Biofuels & Biomass

Ethanol in Crisis: Prospects for a rationalized North American industry under unworkable mandates

• How did we get here? We explain the policy environment in both the US and Canada, including state/provincial level incentives.
• The battle for acres. We show why corn supplies will remain tight and prices high over the medium term.
• Consolidation and rationalization are well underway. We highlight defining characteristics of those ethanol plants that are most likely to fail or succeed during the shake up.
• Producing competitively priced ethanol. The ethanol industry faces unique challenges because it is exposed to extreme volatility in its input markets (corn and energy) as well as its outputs (ethanol and by-products such as DDGs). Our detailed analysis calculates the cost and break-even prices of producing starch-based and cellulosic ethanol.
• The threats and opportunities of ethanol imports into the US. We discuss the current and future drivers of this trade and speculate on the role of imports in satisfying the RFS given the cloud hanging over cellulosic ethanol.
• Cellulosic ethanol – stuck in the pipeline. The delayed commercialization of cellulosic ethanol has jeopardized the RFS and Canadian mandates. We discuss the extraordinary technical and logistical difficulties in commercializing cellulosic ethanol and where this leaves the new US administration.
• Strategies for successful investment. Although there is already sufficient capacity to meet governments’ blending mandates for corn-based ethanol in the US and Canada, this does not mean there are no opportunities to invest. We show how the ongoing consolidation, coupled with significant regional differences in net operating costs, offers investors a unique opportunity to acquire ethanol plants well below construction value.