Biofuel Production Not Impacted by Loss of Government Programs

Biofuel gas pump

The Energy Information Administration (EIA) recently unveiled a forecast relating to the future of the U.S. biofuels market. Primarily, the EIA sees the production of fuel ethanol and net imports of biomass-based diesel remaining unchanged, although exports could see modest declines. Overall, levels should remain consistent even as federal mandates and state programs supporting biofuel consumption will expire after 2020.

The most common biofuels are fuel ethanol and biomass-based diesel. Fuel ethanol is primarily blended with gasoline to produce 10% ethanol-blended fuel, better known as E10. Biomass-based diesel, which refers to biodiesel and renewable diesel, is typically mixed at varying percentages with ultra-low sulfur distillate fuel.

The EIA expects that U.S. fuel ethanol production will remain near current levels, decreasing slightly in 2019 to 1.04 million b/d before increasing to 1.05 million b/d in 2020. Ethanol production is largely dependent on domestic gasoline consumption, which has been relatively stable. Fuel economy improvements have essentially offset increases in population and vehicle miles traveled to keep production levels constant.

The administration also forecasts net ethanol exports, which reached nearly 110,000 b/d in 2018, will fall to an average of 90,000 barrels in 2019 and 2020. Biomass-based diesel production will grow by about 40,000 b/d by 2020.

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