Revised Biofuels Policy In Japan Opens New Market For U.S. Ethanol

The first shipment of U.S. ethanol-based Ethyl-Tert-Butyl-Ether (ETBE) arrived in Japan in 2019, marking the opening of a new market for U.S. ethanol in the country. This success was made possible by a Japanese policy change supported by technical information provided by the U.S. Grains Council (USGC) and the U.S. ethanol industry.

In April 2018, Japan’s Ministry of Economy, Trade, and Industry (METI) revised its biofuel policy to allow U.S. corn-based ethanol in the market based on technological advancements that raised its calculated greenhouse gas (GHG) reduction level.

Throughout their consideration, the Council provided information about the U.S. ethanol industry to METI and other key stakeholders, particularly related to industry improvements to the GHG emission reductions of U.S. corn-based ethanol. In early 2018, a METI-designated expert committee delivered a final report to the Ministry, which included the recommended change to its GHG calculations.

The new policy calls for an increase in the carbon-intensity reduction requirements of ethanol used as a feedstock to make ETBE to meet a 55 percent reduction, up from 50 percent. It also allows corn-based, U.S.-produced ethanol to be used, based on GHG reduction improvements. Following the change, the total potential U.S. market share is up to 44 percent of the estimated demand of 217 million gallons of ethanol used to make ETBE, or potentially 95.5 million gallons of U.S.-produced ethanol annually, worth $147 million at $1.53/gallon.

The Council confirmed with Japan Biofuel Supply LLP (JBSL), the importer representing the Japanese industry, that Japan imported ETBE derived from U.S. ethanol in its fiscal year 2019 (April 2019 to March 2020) under an annual forward contract with the ETBE provider based on the revised scheme. This sale was of 87 million gallons, worth $133 million.

The Council invested $1 million of Market Access Program (MAP) funds to work on ethanol promotion in Japan over four years, for an initial ROI of $133 and a potential ROI of $147, for every $1 of MAP funds expended.

Learn more about the Council’s work to promote ethanol in Japan.