Sharing The Octane Advantage Of Ethanol With World Markets

Global markets vary greatly in their experiences with ethanol, from fully realizing the advantages of increased ethanol use to continued reliance on expensive and environmentally harmful fossil fuel additives. The U.S. Grains Council (USGC) wants countries around the world to look to ethanol when their government and industries think about octane.

Depending on the octane of the base gasoline in the fuel, refiners use additives to boost octane levels to enhance engine performance. Many international markets rely on methyl tertiary butyl ether (MTBE) as an additive despite water quality problems and associated clean-up costs exhibited in the United States and other countries. Additionally, refiners often use aromatics such as benzene, toluene and xylene, collectively known as BTX. Aromatics have high levels of particulate matter emissions that negatively impact human health and are expensive.

With one of the highest octane ratings of any fuel additive at 113 AKI (anti-knock index, which measures the fuel’s ability to resist knocking during combustion), ethanol provides economic benefits by boosting octane ratings of subgrade gasoline. Markets that do not allow ethanol blending within their national fuel specifications do not capture this octane advantage, cost-savings and other benefits of ethanol for their fuel oxygenation requirements, typically due to the lack of policies effectively governing national fuel standards. Many of these governments simply do not know a reliable alternative to MTBE or aromatics exists and is readily available.

From a straight price perspective, U.S. ethanol is cheaper than other components of gasoline – including MTBE and aromatics – and in some cases, gasoline itself. Using ethanol also reduces refining costs, allowing use of a sub-grade of gasoline, adding more savings. Octane value and cost savings are especially important in price-sensitive markets where fuel demand is more elastic.

Countries with excess refining capacity stand to further benefit from using ethanol in the finished gasoline product to other countries. South Korea and India both have significant refining sectors to service their own markets and export finished product to other markets. Singapore is also a major transshipment point for other countries in the Asian region, including Indonesia, which has annual gasoline demand of nearly 12 billion gallons.

The Persian Gulf, the United Arab Emirates, Oman and other European countries with excess oil refining capacity are exporting finished gasoline products to the West Africa region. These countries are taking advantage of the octane benefits of ethanol and passing them on to customer countries.

In its work to promote ethanol use globally, the Council encourages countries without the ability to produce their own feedstock to develop biofuels policies that include a role for ethanol imports. Countries that produce ethanol domestically can also benefit from trade that helps reliably fulfill the total ethanol demand needed to meet national fuel mandates.

More than 65 countries already have biofuels policies in place, with 11 markets announcing significant policy expansions in the last year. The Council continues to educate ministry and industry officials on the benefits of using ethanol and developing policies with a role for trade.

Editor’s note: The original version of this article appeared in Ethanol Today magazine, which can be accessed at ethanoltoday.com.

Read the Council’s weekly report on ethanol pricing here.