CoBank: Overall Outlook for Ethanol is Positive

  • Wednesday, 24 April 2024 08:26

Ethanol Producer Magazine

Apr 22, 2024

CoBank is predicting a positive outlook for ethanol in 2024 as plants capitalize on lower corn prices and improved margins, according to the company’s latest Quarterly Research Report, released April 11. 

Ethanol production in January, however, was down. Only 434 million bushels of corn went to fuel alcohol production during the first month of the year, down 10% when compared to the previous month, and down 2% when compared to January 2023. 

According to CoBank, reports indicate that improved ethanol demand has encouraged some marginal plants to come back online. These restarted plants are pushing ethanol supplies higher and could create minimal oversupply.

Within the report, CoBank explains that ethanol producers are optimistic that higher blends and sustainable aviation fuel (SAF) will offset the impact of electric vehicles (EVs). “Rising E15 and E85 blending enables the ethanol industry to hold the line in an otherwise declining gasoline market,” CoBank said in the report. “Every 1 million new battery-only EVs sold reduces ethanol demand by 45 million gallons per year.”

While the U.S. Department of Treasury has set to release the revised 40BSAF-GREET model which will be used to calculate greenhouse gas (GHG) emissions reductions for the purposes of the SAF tax credit, CoBank estimates that ethanol producers will need to reduce carbon intensity (CI) by 25 to 30% to qualify. Those reductions could come from sourcing lower CI grains or utilizing carbon capture and storage (CCS) technology, the company said in the report. The 40BSAF-GREET model will also set the tone for implementation of the 45Z clean fuel production tax credit, which is scheduled to go into effect on Jan. 1, 2025, CoBank added.

The report also briefly discusses the impact of lower renewable identification numbers (RINs), which CoBank said may reduce biofuel plant utilization and could force producers to slow or shelve plans to expand renewable diesel capacity. 

A full copy of CoBank’s latest Quarterly Research Report is available on the company’s  website.

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