China’s Phase One Promises Could Be Kept With Ethanol

As producers worry that China is not fulfilling its phase one promise to buy nearly $40 billion dollars in U.S. exports, ethanol groups say that the country could easily make those numbers if they bought more renewable fuels.

China is the second largest gasoline market in the world and is currently trying to use more E10 and E15. Ethanol groups continue to push for access to that market, despite dampened demand from COVID-19. Craig Willis, with Growth Energy, states, “If they were to go E10 nationwide, which they do have an E10 policy... there’s a potential for 3-3.5 billion gallons in new demand for our product, which would be in excess of a billion bushels of corn, so it would be a huge deal for our producers.”

China use to be the third largest ethanol export market for the U.S."Then we got into this Trade War, and when that started, the tariff on ethanol went from, at that time, 30 percent, it went as high as 70 percent during negotiations, right now it’s around 45 percent,” according to Willis.

As ethanol markets continue to dry up, Renewable Fuels Association’s Ed Hubbard says that they way to heal this is to move forward. He notes that the biggest challenge in trading with China is the enforceability.