Harmonized Trade Rules for Ethanol and ETBE

BRUSSELS – An increasing number of countries around the world is introducing mandatory ethanol-gasoline fuel mixtures in order to meet their targets for biofuel market shares. The two main options to do so are either by direct blending of ethanol and gasoline, or by adding the ethanol derivate ETBE. At the moment, ETBE accounts for ¾ of the European ethanol market, compared to approximately ¼ for direct blending. One of the major companies in the ETBE industry is Lyondell, which was recently acquired by Basell. It has the capacity to produce 1 million tonnes of bio-ETBE in the EU and another million tonnes in the United States. During the Biofuels Conference in Brussels this year, Joe Lee, Vice President of Lyondell’s Fuels business, expressed Lyondell’s plans to expand their role in the international biofuels market.

Ethanol Statistics sat down with Mr. Lee to discuss his view on the international trade of ethanol and ETBE. His message from the perspective of one participant in those global markets is pretty simple. He wants “clear, harmonized trade rules that allow his customers, predominantly refiners, real choices. This will allow international markets to grow with high efficiency, resulting in a key objective from any policy-maker’s standpoint: the lowest delivered cost to the ultimate consumer, the man or woman at the pump.”

The need for clear, harmonized trade rules
The reasons for ethanol blending targets are shared to an extent by all countries interested in promoting biofuels: energy diversification, CO2 reduction and rural development. Joe Lee explains during his speech at the Biofuels Conference that, “in recognizing that there is more than one driver to biofuel promotion, however, we also see that each country might weigh the factors differently, affecting their policies on how to regulate trade in these fuels. It is also reasonable to understand why all countries in their national interests have policies on excise taxes, tariffs, CO2 credits, support for advanced research and a number of other items that are so different. What is sometimes overlooked though is the impact of these varying policies in different countries on the efficient supply of materials to their markets.”
“For countries like the US and Japan, who import substantial portions of their energy needs from overseas, whatever rules they enact will affect not only local refiners, blenders or biofuel suppliers, but also those who provide them materials from overseas. Thus their view must encompass the international dimensions of the biofuel markets they are fostering. For each country to achieve its goals, the need for common international understandings particularly in the burgeoning biofuels market would seem to be apparent.”