The U.S. Grains Council (USGC) explored the potential for increased exports of U.S. ethanol under Japan’s new energy policy as part of a U.S. Department of Agriculture (USDA) agricultural trade mission to the country earlier this month.
Under Secretary for Trade and Foreign Agricultural Affairs Ted McKinney led the overall delegation, the largest such group of U.S. businesses and state government leaders yet in a series of missions focused on expanding export opportunities for U.S. food and agricultural products.
The Council’s contingency of USGC officers, staff and members met with McKinney as well as U.S. officials stationed in Japan and the Japanese Ministry of Economy, Trade and Industry (METI) and Ministry of Environment. During each meeting, the Council expressed appreciation for continued support by both governments of the Council’s market development programs and the potential for U.S. ethanol to gain market share in Japan’s fuel market.
“While we have opened the door to ethanol exports to Japan, we still have a lot of work to do,” said Darren Armstrong, USGC secretary/treasurer and farmer from North Carolina, who participated in the mission. “The Council and our partners have an opportunity to provide more information to the Japanese government as well as to the entire value chain about the many benefits of ethanol.”
In April 2018, the Japanese government announced that the country’s biofuels policy will allow imports of the oxygenate ETBE (ethyl tert-butyl ether) produced from U.S. corn-based ethanol. The revision is part of the Japanese government’s aggressive goal of reducing carbon intensity by 26 percent by 2030.
The new policy includes increased carbon intensity reduction requirements of the feedstock used to make ETBE – a 55 percent reduction compared to gasoline, which was previously 50 percent. The new policy also recognizes the ability of corn-based, U.S.-produced ethanol to meet that goal, thanks to increased greenhouse gas (GHG) emission reductions from improvements in production efficiency and the emergence and use of co-products like distiller’s dried grains with solubles (DDGS).
“This policy development is significant for both the United States and Japan,” Armstrong said. “The shift demonstrates the U.S. ethanol industry’s commitment to reducing GHG emissions and supports Japan’s government as it looks to provide positive economic benefits to its transportation industry and consumers while meeting carbon intensity reduction commitments.”
Japan will now allow U.S. ethanol to meet up to 44 percent of a total estimated demand of 217 million gallons of ethanol used to make ETBE, or potentially 95.5 million gallons of U.S.-produced ethanol, worth about $140 million, annually.
The Council and its ethanol industry partners will continue to work closely with the U.S. and Japanese governments to communicate the benefits and importance of U.S. ethanol, including how Japanese refiners and consumers can financially benefit.
“With this decision, Japan recognizes the environmental value of U.S. corn-based ethanol,” Armstrong said. “Going forward, our role is to further demonstrate the economic value of using even greater volumes of ethanol, including through direct blending, as is done in the United States.”
Learn more about the overseas mission here.
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 28 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.