Post by account_disabled on Feb 24, 2024 23:55:13 GMT -5
Barrels of ethanol which are sitting in storage plants across the Midwest unused; these barrels will remain idle until there is enough gasoline available to blend with them. The current supply side crisis has therefore served to compound pre-existing structural issues within the industry.
“It’s a more sombre mood,” said Todd Sneller, the administrator of the Nebraska Ethanol Board. “The growth opportunity that existed some years ago is still out there in theory, but the reality is that it’s going to take an awful lot of time, money and political battles to realise that opportunity.”
“Blend wall” creating demand side difficulties
With most cars and service stations only able to cope with a fuel blend B2B Email List of 10 per cent ethanol, known as the “blend wall”, demand restrictions clearly exist; the hope that demand will rise for higher percentage ethanol blends has not yet materialised.
“Flex-fuel” vehicles, which can operate on 85 per cent ethanol, are also yet to be taken up by the mass market, and technological advancement in electric vehicles will only add further pressure to the industry’s long term competitiveness.
In the EU, discussions are currently under way to limit the production of first generation biofuels, like ethanol, to half of Europe’s renewable fuel target, as a result of concerns over their long term environmental sustainability.
Underdeveloped second generation fuels
With ethanol under pressure, many hope that in the longer term, developments in second generation biofuels, synthesised from non-food sources, will provide a more viable alternative. Although cost advances are being achieved in these ‘cellulosic’ biofuels, productive capacity is still very small in comparison to ethanol. Whether these crops can be commercialized without requiring similarly high levels of water and changes in land use is open to much debate.
Whether the biofuels industry can dust off this recent blow also remains unknown. Idle plants and unused barrels could clearly be short term side effects of changes in the economic cycle, but could also be a sign of longer term decline:
“Is that going to be temporary or permanent? It’s hard to say,” said Eric Lee, Citibank commodities expert.
However, with producers hoping to produce an extra three-tenths of a gallon of ethanol per bushel of corn, technological development could yet save an industry merely bruised from a particularly tough year.
“It’s a more sombre mood,” said Todd Sneller, the administrator of the Nebraska Ethanol Board. “The growth opportunity that existed some years ago is still out there in theory, but the reality is that it’s going to take an awful lot of time, money and political battles to realise that opportunity.”
“Blend wall” creating demand side difficulties
With most cars and service stations only able to cope with a fuel blend B2B Email List of 10 per cent ethanol, known as the “blend wall”, demand restrictions clearly exist; the hope that demand will rise for higher percentage ethanol blends has not yet materialised.
“Flex-fuel” vehicles, which can operate on 85 per cent ethanol, are also yet to be taken up by the mass market, and technological advancement in electric vehicles will only add further pressure to the industry’s long term competitiveness.
In the EU, discussions are currently under way to limit the production of first generation biofuels, like ethanol, to half of Europe’s renewable fuel target, as a result of concerns over their long term environmental sustainability.
Underdeveloped second generation fuels
With ethanol under pressure, many hope that in the longer term, developments in second generation biofuels, synthesised from non-food sources, will provide a more viable alternative. Although cost advances are being achieved in these ‘cellulosic’ biofuels, productive capacity is still very small in comparison to ethanol. Whether these crops can be commercialized without requiring similarly high levels of water and changes in land use is open to much debate.
Whether the biofuels industry can dust off this recent blow also remains unknown. Idle plants and unused barrels could clearly be short term side effects of changes in the economic cycle, but could also be a sign of longer term decline:
“Is that going to be temporary or permanent? It’s hard to say,” said Eric Lee, Citibank commodities expert.
However, with producers hoping to produce an extra three-tenths of a gallon of ethanol per bushel of corn, technological development could yet save an industry merely bruised from a particularly tough year.