producers need to lean into the low carbon appeal of their product to expand the market. “Many of you have already taken important strides in this direction,” Jennings said. “Think about the investments you have made, or are considering, to diversify in operations and position yourself as a low carbon producer: innovations and equipment designed to reduce energy use—virtually every plant in this room has done that—or to reuse or recycle critically important and sometimes expensive inputs.”To help farmers and ethanol producers quantify the value of climate-smart farming practices, ACE plans to build a non-proprietary tool that allows anyone in the industry to see what carbon credits certain farming practices—low- and no-till farming, for example—should receive. “In short, future demand is going to hinge on driving down our carbon score,” Jennings said.Higher Blends, HEFF&nbsp;&nbsp; Lamberty took the stage to discuss ACE’s efforts to help retailers learn how to access federal funding from the Higher Blends Infrastructure Incentive Program for renewable fuels infrastructure. The program has $450 million available for retailers, divided over five quarters. Retailers that own less than 10 stations are able to get 75 percent of their costs reimbursed, and larger chains are able to get a 50 percent reimbursement. ACE’s Flex Fuel Forward website provides information on the HBIIP program and has been getting a lot of traffic. “Every retailer wants to be first to be second, so now that a lot of people have gotten HBIIP money, the rest of the industry realizes it’s real,” Lamberty said. “And I can tell you from trade shows we’ve gone to, people are understanding that this money is out there.”He also discussed the misconceptions that Americans have about how widespread electric vehicles really are. One poll demonstrated that one-fifth of Americans believe that 20 percent of vehicles on the road are electric, when the reality is much lower—less than 1 percent, according to J.D. Power.“Even the most optimistic predictions say that by 2035, 75 million of 295 million cars will be electric,” Lamberty said. “So, even if electric cars do take off, and there’s a place for them … we’ll still have a lot of room for our fuel.”ACE has sought to demonstrate the value of ethanol through its Hybrid Electric Flex Fuel (HEFF) project, which took a hybrid Ford Fusion and converted it to use E85 instead of E10 or gasoline not blended with ethanol. Lamberty talked about his experience driving the vehicle and shared that he saved nearly $150 using E85 in the hybrid over the course of one test period. “The beauty of this thing, the eFlexFuel converter, is keeping us from where we’re only losing 17 percent [or], on the high end, 20 percent using a fuel that has about 25 percent to 28 percent less Btu content,” Lamberty said. &nbsp;Oil Outlook and Demand&nbsp; The event’s keynote speaker, Tom Kloza, global head of energy analysis with Oil Price Information Services, or OPIS, outlined the petroleum price outlook and discussed some of its impacts on ethanol markets. “It strikes me, standing before you today, that there has never been a better period of advocacy for using corn based [fuel] ... than there has in the last couple years with everything going on, with the Ukraine invasion [and] the subsequent rally in oil prices to $120 to $130—$5 [and] $6 gasoline, $6 and $7 diesel,” Kloza said. He urged ethanol producers to keep in mind that world petroleum data is myopic, and predictions vary greatly depending on each party’s interests.&nbsp;Kloza explained that although some market projections see oil prices and demand declining in the future, he believes such projections are inaccurate because they do not account for the planet’s estimated population growth of 1 billion people over the next decade. Three refineries across the U.S. with a total capacity of about 428,500 barrels per day (bpd) have closed or are in the process of doing so; five others are in the process of starting up with capacity totaling about 480,000 bpd, representing almost negligible growth in domestic refining capacity. Globally, several large refineries are starting up with a total new capacity of nearly 3 million barrels per day; however, Kloza believes that many of these refineries will actually begin production in 2024. Including U.S. closures, the global supply lost roughly 2 million barrels per day of capacity this year. Despite the added capacity on the way, Kloza explained that oil refining is probably going to be tight in the coming years, and producers will likely see high margins moving forward.&nbsp;Most of the U.S. oil supply is light shale oil, which is good for gasoline, but not as efficient for turning into diesel, the oil industry’s most lucrative product right now. Kloza explained that it takes roughly 3 million barrels of shale oil to make 1 million barrels of diesel. “Refineries can make more gasoline than they want and much less diesel than they want,” he said. With OPEC implementing cuts primarily on medium and heavy distillate oil, the market for renewable diesel is “incredibly fertile.”The volume of gasoline usage in the U.S. seems to have peaked between 2016 and 2019, Kloza said. “We averaged 9.3 million barrels a day in gasoline demand in those years; we’re probably going to average about 8.8 or 8.9 this year,” he said. Improved mileage, lower numbers of commuters and higher vehicle miles traveled (i.e., less short-distance, urban driving) are all contributing to this shift.&nbsp;California is a challenging location for oil refiners, Kloza explained, citing the fact that the state is in the process of developing a methodology for determining if refiners are making an unreasonable profit. He said it’s likely that some refiners may choose to close their plants and leave California due to the hostile regulatory environment. “There’s probably a really compelling case that could be made for more ethanol in California fuel,” he said. “But they seem absolutely averse to considering that.”Kloza also made the case for the Gulf of Mexico being the newest chokepoint for world oil supply, explaining that the volume of product moving through that area has grown since Hurricane Katrina, and a powerful hurricane would cause the price of gasoline, diesel and jet fuel to skyrocket. In closing, Kloza explained that he believes gasoline margins will be “very, very high” in the fourth quarter of 2023.ACE’s first session provided producers with updates and information on the state of policy, the liquid fuels market as a whole and the expansion of the higher blends, illustrating just how important “everything” is to growing the ethanol market.Author: Katie Schroeder&nbsp;&nbsp; Contact: katie.schroeder@bbiinternational.com &nbsp; &nbsp;

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High-profile speakers at ACE’s annual conference discussed policy, the future of higher ethanol blends, oil markets, refining trends and more. 

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