The E15 blend of gasoline was approved for year-round use this spring, bringing excitement for additional demand to corn country.
Kelly Nieuwenhuis, who sits on the Iowa Renewable Fuels Infrastructure Program Board, said when the announcement was made in late May, applications for the product “basically tripled” from the previous quarter.
While E15 was the hot topic leading into the summer months, Nieuwenhuis, who is also a board member in the Iowa Corn Grower’s Association’s first district, said the goal is to see even higher blends of ethanol hit the market. That may take time, but backers are trying to show car makers how things can change.
“We are working with the auto industry to help them see the benefits,” he said. “They can build smaller engines with higher compression that need octane to be efficient, and ethanol is by far the best octane available to the oil industry right now. It’s also the cheapest.”
Electric vehicle purchases have been increasing year over year, with 361,307 vehicles sold in 2018, according to market tracker InsideEVs. That marked a jump from 199,826 purchases in 2017.
But Nieuwenhuis said he is not overly concerned about losing demand for biofuels.
“The studies I’ve seen is about 5% of the world’s automobile industry being electrified by 2050,” he said. “The middle class in the world continues to grow, so there are more and more people in the world buying vehicles.
“I think the internal combustion engine has a long, long lifetime left. I think biofuels have a big part of that future. The oil industry has a limited supply that eventually will run out.”
University of Illinois agricultural economist Todd Hubbs said he does not know how many consumers will start purchasing more E15 now that it is available year round. Despite more pumps offering the blend, he expressed uncertainty about whether the public is “bought in” to higher blend ethanol.
“That could creep up a little bit, but I don’t think it’s enough to fix the problem,” Hubbs said. “Exports, I think, is where we saw a lot of growth over the last few marketing years, and they’ve regressed over the ’18/’19 marketing year. A lot of that is Brazil.”
Through July, Brazilian imports of ethanol are down 17% from last year. Part of the reason for the decrease is a 20% tariff, but Hubbs looked at other reasons.
Hubbs said lower sugar prices in Brazil have led to the South American country utilizing that in their process for cheaper domestic ethanol, which has limited demand for the U.S. product. Meanwhile, losing the market in China as well has hurt demand prospects, and while markets such as India and Indonesia have been growing, Hubbs said he is not sure the growth lines up with the current USDA projections.
“They are growing, but growing at a really slow pace,” Hubbs said.
The landscape could change if the U.S. and China reach a trade agreement. That, combined with China following-through on its policy to boost E10 use, could “be a boon” for the industry, Hubbs said.