In December 2017, Ontario (a province that comprises nearly 40 percent of Canada’s fuel pool) announced it would consider doubling the current 5 percent ethanol mandate to a 10 percent ethanol mandate to meet its Climate Action Plan Goals of reducing greenhouse gas (GHG) emissions.
The U.S. Grains Council (USGC) and Growth Energy submitted comments to the government of Ontario in March 2017 to support the expanded use of ethanol in Ontario’s fuel supply to help meet its GHG emissions reductions targets, as the GHG emission reduction profile of U.S. corn-based ethanol has improved significantly with new production technology. The comments submitted by the Council and Growth also included information about the benefits of ethanol for reducing particulate matter emissions, for improved air quality, and its cost competitiveness compared to components of gasoline.
Canada has typically been the U.S. ethanol industry’s largest export customer. However, it was replaced in the 2016/2017 marketing year by Brazil. As the policy is implemented, the developments in Ontario would greatly support expansion of U.S. ethanol exports to Canada and may lead to Canada reclaiming its spot as the top export market for U.S. ethanol. The United States and Canada share important geographic advantages, infrastructure linkages and trade policy benefits.
The Council and other U.S. industry representatives recognize the importance of the proposed expansion to the mandate for achieving Ontario’s’ climate goals, and in creating an expanded market for Ontario and U.S. ethanol producers. Canada is also considering the expansion of renewable fuels to meet federal-level goals of further reducing GHG emissions. Ontario’s increase to E10 is the first step in what will hopefully become expanded ethanol use across the country.
Ontario will start the phase in of its E10 mandate in 2019 with enforcement beginning in 2020. The new mandate will lead to a potential increase in U.S. exports of ethanol to Canada of more than 81 million gallons within the first year of the mandate being adopted. As the Council and Growth continue to increase program efforts in Canada with funds provided by the U.S. Department of Agriculture’s Foreign Agricultural Service (USDA’s FAS), the potential in Canada – should a nationwide E10 mandate be adopted – could exceed 600 million gallons, nearly double the current levels.
The Market Access Program funds provided by FAS for this effort totaled $41,000 for calendar year 2017. Given that the forecasted increase of U.S. ethanol exports to Canada as a result of Ontario’s new mandate would total 81 million gallons of ethanol per year, the return on investment for MAP funds in this timeframe exceeded $130 million, or $3,170 to every $1 spent.
About the U.S. Grains Council
The U.S. Grains Council develops export markets for U.S. barley, corn, sorghum and related products including distiller’s dried grains with solubles (DDGS) and ethanol. With full-time presence in 13 key markets and representatives in an additional 15 locations, the Council operates programs in more than 50 countries and the European Union. The Council believes exports are vital to global economic development and to U.S. agriculture’s profitability. Detailed information about the Council and its programs is online at www.grains.org.