USGC works to expand ethanol markets in Chile and Brazil through direct involvement
The U.S. Grains Council (USGC) is constantly looking to create new export markets and develop international relationships on behalf of U.S. farmers. The increasing global commitment to fight the climate crisis via ethanol blending has presented an opportunity for the Council to ensure U.S.-produced ethanol is the preferred choice at the pump worldwide.
A crucial pillar of the Council’s mission is to improve lives, and the numerous benefits of ethanol blending have the potential to do that on a massive scale.
Council staff in its Latin America office (LTA) recently traveled to Chile to join a group of consultants assessing the country’s fuel supply chain. The project aims to determine the most feasible and effective logistical model to implement an ethanol blend policy in the country.
“Blending ethanol with gasoline presents a costeffective, short-term opportunityfor Chile to make progress toward its goal of decarbonizing transportation, and this assessment is a key contribution to efficiently determine its effectiveness and how to best goabout it,” said Marri Tejada, USGC LTA regional director.
The Council signed a memorandum of understanding (MOU) with Chile’s Ministry of Energy and the national oil company, ENAP, last March to establish a collaborative structure to explore opportunities for the use of biofuels in the country. The current study is being developed under that framework and is enabled by a grant provided by Indiana Corn Marketing Council and resources from the Council’s LTA office.
Once completed, the study will be used by the Ministry of Energy and ENAP to complement the refining, environmental and fleet analyses that will be conducted over the next few months as part of the process of regulatory and policy changes required for the implementation of an ethanol blend policy.
“The willingness of Chile’s government and fuel industry stakeholders to conduct a thorough review of the infrastructure and logistics feasibility of ethanol blending is a major accomplishment for the Council, as only three years ago it was not included in the country’s energy policy or the industry’s agenda,” Tejada said.
Under the workplan developed by the government and ENAP officials, with collaboration from the Council, the process is expected to culminate by late 2023 and could open the market to approximately 130 million gallons of foreign ethanol per year, based on Chile’s current gasoline consumption. TheCouncil will continue to work with the Chilean government and the various fuel supply chain stakeholders to unlock the full possibilities of ethanol use in the country.
Corn ethanol in Brazil?
A Council team also traveled to Brazil in August to learn about the market potential Brazilian corn ethanol has domestically and globally and about the logistics faced by U.S. ethanol exporters at the main ports situated in the northeastern part of the country.
While there, the group had the opportunity to meet with many different industry associations, ethanol producers, port operators and union leaders in the country.
“By meeting port authorities and ethanol traders, our group was able to learn the complexity of trading ethanol in the north and northeast areas of Brazil and to assess the potential obstacles that the industry needs to overcome to regain market share in the country,” said Juan Diaz, USGC LTA ethanol consultant.
The Council has been active in Brazil advocating to reduce the duties applied to U.S. ethanol and to help certify ethanol plants under the RenovaBio program, a government initiative to reach carbon reduction goals. In March 2022, Brazil decided to drop the common Mercosur duty of 20 percent on all ethanol imports until Dec. 31 as an anti-inflationary measure. Council efforts this year have been aimed at turning this into a permanent decision.
Involvement in the RenovaBio program continues to be unreachable for U.S. exporters since the Brazilian government has not defined the rules for other feedstocks to get certified under the program. The Council is working to reduce the extensive data requirements and to unify land use criteria that currently limits U.S. corn ethanol from accessing the carbon credit (CBios) market that represents extra revenue for biofuels producers in Brazil.
“Brazil enjoys an average ethanol blend of 27.5 percent within its national fuel supply, making it the top per capita consumer of ethanol in the world. The Council seeks to learn how both the U.S. and other countries could implement similar high blend levels within our respective fuel infrastructures, and this mission provided value on the various pathways to achieve such success,” said Mackenzie Boubin, USGC director of global ethanol export development.
Brazil has historically been a top three ethanol export market for the U.S. industry reaching up to 480 million gallons during the 2016-17 marketing year. So far, in the 2021-22 marketing year, Brazil has imported nearly 99 million gallons of U.S. ethanol, making the country the fifth largest market for the U.S. commodity at this stage.
“The current pricing dynamics in Brazil are very favorable to U.S. product. The Council continues to promote the value of U.S. ethanol supply to compliment Brazil’s growing ethanol production and consumption, key in maintaining and growing U.S. market access to this vital trading partner,” Boubin added.
Establishing and maintaining strong relationships with key stakeholders in major export markets will be critical to the continued expansion of biofuel usage. Additionally, long-term efforts such as shaping policy by engaging with relevant government bodies and studying the overall structure of a country’s logistics to adapt new strategies are an essential focus of the Council’s work.
The Council’s use of regional experts, connections with foreign buyers and robust training and information programs aims to consistently position U.S. producers at the forefront of global trade.