We continue our coverage from the NAFB convention in Kansas City, Missouri catching up with Ron Lamberty, Chief Marketing Officer for the American Coalition for Ethanol.
Q: Well, of course you get to talk with a lot of ag media folks, farm broadcasters and more here at NAFB, and talk a lot about ethanol. And there’s plenty going on there in terms of exports, trade, infrastructure, et cetera. Let’s dive into the infrastructure piece first.
And I think about E15 specifically. And we’re still trying to get that nationwide year-round fix. We got it in the Midwest states. I know in California, Governor Newsom’s mandate for E15, big win there. But obviously getting E15 at the pump, infrastructure wise, that’s been a big challenge. And I know that’s something you worked on extensively with ACE.
RL: And the thing about it is, I think to some extent, with all the emphasis we put on infrastructure has maybe been, maybe to some folks, there’s been a little bit of a negative because I know we spent a lot of time when E15 was approved talking about how it could be used in the equipment you have now. And I think we have a website for marketers that’s flexfuelforward.com that has a chart on it where a station can go in and put in what their tanks are, what their pumps are, and find out if they’re compatible. You send this message out, you can use it in your existing stuff, but then you give them money to buy new stuff. And it’s kind of a mixed message. So I think there’s marketers that kind of get confused by that.
At the same time, being able to get some money to get new equipment is a good incentive to start using that other product. So that’s gone well. What usually happens when you’re dealing with fuel marketers is that there’s all these cliches that everybody accuses me of using too much. Well, they’re cliches, that’s what they are.
But it’s like, you know, everybody wants to be first, to be second. So whoever does it first, then the other guys see that it works and they start piling on. So hopefully that’s what’s happened with the number of folks that we’ve got using E15 now. And I think then you kind of swerve into the real reason people haven’t used E15 is because it’s kind of an uncertain fuel. You got that seasonality that we’ve taken care of the last four years with exceptions, and they know that can’t happen forever.
So a station doesn’t want to put a fuel in that they might have to take out every June and put back in. It’s too much of a hassle. So that E15 year-round is a key piece. And I think finally, if that goes through, I think we’ll finally see some critical numbers build up in E15.
Q: Thinking about E15 here, but also just exports of ethanol and trade and our partners around the world talk about that. I’ll add the caveat, of course, we have a new Trump administration coming in here. What does that mean for exports of things like ethanol? Your thoughts on ethanol exports, trade, etc.?
RL: First of all, the reason that ethanol exports are up is that the rest of the world has gotten kind of figured out that it’s a good way to reduce carbon pollution without having to invest in in countries where they can’t all buy electric cars.
In Canada, which has been our biggest growth area, they put rules together that were pretty much agnostic as far as how you get to those numbers. So, if your numbers are better because you’re selling E10 or E15 or E20, those numbers work. And so, even the oil companies in last summer ‘23, we met with some folks in Calgary, and it was oil companies who were talking about how much they like the fact that they can use it for octane, and they’re just looking at ways to meet their numbers that they got to hit. And ethanol works for them. So, there hasn’t been as much politicking around that.
And you’ve got parts of the world where they started doing ethanol 20 years ago and then they quit because of the food versus fuel BS. And now they kind of are getting back to using ethanol because it’s the fastest way to reduce carbon pollution and it’s the least expensive. So, you know, internationally, I think we’ll see that growth continue. And the nice thing is you get some of these areas where you see a number and it’s like they bought 10 million gallons or 2 million gallons. Once it’s there, it’s there.
I mean, that’s the best part. You get into a market, and they start using it, they usually like it and start using more. I think those things will continue to go now as far as trade goes if we’re slapping a bunch of tariffs on things, as we found before, ag commodities and ethanol tend to be the place where people slap back. That’ll be an interesting needle to thread.
I guess the bypass to that is if they’re buying Brazilian ethanol, then maybe US Ethanol can go places that aren’t in Brazil. The other one that’s kind of exciting is I spent a lot of time, 2016-2018, in Mexico and it looked like we might get something going there. And then they got a new president who decided he wasn’t a big fan. And now the new president there is at one point was mayor of Mexico City and she was advocating for E10 in Mexico City. So I think there’s some hope that maybe Mexico would take it.
And you know, you throw in Mexico with the fact that you don’t have to put it on a ship and the economics work pretty well and I think they’d be great for our ethanol producers here.
Q: What about Southeast Asia? I hear a lot of talk about India. I mean, a country like that, what’s the potential there?
RL: So I went to the India Auto Show with the U.S. Grains Council in January of 2017. It was great market because they’re a perfect example of that. They’re not going to buy electric cars in India. It’s a market that they know ethanol will work.
In fact, I was on a panel and the panel was with me representing ethanol industry. You had a domestic ethanol guy. The oil industry was in favor of it. The auto industry was in favor of doing more ethanol. They had a hybrid flex fuel vehicle there. And it was huge auto show. But their rules right now say that you can only use domestic, or ethanol made by an Indian company. And there’s some question of whether that would count if an Indian company made it in the US maybe, but I don’t know how that works out. But they could only use ethanol made in India for their vehicles. But that opens up the market that that ethanol used to be in, whether it’s a cleaning supply or beverage or industrial ethanol uses.
So there’s some volume going in there. And the same is true of some of those Indonesian markets: Malaysia, Korea had set some good numbers. And then there’s always that chance that China might decide they’re going to start using some US ethanol. And if they do, then who knows, the market could go just nuts with something like that. They passed a law that says they’ve got to be to, I think 20% ethanol by a certain date.
They’re pretty fickle as a partner. But again, that’s kind of alluding to when I said once it’s there, it’s there once you get ethanol. And you know, the Philippines is using some, there’s some people doing auto ethanol there. Japan is using ethanol as ETBE, so it’s further processed ethanol. But they’ve got a couple of companies that are doing like an E4 or something like that. But once it’s there, the ability to expand, it happens pretty quickly. So I think those could be some big markets.
Q: A lot of opportunity, some questions, but plenty of things to keep an eye on. I know folks can go to ethanol.org for more. Ron, anything else you’d add?
RL: At some point we probably should talk. We got done with our test of the hybrid electric flex fuel vehicle, Heff, and the emissions patterns from that that we kind of logged are very similar to a Lexus from the same year or not Lexus, Tesla from the same year. So those would be at some point.
We’ll have those on our website that you just mentioned. And pretty cool the way that turned out because, you know, it’s sort of electric but when you charge the battery, you charge it with ethanol so that lowers the emissions. So it’s pretty cool.
Q: We’ll save that conversation for the next time. And again, ethanol.org for more.
