Ag Policy Blog

The National Corn Growers Association (NCGA) highlighted this week that EPA's newest rule to further reduce tailpipe emissions has the potential to lower corn use by 551 million bushels from 2027-2032 in E10 blends. This would come as tighter emission rules for light-duty and medium-duty vehicles move manufacturers to produce more electric vehicles. EPA's emissions rule would drop gasoline usage by 6.9 billion gallons in 2032, a 5.7% decline in the baseline gasoline use projections.

As projections go farther out, NCGA shows an annual decline of corn demand of 1 billion bushels by 2041 as less E10 is put into vehicles.

"Losing greater than 1 billion bushels of corn demand annually at a time when production is increasing would be doubly detrimental to U.S. corn farmers and the rural economy," NCGA's analysis stated.

As a counter, NCGA highlighted the importance of nationwide E15 to corn demand. Moving to national E15 blends would increase corn use by more than 2 billion bushels in 2027 and "provide a long-term offset to the rule's otherwise devastating hit to corn demand. It would also offer consumers lower fuel prices at the pump and provide a lower emissions product that can protect the environment during the vehicle transition."

Under NCGA's calculations, E15 would more than take up those losses in E10 until 2045 when the decline in liquid fuel use would eventually overtake the higher blend level as well.

"As motor gasoline use declines, so does demand for ethanol and for the corn used to produce it – causing potentially devastating impacts on farmers and the rural economy," NCGA stated.

A separate analysis by the American Enterprise Institute (AEI) earlier this month looked at the Biden administration's goal of producing 3 billion gallons of Sustainable Aviation Fuel by 2030. The argument in the AEI study is producing more SAF from either corn or soybeans would demand between 8 million and 11 million acres of corn or 35 million to 50 million acres of soybeans, "depending on how rapidly crop yields increase over the next six years."

There are no electric battery or fuel-cell capabilities for commercial airlines. As regulators and others demand airlines lower emissions, that requires aviation fuel really to turn to biofuels as the only real viable solution.

As DTN has reported, the federal government is in the middle of an overhaul to the government life-cycle analysis, the Department of Energy's Greenhouse Gases, Regulated Emissions and Energy Use in Technologies (GREET) model. That model update is going to dictate the demands necessary for new jet fuels to qualify for tax credits of up to $1.75 a gallon. It will also be critical for EPA to plug in the GREET model for the Renewable Fuels Standard so these new aviation fuels qualify for EPA renewable identification number (RIN) credits.

To get those tax credits from the Inflation Reduction Act, a fuel feedstock has to have at least a 50% reduction in emissions compared to petroleum jet fuels.

While the goal is to hit 3 billion gallons by 2030, the potential SAF market is as much as 36 billion gallons as airlines continue to face pressure over time to reduce emissions -- similar to what EPA is doing now with emissions from vehicles.

The AEI report highlights the U.S. "has the industrial capacity and technical knowledge to produce billions of gallons of biofuels, and greater quantities of feedstock can potentially be produced through increasing crop acreage and yield." That's essentially why "President Joe Biden claimed during a campaign event in June 2023 that 95% of SAFs would be produced using agricultural feedstock."

The AEI study then dives into "scaling production by increasing acreage is a major concern for policymakers and environmentalists." Increasing demand for biofuels reduces the land available to grow food for human and livestock consumption, the AEI analysis states. "For these reasons, ethanol plants may need to lower their emissions to qualify for SAF credits."

While the NCGA analysis made no mention of SAF prospects to displace demand loss, the AEI study also does not examine how corn ethanol would lose demand under tighter tailpipe emissions or a widespread conversion to electric vehicles.

To produce 3 billion gallons of SAF under a "trend yield" scenario (187 bushels an acre), it would take about 9 million acres of corn production. Under a higher yield, the acreage needs decline and under a lower yield, the acreage demands rise.

The AEI study also looks at soybeans, estimating it would take nearly 40 million acres of soybeans to produce 3 billion gallons of SAF, thus corn to SAF seems like a more viable option to the AEI authors. Still, "even if corn is used, increasing SAF production to this extent would require at least some expansion of cropland. However, if reducing land-use impacts is a primary goal for policymakers, then corn ethanol is a better option than soybean oil for SAF production.

NCGA analysis: https://ncga.com/…

AEI study: https://www.aei.org/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

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