NCI Everything Ethanol Webinar Series | Featuring Brian Healy
Brian Healy, Founder & CEO of Agtech Advisors LLC.
The Northern Crops Institute (NCI) recently hosted the first entry in its new “Everything Ethanol” webinar series. This monthly webinar program is dedicated to advancing global ethanol market development, and topics that will be explored throughout the series include ethanol marketing factors, global policies, and more. This month’s presentation featured speaker Brian Healy, Founder & CEO of Agtech Advisors LLC. He discussed the subject of “Expanding Global Ethanol Use: Factors of Growth.”
Healy began his presentation by discussing global ethanol production. He stated that 2022 production has nearly recovered to 2019’s production level following a major hit in 2020 due to the pandemic. After being flat for nearly 20 years since 2000, 2019 was a record-breaking year for ethanol production, with the U.S. now holding a 60% market share of this industry. A new production record is also forecasted for 2024, spurred by policies which were enacted to support this ethanol production.
Four main factors that drive global ethanol policy.
He also introduced the four main policies that he considers to be the drivers of global ethanol policy: rural economics, environment & health, octane economics, and energy diversification. Rural economics refers mostly to competitive feedstock, with an example being corn. This feedstock contributes 70% of the price of the finished ethanol product, making it very influential over the market. This influence is driven by collaboration amongst feedstock producers and ethanol producers, which Healy say can create a so-called “political momentum” to create change in the ethanol marketplace.
Environment & health, on the other hand, pertains to issues that a greater use of ethanol can solve or mitigate. Healy used the example of particulate matter emissions. These emissions, which are a by-product of burning fossil fuels, are reduced by using ethanol instead. This in turn improves the air quality and quantifies the health benefits of using ethanol as an alternative to fossil fuels. This chain-of-events is responsible for driving public policy to support a more widespread adoption of ethanol.
Octane economics in global ethanol policies.
Octane economics refers to the idea of ethanol offering savings as a price-competitive substitute to other oxygenates (fuels). In other words, by emphasizing the cost benefits of ethanol compared to other fuels, it can be very influential in furthering its adoption. As the graph to the right shows, ethanol has a track record of almost always remaining cheaper than other fuels (indicated by “BTX” on the graph), sometimes by a wide margin. This is especially important for governments to see so that, once again, they may create policies that encourage the public to adopt ethanol as a fuel source.
Finally, energy diversification is something that Healy states is part of a big goal of many markets with competitive feedstock: energy independence. These markets use policies to strive towards being an independent producer of their own energy sources. According to Healy, this is something that represents a huge untapped growth opportunity for trade, since energy-independent nations around the world are said to produce enough energy for themselves – and yet, they have excess that could be a useful trade tool with other nations that perhaps don’t quite have the feedstock capabilities needed to achieve energy independence yet.
2022 top ethanol export destinations.
As was mentioned before, the U.S. maintains a strong 60% market share for the global trade of ethanol, which has amounted to an estimated 1.38 billion gallons of the commodity. This trade is up about 22% compared to last year, with Canada importing the majority of the ethanol the U.S. produces by a wide margin compared to other markets. Together with Brazil – the next-largest exporter of ethanol behind the U.S. – there’s an 85% market share between the two countries. The uses for this ethanol being exported is largely concentrated in the transportation sector rather than the smaller industrial sector (though some smaller exporters export more for the industrial sector than the transportation sector in certain markets).
Overall, Healy stated that the ethanol market is on pace to set new record production and import/export numbers as we look ahead to 2023 and beyond. Spurred by new policies being enacted globally to increase the appeal of ethanol as a fuel source, the global trade of this commodity will only continue to grow, especially as consumers begin to recognize its viability as an alternative to fossil fuels. Markets will expand and production will expand…and, therefore, so will ethanol’s adoption.
The Northern Crops Institute greatly appreciates Brian Healy’s professional input and involvement in our new webinar series. At NCI, we continue to fulfill our mission to support regional agriculture and value-added processing by conducting educational and technical programs that expand and maintain domestic and international markets for northern grown crops.
For more information about future webinars offered at NCI, click here.
To view the webinar, click the recording below.