Industry seeks access to Chinese market

Source: Amanda Peterka, E&E reporter • Posted: Thursday, May 22, 2014

Ethanol industry trade groups and companies say they’re making inroads in opening up Chinese markets to U.S. ethanol imports.

A group of U.S. ethanol proponents and businesses returned last week from what they called a fruitful trade mission designed to explore opportunities and challenges to exporting U.S. ethanol into the Chinese market.After meeting with Chinese officials, as well as large Chinese petroleum companies, U.S. producers say they’re closer to tapping that country’s 30-billion-gallon-a-year gasoline market.

“We believe that there are greater possibilities to export ethanol to China than many of us thought prior to going on the trip,” said Jim Miller, vice president and chief economist at ethanol trade group Growth Energy.

U.S. ethanol exports have recently expanded due to a lowering in domestic corn prices, which has brought the price of U.S. ethanol down to the cheapest in the world. U.S. ethanol producers are also increasingly eyeing new markets for their product because wrangling over the federal renewable fuel standard at home has made future use in the United States less certain.

A new European Union tariff on ethanol imports from the United States has made the European market less desirable and spurred more exports to new and emerging markets (Greenwire, Feb. 21).

China is one of several markets that the industry is hoping to open. By law, China currently does not allow imports of foreign ethanol. Other barriers stand in the way of a robust ethanol trade with the nation, including Chinese concerns over using food crops to make fuel.

The recent trade mission from May 5 to May 13 to China was supported by the Agriculture Department’s Foreign Agricultural Service. In the first part of the trip, ethanol trade groups, U.S. officials, representatives from several state departments of agriculture and more than 20 agribusinesses traveled to northeast China to view agricultural practices, according to Miller.

Back in Beijing, U.S. ethanol representatives, U.S. officials, National Farmers Union President Roger Johnson and the China country director for the U.S. Grains Council met with Chinese energy and trade officials and China’s two largest petroleum companies.

In a press call yesterday, trade mission members said they came away from the meetings optimistic about future potential trade opportunities.

“There’s a fairly sizable potential export market,” Johnson said. But he added, “It’s going to take a little bit of work to break into that market.”

The ethanol trade groups said they believed their major competition in China would be domestic Chinese production of ethanol and other oxygenates.

In China, methyl tertiary-butyl ether is still commonly used as an oxygenate in fuel, whereas MTBE use has almost ceased in recent years in the United States because of concerns over groundwater contamination. Ethanol has largely replaced MTBE as an oxygenate in gasoline in the United States; the large majority of U.S. gasoline contains about 10 percent ethanol.

China “should certainly consider ethanol as their fuel oxygenate of choice,” said Kelly Davis, director of regulatory affairs at the Renewable Fuels Association, who participated in the trade mission.