Brian Jennings discussed ethanol production, demand, and policy issues in his guest presentation.
In 2020, we lost 700 million bushels of corn use for ethanol due to the pandemic. Domestic use dropped from over 14 Billion gallons in 2019 to just over 12 Billion gallons in 2020. “We are seeing a recovery in 2021, but don’t anticipate getting back to the pre-COVID levels in 2021 or even 2022.” After the bottom fell out of the domestic fuel market in March of 2020, there was a quick rebound by July to a level around 15 to 20% below normal. “Domestic demand has continued run at about a 15-20% reduction when compared to prior years,” said Jennings.
A change in administrations will have an impact on the ethanol industry. The Trump EPA can be summed up in two policy issues, one good and one bad. Under Trump’s EPA, E15 was approved for sale year-round across the U.S. Unfortunately, the same EPA granted nearly 90 small refinery waivers of the renewable fuels standard and eroded about 4 billion gallons of demand from statutory levels.
Biden campaigned aggressively against those waivers and has indicated that they will reverse course. The Biden EPA is focused on net-zero emissions by 2050. The question is, ‘What role will Ag and ethanol play?’ “We intend to go on offense. There is an opportunity to increase ethanol demand because corn ethanol GHG emissions are 50% cleaner than gasoline.” Jennings cautioned that they have work to do to convince some Biden officials of the value of corn ethanol.
Jennings addressed recent auto manufacturer announcements on electric vehicles (EVs). “In terms of supply, 97% of vehicles are internal combustion. Even the most aggressive projections on future sale of EVs will mean ethanol will play a significant role in reducing GHG well into the century.”