Craig Willis is Senior Vice President for Global Markets at Growth Energy, a trade association representing the US ethanol industry. We caught up with him at the World Ethanol & Biofuels conference in Brussels to discuss the state of ethanol policy in the US, and what Growth Energy is doing to open up other markets for US exports, including Brazil and India.
“The number one problem that I run into in every market is misinformation... and at the end of the day we have the facts on our side.”
Q: Where does ethanol policy in the US stand currently?
Willis: Since 2016, the EPA have given out 4 billion plus gallons’ worth of waivers to small refiners. We’ve done a lot of advocacy, a lot of talking to them, because when they’ve done that it has essentially led to fewer incentives for higher level blends like E15 or E85.
There ended up being a White House meeting on October 4th with our rural champions, and we came out of that meeting feeling pretty good. We felt that the EPA was going to write a proposal which, when they calculated their RVOs, would use a three-year average of their small refinery exemptions to make their calculations. And we were good with that.
But then the proposal came out not too long afterwards, and what they suggested in the proposal was not to use the three-year average that we thought we had agreed to in this meeting. They ended up proposing to use the Department of Energy projections.
The problem we have with that is that when you look over a three-year period from 2016 to 2018, the DOE forecast short-changes what the actual small refinery exemptions were by 530 million gallons a year. And that’s very material in a market that uses about 14.4 million gallons of ethanol domestically.
So we’re asking the EPA to live up to the agreement that the White House made with the rural champions in that meeting. That’s where we stand on the small refinery exemptions.
Q: How much of an obstacle has the EPA been to the development of the ethanol industry?
Willis: As I said, the EPA has given out 4 billion plus gallons of small refinery waivers since 2016, and that really has hurt us because we had a lot of infrastructure in place via our prime the pump programme.
We have almost 2000 stores now selling E15. They’re high volume stores, they’re some of the largest and the most reputable retailers in the United States, but there’s less incentive than there could have been has they not given those 4 billion gallons worth of waivers out.
That’s why we’re spending so much time trying to fix this small refiners process – because we think it will lead to faster, accelerated growth of E15 and E85 in the States.
Q: What are the biggest challenges you encounter when travelling around the globe to develop ethanol markets?
Willis: You know, the number one problem I run into in every market is misinformation. I just came from Nigeria last week, and we had a lot of questions on phase separation with ethanol, a lot of questions around water issues with ethanol. I hear this over and over again – whether it’s in Mexico, whether it’s in Ghana, Nigeria, Indonesia – and at the end of the day we have the facts on our side.
The United States uses 143 billion gallons of gasoline annually, we’re by far the largest consumer of gasoline in the world, and we have a 10% ethanol blend. So we have ample, real world proof that ethanol works, and we have a lot of data to back it up.
Our challenge is getting that information out to the countries as we go visit them, and getting our experts in the room when they have technical questions that I can’t answer, to make governments and provinces feel comfortable that ethanol is not a problem.
A prime example is in Canada. They’re working on a couple of different initiatives in Quebec and Ontario that would allow E15 to be used province-wide. Well we now have all that proof and data in the States.
We’ve driven 10 billion miles with E15 with no problems, we have some of the largest and most respected retailers in the country offering it. There’s no problem with E15, we know that. And now we have that information we just have to communicate it to those respective provinces and policy makers.
Q: Do US suppliers currently have a fair level of access to the Brazilian market?
Willis: Well, Brazil’s a huge deal to us. They were 30% of our total exports in 2018, so they’re a big deal to our industry. As far as a fair level of access, we would say no. The Brazilians have really unimpeded access to our market with no import duties or tariffs, yet when we go there there’s a current Tariff Rate Quote (TRQ) for 750 million litres annually, and for anything over and above that there’s a 20% duty on that product.
They also limit who can buy our ethanol, so we would say no. We just want reciprocal trade between the two, so we’ve been disappointed in some of the policy moves that they’ve made recently. They made the amendment to extend the TRQ another year on August 31st, and they amended it here in just the last couple of weeks.
Q: You’ve written that India could be a sleeping giant for US ethanol exports if markets open. Are you confident that the country is moving in the right direction?
Willis: In India change comes slow. I think they have the right goals. This last year they’ve blended at around 6% blend country-wide. Where we’re disappointed, and what we’d like to change and what we continue to be advocates for, is that US ethanol into that country can only be used for industrial purposes.
We think we can help to solve a couple of problems for the Indian government. They’re at 6% today, and we could for sure in the United States come up with the incremental 4%, and that would do two things for the country.
Number one, it would make gasoline prices less expensive for the consumers, which most governments have high on their priority list. Number two, it helps with their climate goals, so we think we’re a good answer to some of their goals on ethanol, and they have E10 in their policy. So that’s where we’re spending a lot of our time.
Q: Do European ethanol producers have anything to worry about following the repeal of antidumping duties on US imports earlier this year?
Willis: We’re going to advocate for free market trade with any country that we deal with or any continent that we deal with, so we’re going to ask the same of the Europeans. I don’t think they have a lot to worry about.
Last I checked, we only had four plants that were certified out of roughly two hundred in the United States to actually ship product to the EU and meet their standards. So it looks to me like we’re probably shipping about 100 million gallons a year there roughly, that’s the rough estimates. So I think based on those four plants that maybe their fears are a little bit misguided.
This transcript has been edited for clarity.