Where’s ethanol going to go?
High drama at the White House in recent days and weeks — a series of meetings as certain merchant oil refiners seek caps on US ethanol mandates and RIN prices, while ethanol producers and their corn growing suppliers seek to protect the foundational mandate paseed by Congress in 2007 that set the country on a “never again 100% dependent on oil” course, and seek to move to year-round E15 blending.
Is a deal in the cards?
According to POET CEO Jeff Broin, there’s a deal on the table — changing almost by the hour, but a deal none the less. A deal on the table to provide year-round E15 approval for the biofuels industry and that may offer some relief to small merchant oil refiners.
Commenting on the negotiations, Broin told delegates that “it’s been changing almost by the hour the past couple of weeks. The President has been very supportive to us, and he also wants to help the merchant refiners. It’s important that everyone here, and across the Midwest, remind the President in every way how important these issues are to us.”
The White House meetings are tremendous theater but ultimately are a side-show to the bigger question of where ethanol is going in the future — because there’s an E15 saturation point looming just as there’s an E10 saturation point already reached.
So, where’s the growth? There are four paths that the ethanol industry could take. Let’s examine.
E15 year round acceptance
The regulation in question governs Reid Vapor Pressure (RVP), a measure of evaporative emissions in fuel.
Gasoline evaporation contributes to ozone formation. Under current law, evaporative emissions from gasoline are limited during summer months, from June 1 through mid-September to prevent ozone formation. In primarily large, urban areas that are not in attainment of National Ambient Air Quality Standards (NAAQS) evaporative emissions and gasoline are even more strictly regulated.
In 1990, Congress limited the amount of evaporative emissions from vehicle fuel at 9 pounds per square inch (psi) RVP. Pure ethanol has a 3 psi RVP, only when combined with gasoline at low levels, does the RVP of ethanol blended fuel exceed 9 psi. Despite E15 having a lower RVP profile than E10, E10 has been granted an one pound per square inch (psi) RVP waiver, while E15 has not received the same treatment.
Consequently, access to E15 is severely limited in many regions of the U.S., especially during the summer driving season, creating confusion for consumers and discouraging many retailers from offering E15 altogether.
We reported in January that the Environmental Protection Agency should decide soon whether or not it has the authority to approve E15 use year-round. The EPA administrator told a Senate hearing this week that the internal discussion on its authority to grant the waiver or not should be completed soon.
Foreign trade
Exports? They are a dicey proposition.
As we noted last year:
For every ethanol blend everywhere these days, there seems to be a war on. A war in India over 22% blends. A war in Brazil over exactly what baseline blend ratio (somewhere int he 20s) is ideal. A war on in Europe to roll back first-gen ethanol to around 2% blending. A war in New South Wales, Australia over whether there should be any ethanol mandating at all. A war in the US as conservatives aim to haul blending down to 9.7% while ethanol producers have clearly aimed at a 15% baseline blend.
Here’s the good news, sort of. As we reported in January, U.S. ethanol exports totaled 107.2 million gallons in November, up 14% from October, according to government data analyzed by the Renewable Fuels Association. Brazil received 28.1 mg. and a small amount went to China, which has not imported any U.S. fuel ethanol in the prior 10 months. Canada scaled back to 24.2 mg, a 29% reduction from October. Exports to India perked up at 15.5 mg, a 17% increase, while shipments to the Philippines more than doubled to 9.9 mg. Exports to all destinations for the first eleven months of 2017 stood at 1.19 billion gallons, indicating a record annualized export volume of 1.30 billion gallons.
U.S. Ethanol Exports Swell in November – Brazil is Top Destination
Then, we reported this month that USDA data shows ethanol exports fell by nearly half in February from the month before to 334.4 million liters, also 24% lower than in February 2017, on the back of China’s near absence as an import destination despite strong buying expected throughout Q1.
Why’s China not an importer? For one, China’s an exporter. As we reported last August, Chinese ethanol exports soared once again in July to 19,814 cu m, up 8% on the month, with about 65% of the total—12,945 cu m—headed to Saudi Arabia. North Korea and the Philippines absorbed much of the rest of the export volumes.
E30 and other advanced engines
Now, war is surely about to break out over E25-E30 blending, now that RFA CEO Bob Dinneen testified in DC in his courtly but adamant manner that a high-octane, low-carbon ethanol blend in optimized engines would be the lowest cost means of achieving compliance with fuel economy and greenhouse gas standards for car model years 2022-2025 and beyond,
As Dinneen put it, “most new and emerging internal combustion engine technologies are enabled by a high-octane, low-carbon fuel blend. For example, high-compression ratio technology (which EPA estimates will comprise 44% of the market by 2025) demands higher octane fuels to limit premature fuel ignition in the cylinder,” he said.
What’s he’s pointing to are ethanol’s unique properties—high octane rating, low lifecycle carbon emissions, high octane sensitivity, and high heat of vaporization. “These attributes make ethanol a highly attractive component for the high-octane fuel blends of the future,” he said.
Are high ethanol blends going to be essential, and mandatory, for super high fuel-efficient engines?
More on advanced engines via the DOE’s Co-Optima Initiative
Advanced fuel designed for advanced engines: The Digest’s 2017 Multi-Slide Guide to the DOE’s Co-Optima Initiative
And, there’s the Nissan
Nissan’s Solid Oxide Fuel Cell system, and what the fuss is all about
Fuel cells are important technology. You may remember them from the space program. They show up in the drama of Apollo 13, for example. Many car companies have investigated their potential — but here’s a breakthrough that addresses the major barriers for fuel-cell adoption, and has ethanol in the mix as the energy carrier.
Capacity expansion or switching via advanced fuels
There are many things that ethanol plants can switch over to, to achieve growth while bypassing the E10 saturation point and the resultant controversies.
Cellulosic fuels co-locations. As we reported this past week, there were more than 100 presentations at ABLC last week and not a clunker amongst them, but if I were to point the reader’s attention at one or two that stood out from the rest because of the short-term or long-term implications, I’d start with the news from Aemetis that they are embarking now on a $158 million cellulosic ethanol plant — to be built in Riverbank, California, in partnership with LanzaTech.
Butanol. It’s been discussed endlessly — there’s absolutely no dispute that butanol as an advanced alcohol blends at a higher rate and carries more energy than ethanol. Gevo and Butamax are embarked on that strategy — but it all comes down to achieving the right economies of scale. And as we reported in November 2017, Gevo said it decided to reduce its employee base at the Luverne Facility in October to better match industry norms in terms of staffing levels necessary to produce solely ethanol at the plant.
Given the Luverne Facility has only one production line suitable for isobutanol, Gevo’s current isobutanol production costs are higher than its expected sales price. Going forward, Gevo expects its operating strategy will be to focus on the production of ethanol and to produce limited volumes of isobutanol until the completion of the Luverne Facility Expansion.
Gevo switches to ethanol at Lucerne as it waits for isobutanol market to catch up
Ethanol encapsulation. We sure liked this one in theory. Sylvatex technology takes one gallon of free fatty acids (made, in this case, by hydrolyzing distiller’s corn oil) and one gallon of conventional corn ethanol, creasing thereby two gallons of a diesel fuel blendstock. Meanwhile, we reported last month that Sylvatex and Valicor inked a Joint Development Agreement to develop and commercialize Sylvatex’s MicroX technology, converting distillers corn oil and other plant-based oil feedstocks into Sylvatex’s proprietary MicroX renewable blendstock. The JDA will also accelerate commercial scale engineering and expedite early market sales of the MicroX blendstock.
Vive le ROI: has Sylvatex uncovered a gold mine in renewable fuels?
Nano-scale encapsulation: The Digest’s 2017 Multi-Slide Guide to Sylvatex
Jet fuels. Byogy and Vertimass both have different paths towards the same goal. Using ethanol as a blendstock to make jet fuels. Oak Ridge’s research (which was licensed to Vertimass) uses direct catalytic conversion, the ethanol is used to produce a hydrocarbon blendstock that can be blended with petroleum at a refinery to produce biofuels such as drop-in hydrocarbon fuel, jet fuel, or diesel, or to produce renewable commodity chemicals such as BTX (benzene, toluene, and xylenes).
ORNL teams with Verlimass to commercialize ethanol conversion to hydrocarbon blendstock
Affordable, renewable hydrocarbons made from ethanol: The Digest’s 2017 Multi-Slide Guide to Vertimass
Jet fuel from (any) bio-alcohol: The Digest’s 2018 Multi-Slide Guide to Byogy Renewables
The Bottom Line: A Path Worth Noting
Advanced Biofuels USA put it out there back in 2011 and their goals and ideas are just as valid then as now. Here is the plan AB USA outlined:
“The Pathway to a Sustainable Total Biomass Advanced Ethanol Industry,” itemizes six steps cellulosic and advanced ethanol producers could take to build a long term high (30% and higher blend) ethanol market.
1. The advanced ethanol community must adopt a long term plan to greatly increase the number of North American cars and light duty trucks that can run on E30 and higher ethanol mixtures while achieving parity mileage with current gasoline.
2. The advanced ethanol community must have the patience to stick with this long term plan even if the results are, at first, slow.
3. To build a long term high (30% and higher) blend ethanol market, the ethanol community should make clear the benefits of ethanol as a very good primary fuel, not just as an additive.
4. Ethanol producers must work closely with motor vehicle manufacturers and governments, both state and federal, as “First Adopters” to bring “Optimized Flex-Fuel Vehicles” to market using two approaches:
A. Optimized E30 Flex Fuel Vehicles (FFVs) Based on Current FFVs: Test data has shown that existing computer controlled/fuel injected FFVs can get the same mileage on E30 as E0 or E10 with minimal modifications to the on-board computer software.
B. Optimized E30+ Vehicles: Introduce E30+ optimized EcoBoost and Ecotech engines in limited production, high performance models.
5. In conjunction with government fleets buying optimized E30 vehicles, those fleets (and nearby fuel stations) should also begin replacing aging pumps with blender pumps to fuel all vehicles with blends ranging from E10 to E85.
6. As the number of these optimized FFVs and new tech E30+ vehicles increase, the advanced ethanol community should identify where concentrations of those vehicle are located and work with stations and governments in those areas to get more blender pumps installed.
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