CoBank: Political and regulatory uncertainty could impact US ethanol industry in 2025
CoBank’s report on U.S. ethanol production predicts steady production levels in 2025, maintaining about 1.05 million barrels per day. However, regulatory uncertainties, including small refinery exemptions (SREs) and possible tariffs, present challenges. Despite this, global ethanol demand remains strong, particularly from exports, with Canada expected to lead as the top export destination in 2024.
December 18, 2024
BY Erin Voegele
CoBank predicts U.S. ethanol production in 2025 will be largely unchanged from 2024 but cautions that policy uncertainty looms over administration of the Renewable Fuel Standard program, small refinery exemptions (SREs), and the impact of potential tariffs.
CoBank discussed the outlook for the U.S. biofuel industry in a report released Dec. 12, titled “The Year Ahead: Forces That Will Shape the U.S. Rural Economy in 2025.”
The report notes that the biofuel sector is facing several headwinds in 2025 stemming from both political and regulatory uncertainty. Some of that impact, however, could be offset by continued tailwinds from strong exports and higher biofuel mandates from countries around the world.
CoBank cites U.S. Energy Information Administration predictions that U.S. ethanol production will be maintained at current production levels in 2025, averaging approximately 1.05 million barrels per day.
According to the report, the incoming Trump administration is unlikely to quickly propose new RFS renewable volume obligations (RVOs) for 2026-2029. Rather, the administration is expected to wait for actions on pending SREs. CoBank notes that during the previous Trump term, the U.S. EPA granted 34 SREs filed seeking exemptions for the 2017 RFS compliance year. The Biden administration has not approved any SREs and has to date denied 79 SRE petitions.
Increasing global demand for ethanol may continue to be a bright spot for the industry, with CoBank stressing that expanded renewable blending requirements around the world are helping to build global demand. U.S. ethanol exports are expected to set a new volume record in 2024, with Canada taking over as the top destination.
That bright spot, however, could be impacted by trade policy. “The impact of potential tariffs on world trading partners and retaliatory tariffs on U.S. agricultural products, including ethanol and DDGs, could limit ethanol export growth,” CoBank said in the report. U.S. ethanol exports could also be impacted by expanding corn ethanol production in Brazil, which may increase ethanol competition in the world market.
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Source : Ethanol Producer Magzine
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