Ethanol Blog: Japan Opens Door to US Ethanol

Todd Neely - DTN Reporter,
April 17, 2018

United States corn ethanol producers will be allowed to export ethanol to Japan, after the nation’s government approved a new policy to allow 44% of its 217-million-gallon ethanol demand to produce ethyl tert-butyl ether, or ETBE, which is commonly used as an oxygenate in gasoline, to come from corn-based ethanol.

The announcement comes on the same day Japanese Prime Minister Shinzo Abe is scheduled to meet with President Donald Trump in Florida. In addition, in recent weeks the Trump administration has started to explore the possibility of re-entering the Trans Pacific Partnership, or TPP.

Since 2010, Japan’s sustainability policy allowed ethanol imports from sugarcane ethanol suppliers, because those gallons were considered to have a smaller environmental footprint. There currently is little or no sugarcane ethanol produced in the U.S.

The U.S. Grains Council, the Renewable Fuels Association and Growth Energy said in a joint news release on Tuesday that the action could open the door for nearly 96 million gallons of corn ethanol exports to Japan.

The new Japanese policy calls for an increase in the carbon intensity reduction requirements of ethanol used as a feedstock to make ethyl tert-butyl ether, or ETBE, which is commonly used as an oxygenate in gasoline.

The new policy calls for ETBE to meet a 55% reduction in carbon intensity, up from 50%.

In 2017, Japan was not among the top 10 importers of U.S. ethanol. If Japan imported 96 million gallons, it would make it the fourth-largest export market for U.S. producers behind Brazil, Canada and India.

The Japanese government made the decision based on its evaluation and life cycle assessment update of U.S. corn-based ethanol. The U.S. industry has made efforts in the past decade to produce higher GHG emission reductions.

The U.S. Grains Council, RFA and Growth Energy released statements following the announcement.

“We continue to work around the world, sharing the benefits of U.S. ethanol with other countries that are serious about reducing their GHG emissions,” said Tom Sleight, president and chief executive officer of the U.S. Grains Council. “From this decision, it is unequivocal that continued improvements in carbon intensity reductions are critical to gain and maintain market access for U.S. ethanol.”

Emily Skor, chief executive officer of Growth Energy, “For the first time, the U.S. ethanol industry will have the opportunity to compete for a portion of Japan’s fuel blending market. This new policy represents a new trade opportunity for the U.S. to continue to work with Japan to demonstrate the economic value, sustainability, and environmental advantages of utilizing our product in their consumer market for motor fuels.”

RFA President and Chief Executive Officer Bob Dinneen, “We are pleased Japan now allows ETBE imports from U.S. corn-based ethanol, as this opens an important and growing market for American farmers. ETBE is an ethanol-based oxygenate frequently used in overseas markets. Japanese consumers will now have access to cleaner, cheaper, American high-octane fuels. We look forward to beginning a dialogue on how Japan’s new policy could be improved, such as moving towards direct blending rather than having to convert our ethanol into an ether like ETBE. But we certainly welcome Japan’s first step toward the use of U.S. ethanol.”

Todd Neeley can be reached at todd.neeley@dtn.com

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