Pacific Ethanol CEO Neil Koehler discusses how the Trump adminsitration's lifting of a federal ban on the summer sale of ethanol will benefit farmers, consumers, the environment and ethanol producers.
New Regulation Means New Opportunity
California's groundbreaking Low Carbon Fuel Standard (LCFS) was adopted in 2007 to reduce greenhouse gas emissions across the state. Oregon and British Columbia have similar laws for reducing carbon content of transportation fuels. The LCFS does this by requiring fuel providers to ensure that the carbon intensity score of its fuel meets the annual carbon intensity target for a given year. Carbon credits are bought and sold among market participants in an active carbon credit market.
As a fuel additive, ethanol changes the emissions profile of gasoline, creating a cleaner, safer motor fuel. Ethanol blending reduces municipal smog levels and cuts down on atmospheric concentrations of harmful toxins. Ethanol has a high octane rating and oxygen content. The carbon intensity of gasoline is reduced when blended with ethanol.
There is now a strong consensus among scientists: the energy output from burning ethanol as a fuel source exceeds the energy input required for ethanol production. Studies that suggest that corn ethanol has a negative net energy balance rely on outdated data, and fail to consider co-product generation and other factors that improve ethanol’s energy efficiency. The energy balance of corn ethanol is steadily increasing as corn farmers and ethanol producers embrace new technologies.
The food and fuel debate to date has been too simplistic, focusing on biofuels, rather than recognizing the significant impacts of fast rising petroleum prices, increasing Asian demand for protein and grains, and weather-related events like Australian and European droughts. All commodity prices are on the rise - biofuels are a bit player.
Rising food and fuel prices have led the biofuel industry to take a beating on Capitol Hill the past few weeks. But the pummelling hasn’t been by chance - it’s part of a concerted effort spearheaded by the Grocery Manufacturers Association and the Glover Park Group.