July 3, 2023
By  Cassidy Walter

Expanding ethanol's legacy into new markets

For decades the American ethanol industry has supported farmers, created jobs in rural communities, and displaced toxic chemicals in light-duty fuel tanks across the country. Today, the changing landscape of transportation has the industry looking for new opportunities in addition to the light-duty market to expand that legacy.

“If we’re going to grow markets and grow demand for our products and agriculture in general, we’re going to need to develop new markets beyond the light-duty transportation sector,” says Monte Shaw, executive director of the Iowa Renewable Fuels Association (IRFA).

Shaw says the ever-increasing efficiency of vehicles, the growing demand for electric vehicles, and a cultural trend away from driving in general, is leading to a long-term decline in fuel consumption. To highlight new opportunities for ethanol, IRFA featured three emerging markets earlier this year at the annual Iowa Renewable Fuels Summit in Des Moines, Iowa.

“If we do this right, this is going to be a tremendous opportunity for farmers, and we’re going to see increased demand for their products,” he says.

Sustainable Aviation Fuel
Air travel is widely considered part of the “hard-to-electrify space” where biofuels are critical to lowering the carbon footprint of the industry.

Ethanol is one of several renewable products vying for market share in the sustainable aviation fuel (SAF) market. SAF producer Gevo says ethanol has the advantage of being the lowest-cost feedstock to produce SAF.

“However, ethanol itself from a typical ethanol plant can’t get a low enough carbon intensity reduction,” says Patrick Gruber, CEO of Gevo. “The vast majority of the carbon footprint of ethanol is due to the energy of production. So this is very much about infrastructure as well. That’s what makes this difficult.”

Gruber says before ethanol can be used as a feedstock, several pieces need to fall into place. First, the supplying plant must be capturing and sequestering carbon, and powering the plant with renewable energy sources. That will lower the carbon intensity (CI) score of the ethanol enough that it can be used to produce SAF that meets the specifications for the tax credit in the Inflation Reduction Act. Second, he says it is important farmers get credit for their soil health practices. Lastly, Argonne National Laboratory’s GREET model must be used to calculate the CI scores.

The U.S. Department of Treasury is currently writ-ing regulations around the SAF tax credit, including what model may be used. Emily Skor, CEO of Growth Energy, a national ethanol trade association, says the industry is working with the department to ensure ethanol is not excluded as a feedstock.

“We want to be able to contribute in the hard-to-electrify spaces as well as for light-duty vehicles, and these are fantastic opportunities,” says Skor.

Despite current barriers to entry, Gruber says he is optimistic ethanol will be used to create SAF, and it will be a significant market for the ethanol industry. He says if the entire U.S. ethanol production capacity of roughly 17 billion gallons was suddenly diverted just to SAF production, it could fill the entire 10 billion-gallon SAF market.

ClearFlame and Heavy-Duty Vehicles
While ethanol is traditionally used in gasoline engines, new technology has made it possible for ethanol to run in diesel engines.

“When you integrate our technology, you enable the diesel engine to become fuel agnostic,” says BJ Johnson, CEO and cofound-er of ClearFlame Engine Technologies.

Johnson says ClearFlame gives diesel fleets the advantage of maintaining the performance of diesel engines while saving money with ethanol.

“That’s a huge market opportunity for ethanol. It’s also a longer-term market opportunity for ethanol because the need for liquid fuels in those hard-to-electrify sectors is not going anywhere anytime soon,” he says.
Heavy-duty vehicles are considered hard to electrify, and other fuel options such

as biodiesel and renewable diesel are also directed at reducing their carbon footprint. Johnson says with the U.S. diesel market being roughly 60 billion gallons, all solutions are needed.
“The value of these bio-based fuels is only going up and up and up,” he says.

Still a relatively young company, ClearFlame is fulfilling its first sales this year, working with fleets to retrofit engines. Down the road, it hopes to collaborate with engine manufacturers to integrate the technology.

Proteum Energy
The newest market opportunity the ethanol industry has its eye on is Proteum Energy. Proteum aims to use ethanol to produce “clean hydrogen,” which is hydrogen produced with a low carbon intensity.

Through its steam non-methane reforming process, Proteum plans to crack low-carbon ethanol to produce hydrogen that has a negative carbon intensity, initially for hydrogen fuel cells for heavy-duty vehicles.

John Rosenfeld, Proteum vice president commercial/strategic, says producing clean hydrogen from ethanol has several advantages over other processes, including being less expensive and requiring less water.

Furthermore, he says ethanol won’t have to compete for market share like it has in the light-duty market against oil companies.
“This is an opportunity to come into the market very early and carve out a much larger piece of that market based on ethanol’s advantages,” Rosenfeld says.

However, carbon capture and sequestration (CCS) is key again. CCS is estimated to reduce the carbon intensity of an ethanol plant by roughly 30 points. Rosenfeld says this is why the CCS pipelines proposed to crisscross the Midwest capturing carbon from ethanol plants and sequestering it underground are vital for the future of this market opportunity.

Proteum is building its first plant near an existing ethanol plant in central California. It estimates it will be running using ethanol from its neighbor by 2025.

“Hydrogen need not be in competition with ethanol,” says Rosenfeld. “We’re actually right on the same page.”