KTIC Radio

November 28, 2017

By DTN/Progressive Farmer

China’s newly instituted E10 mandate has the potential to create more demand for both corn and ethanol produced in the United States, according to a new analysis from the Center for Agricultural and Rural Development at Iowa State University.

In its fall 2017 agricultural policy review, CARD said there are many unknown details about China’s mandate. However, the Chinese are expected to see an increase in gasoline consumption from about 40 billion gallons in 2017 to 46 billion gallons in 2020.

“Meeting the national E10 mandate would require an extra 3.6 billion gallons of ethanol, putting China ahead of the European Union to become the world’s third-largest ethanol consumer,” CARD said.

“Since details of the mandate have not been disclosed, it is not yet clear how China will generate more than fourfold output growth within three years (assuming domestic production is to keep up with consumption).”

As U.S. ethanol producers have faced concerns about the implementation of the Renewable Fuel Standard in recent years, there has been an increased emphasis on growing export markets in China and elsewhere.

China’s government announced the new E10 mandate in September as a way to decrease the nation’s corn stockpiles that peaked at more than 4 billion bushels in 2015-16.

According to CARD, the total accounts for about half of world ending stocks and would be enough for domestic consumption for about six months in China. The stockpiles grew as a result of a corn price support policy that was paying Chinese corn producers more than twice the international price level until 2016.

“Burdened by high storage cost, food safety risks, and potential waste, China recently adopted multiple measures to cut supply and increase demand,” CARD said.

“These measures include replacing the support price with a producer support based on planted area and financial assistance for corn processors. These measures have been effective — since 2015, China’s corn consumption has caught up with production, the price for corn dropped to the lowest point in six years, and ending stock has been decreasing. The E10 mandate will further increase the demand for corn and speed up reduction of the stockpile.”

CARD said the mandate started on a trial basis in 11 provinces and will become national by 2020.

“This measure would require ethanol consumption in China, the largest motor vehicle market in the world, to at least quadruple within the next three years,” the analysis said.

“For U.S. producers, this recent development fuels interest in whether China is going to import ethanol and/or corn (the main feedstock for ethanol production in China) to meet the mandate.”

CHINA ETHANOL GAINS

CARD said that in 2016, China produced more than 1 billion gallons of ethanol. It became the fourth-largest ethanol-producing nation in the world behind the United States, Brazil and the European Union. China’s average annual production growth rate in ethanol production was about 17% from 2004 to 2016.

China’s primary ethanol feedstock is corn, according to the report, which accounts for about 64% of ethanol production in the country. China started ethanol production at four state-owned plants in northern China in 2002 after corn stockpiles reached historical highs.

“As the stockpile decreased and refineries started to use newly harvested corn for feedstock, the government stopped approving additional generation-one ethanol refineries in 2007. By calling for ‘appropriate development of grain-based ethanol,” according to CARD, “the current national E10 mandate relaxes the government’s previous stance against corn-based ethanol.”

In 2006, China began development of ethanol production using cassava. The starchy root plant now accounts for about 23% of China’s total ethanol production.

“However, it is challenging to grow enough generation 1.5 feedstock domestically, and cassava refineries in China still heavily rely on imports,” CARD said.

“Cassava refineries are located in southern China, close to domestic and foreign cassava production regions. Recently, China has been encouraging ethanol production using cellulosic feedstock. However, cellulosic ethanol production is not expected to reach large-scale production until 2025.”

The CARD analysis said recent low oil prices have hurt Chinese ethanol producers. In addition, the Chinese government gradually has removed ethanol subsidies.

“China has been importing substantial quantities of ethanol in the past two years,” CARD said.

“Before 2015, even though the imported ethanol was much cheaper than domestic ethanol, very little ethanol was imported. This is due to government forbidding distributors to handle imported ethanol in order to protect the domestic ethanol industry.”

US IMPORTS

In 2015, ethanol imports to China reached almost one-quarter of the country’s total supply in 2016, or about 225 million gallons. About 95% of those imports came from the United States. China was U.S. ethanol’s third-largest export destination in 2016, amounting to about 17% of total U.S. ethanol exports.

At the end of 2016, China increased the ethanol import tariff from 5% to 30%. CARD said that action caused the forecast for imports in 2017 to fall to just 35% of 2016 levels.

With a national E10 mandate in place, however, CARD said China will need to take action to ramp up ethanol availability.

“Since details of the mandate have not been disclosed, it is not yet clear how China will generate more than four-fold output growth within three years,” the report said.

“Currently, production capacity utilization rate is about 85%; therefore, a short-term production spur can be achieved with existing facilities. Beyond that, a dramatic increase in capacity is needed. Since it takes one to two years to build a large-scale generation 1 or 1.5 refinery in China, it is possible that China will be able to construct the physical facilities in time.”

If current trends in production and consumption continue, according to CARD, “China’s corn stock will fall quickly, opening up potential opportunities for more imports.”

The analysis said China’s E10 mandate is likely to speed up the reduction in corn stockpiles, requiring between 650 million and 1.35 billion bushels of corn per year.

“If China wants to maintain a stockpile of 1.39 billion bushels, the lowest in recent history, it will need to import 2 billion bushels of corn by 2020-2021 and much more after that,” CARD said.

“China may change its policies if it finds high levels of corn import unacceptable. In the past, China has imported large quantities of ethanol when domestic production has fallen short of demand. If imports surge as a result of the E10 mandate, the United States, the top ethanol exporter to China, will benefit” even with a 30% tariff in place at the time of the analysis.

Read the CARD analysis here.

Read the original article: Report: US Corn, Ethanol Could Benefit From China E10 Mandate

Quad-City Times

November 23, 2017

By James Q. Lynch

BioFuture Platform

November 16, 2017

Press Release

Countries representing half of the global population and 37% of the global economy today agreed to scale up the low carbon bioeconomy and develop collective targets prescribing the contribution of sustainable bioenergy to final energy demand and as a percentage of transport fuel use.

The decision is set out in a declaration released today by the Biofuture Platform member countries – entitled “Scaling Up the Low Carbon Bioeconomy”.
It is a major breakthrough for sustainable biofuels and the broader bioeconomy, which will now become a key component of the global solution to climate change.

The declaration is the culmination of nine months of negotiations and is the first time countries and other stakeholders have formally agreed to develop targets for biofuels and the bioeconomy, and construct an action plan to achieve them.

The declaration was adopted today at the COP23 Climate Change Conference in Bonn by member countries of the Biofuture Platform: Argentina, Brazil, Canada, China, Denmark, Egypt, Finland, France, India, Indonesia, Italy, Morocco, Mozambique, the Netherlands, Paraguay, the Philippines, Sweden, the United Kingdom and Uruguay.

“What we have just accomplished here with the endorsement of this statement is quite remarkable”, said Brazil’s Minister of the Environment, José Sarney Filho. “The technology and the awareness of the need for bio-based solutions are finally coming together.”

The decisions announced today have been informed by modelling from the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA) – both partners in the Biofuture Platform – concluding that the 2030 temperature goals adopted in the Paris Agreement cannot be reached without a major increase in the production and use of sustainable biofuels and bioproducts.

Specifically, the IEA and IRENA conclude that “in order to limit the increase in global average temperature to well below 20C above pre-industrial levels and pursue efforts to reach 1.5ºC, bioenergy and biofuels share in the global energy matrix must be accelerated to achieve at least a doubling in the next 10 years”. In specific sectors, such as transport, the need is even greater. “Biofuels in transport would need to grow three fold by 2030, most of it coming from advanced technologies using non edible feedstocks, including waste and residues.”, says Fatih Birol, Executive Director of OECD’s International Energy Agency (IEA).

In addition to developing specific targets, participating countries will “devise an action plan outlining detailed actions to support achieving the targets, [and] develop a reporting mechanism to track progress”.

“Because of its abundant, renewable raw materials and its integration with existing fuel systems, biofuels have been instrumental in reducing emissions and replacing existing fuels,” said Special Representative for Climate Change of China, Mr. XIE Zhenhua. “Through problem-oriented work methods, we should strive to form feasible proposals or solutions and promote transformative measures”.

While some progress has been made in growing the bioeconomy, there is an urgent need to drive investments and overcome challenges in scaling up production and use, including oil and feedstock price volatility and policy uncertainty.

To address such challenges, in the declaration member countries agreed that coordinated international action is required to implement policy solutions, many of which have already been adopted by member countries, including specific biofuels mandates, sustainable low-carbon agricultural policies, R&D support, and incentives related to verified carbons savings.

In the declaration, member countries also call for climate and green financing mechanisms and institutions to ramp up resourcing of bioeconomy projects as a top priority.

“It is important that the statement includes key actions, as concrete actions are needed to reach our common goals. All actors need to get involved. With wise policy measures, like streamlining regulation and creating incentives, we can create an encouraging business environment for bio-economy investments”, said Kimmo Tiilikainen, Minister of Environment of Finland.

“While renewables have made rapid progress in the power sector, energy transformation in end use sectors such as industry, heating and transport needs to be accelerated to meet climate objectives. Bioenergy will play a key role in this context. As such, we welcome the vision statement of the Biofuture Platform and will continue to support it as it works to build a sustainable energy future,” said Adnan Z. Amin, Director-General of the International Renewable Energy Agency (IRENA).

The full text of the declaration and more information about the Biofuture Platform – launched at COP22 in Marrakech – can be accessed here: http://biofutureplatform.org/statements .

The declaration was be launched today at an official event convened by the Government of Brazil and the Center for Strategic Studies and Management, entitled the “Biofuture Platform and the contribution of bioenergy to the Paris Agreement”. Details are below. Media and Parties attended the event.

At the event, Brazil provided an update on the RenovaBio Program to create financial incentives for investments in low-carbon biofuels, as part of its commitment to the Biofuture Platform. A bill to implement the program was introduced into the Brazilian Congress this week.

Read the original press release: Biofuture@COP23: Major Countries Agree to Scale up the Low Carbon Bioeconomy and Develop Sustainable Biofuels Targets

Renewable Fuels Association

November 14, 2017

By Rachel Gantz

Nearly 90 percent of new 2018 model year (MY) vehicles are explicitly approved by the manufacturer to use 15 percent ethanol blends (E15), according to the results of an annual analysis of warranty statements and owner’s manuals conducted by the Renewable Fuels Association (RFA). That is up from last year, when approximately 81 percent of MY2017 vehicles were formally approved by automakers to use E15.

For the first time, Nissan Motor Company has warrantied the use of E15 in most of its MY 2018 vehicles, joining the majority of its competitors. Together, Infiniti and Nissan represent slightly more than 9 percent of the U.S. light-duty automobile market. Language allowing the use of E15 appears in the owner’s manuals for popular Nissan models, including the Altima, Maxima, Pathfinder, Rogue, and Sentra, as well as Infiniti’s QX60, Q60, Q70, and certain Q50 models.

Other key points from RFA’s analysis include:

• The Detroit Three (Chrysler, General Motors and Ford), which collectively represent 44% of U.S. market share, all continue to clearly allow E15 in their vehicles. GM started approving the use of E15 with its MY 2012 vehicles, while Ford joined the following year and Chrysler began E15 approval with its MY 2016 vehicles.

• Other large automakers explicitly offering E15 approval for MY 2018 vehicles include Toyota, Honda, and Hyundai/Kia. Altogether, auto manufacturers with 89.4 percent of 2017 U.S. market share now approve the use of E15 in their MY 2018 vehicles.

• Subaru, Daimler (maker of Mercedes-Benz), and Mazda remain the largest vehicle manufacturers that still exclude E15 from owner’s manual fuel recommendations and warranty statements, together representing about 7.5 percent of U.S. market share. It should be noted, however, that Mercedes-Benz offers three of its most popular models as flex fuel vehicles (FFVs) capable of operating on up to 85 percent ethanol.

• With 1.7 percent of the U.S. market, BMW also continues to exclude E15 from its fuel recommendations. However, BMW Group’s Mini vehicles again allow the use of up to 25 percent ethanol blends.

In 2012, EPA approved the use of E15 in vehicles built in MY 2001 or later. However, auto manufacturers did not retroactively endorse the use of E15 in legacy vehicles that were already on the road. Since 2012, however, the number of major automakers approving the use of E15 has grown from one (General Motors) to 10.

RFA estimates that approximately 34 percent of the estimated 235 million cars, trucks, and SUVs on the road today are clearly approved by the automaker to use E15 (including FFVs). Meanwhile, more than 90 percent of vehicles on the road were built in 2001 or later, meaning they are legally approved by EPA to use E15.

“Automaker acceptance and approval of E15 continues to expand rapidly, and almost all new 2018 vehicles carry the manufacturers’ explicit allowance to use this lower-cost, cleaner-burning, higher octane fuel,” said RFA President and CEO Bob Dinneen. “This analysis should put to rest any myths still being propagated by the American Petroleum Institute and its cronies that automakers don’t allow or warranty the use of E15. We applaud Nissan for joining the ‘E15 Club’ with its model year 2018 vehicles, and we will continue to work with the few remaining automakers who haven’t yet included E15 in their fuel approvals. We’re thrilled to see Mini continuing to blaze the trail toward greater consumer choice. By allowing the use of optimal high-octane fuel blends like E25 in conventional autos, Mini continues to set the pace.

“The oil company explanation for their failure to invest in infrastructure allowing E15 has been there isn’t sufficient demand for E15 because it isn’t warrantied. Well, that narrative has been misleading for years, but now it is completely bankrupt. As this analysis shows, 34% of the cars on the road today have full warranty coverage for E15. That compares to only about 10% of vehicles that require a premium fuel. Oil companies have invested in the infrastructure for premium, but why not for E15? The answer is obvious, they want to preserve their monopoly at the pump. But consumers deserve better. Consumers deserve higher octane fuels at lower prices. That’s what E15 provides. It’s time for the oil industry to stop erecting barriers to higher ethanol blends, and start serving the consumer,” Dinneen added.

Recently E15 has been experiencing incredible growth in the marketplace and it is sold today at more than 1000 retail stations in 29 states.

Fuel up with more E15 Facts on RFA’s webpage here and view the new RFA analysis here.

Read the original release: RFA Analysis: Automakers Approve E15 in Nearly 90% of New 2018 Vehicles