Op-ed: Free Trade Needed to Maximize Biofuels’ Benefit

Source: By Bliss Baker, Ethanol Producer Magazine • Posted: Friday, May 26, 2017

The year is shaping up to be very significant for the ethanol industry and the role it will play in international efforts to reduce global transport emissions.From the signing of the Canada-European Union Comprehensive Economic and Trade Agreement, to the termination of the Trans-Pacific Partnership, to speculation about Brexit and the change in outlook with the new U.S. administration, what happens in 2017 could shape the global economic landscape for years to come.

While biofuels do not always make headlines in international trade discussions, the potential for the impressive growth and maturation of the global biofuels industry to be impacted by upcoming trade negotiations is very real. For the industry to continue to create jobs, reduce transport sector emissions, develop new technologies and drive down costs, a stable investment climate is crucial.

The recent rise of economic populist and protectionist language used in several countries is a troubling sign as it could harm investors’ confidence at a time when the biofuels industry’s future is particularly bright.

Projections for 2017 show that total global ethanol production will hold firm at 97.80 billion liters (25.8 billion gallons), continuing the trend of incremental annual ethanol production growth since 2013. The industry has achieved this resilience during a period when oil prices dropped to record lows.
Bolstering this resilience, some of the favorite attacks used by opponents of the biofuels industry have finally been put to rest.

The food vs. fuel issue has been conclusively disproven as real-world data has become available, and the American Petroleum Institute’s self-serving myth that 10 percent is the marketplace limit for ethanol content in U.S. gasoline has been shattered. Data from the U.S. Energy Information Administration shows that in 2016, gasoline consumed in the U.S. contained more than 10 percent ethanol on average, demonstrating that the so-called blend wall is not a real constraint on ethanol consumption.

As these specious arguments are disproven by hard evidence, the enormous growth potential still available for biofuels globally becomes more clear every day. In the International Energy Agency’s World Energy Outlook for 2016, the IEA is forecasting global energy demand will increase by 30 percent by 2040, with a significant portion from the transport sector.

Where this demand would historically have been addressed with increased reliance on fossil fuels, the global mindset has shifted. The ratification of the Paris Agreement last year established very ambitious targets for CO2 emission reductions, and set aspirational goals of shifting to a low-carbon global economy and encouraging the development of clean technologies as the basis for future growth.

Ethanol, as an immediately dispatchable low-carbon transport fuel alternative, represents a key policy solution that will be integral to meeting this challenge.

Multiple nongovernmental organizations have published reports since the ratification of the agreement outlining how current national policies aimed at reducing CO2 emissions from global transport activity will not achieve the targets laid out in the Paris Agreement, and that governments will have to redouble efforts to meet steeper targets in coming years.

Developing low-carbon alternatives to fossil fuels while maintaining growth will require the maximization of all cost-effective options and continued investment in clean technology development. Biofuels represent an ideal solution, but for the global industry to continue to grow, international free trade and a stable investment climate is key.

International trade negotiators would be extremely shortsighted to consider protectionist measures that would undermine the biofuels industry and the hundreds of billions of dollars of economic activity it represents. Creating barriers to trade would only serve to increase global reliance on crude oil and increase greenhouse gas emissions. As major economies look to negotiate trade agreements that will shape the investment outlook for the foreseeable future, it is critical that countries avoid protectionist policies.

It’s time to recognize ethanol for the ideal low-carbon transport fuel alternative that it is, take the brakes off biofuels technology development and meaningfully begin the transition to a sustainable future.

Bliss Baker, President, Global Renewable Fuels Alliance