Joanna Guza:
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Joanna Guza:
The mission of US Farmers & Ranchers in Action is to bring all of American agriculture together with farmers and ranchers at the center to collectively identify and tackle critical long-term issues. We are glad to have a familiar voice on Farm + Food + Facts. And that is Doug Berven. He's the Vice President of Corporate Affairs at POET. He joined us in August of 2023 to talk about biofuel basics and the future potential. Doug shares with us from a high level view that biofuels are made from plant-based materials. And now today our focus will be on how biofuels are being used around the world. Well, Doug, to kick off our conversation, can you give us a preview of how biofuels are being used around the world?
Doug Berven:
Sure. Well, thanks for having me, Joanna. Well, there are a number of reasons why we're using biofuels in increasing numbers around the world. Number one is to reduce carbon intensity and greenhouse gas emissions around the world. Everybody is focused on, on climate change. Biofuels are the best way to reduce greenhouse gas emissions from the transport sector. That's one thing. Another thing is a lot of countries are looking at biofuels to reduce their dependence on foreign oil. For example. The United States is very concerned about that. The more biofuels we produce domestically here, the less we have to rely on fossil fuels from other nations. So the way that we're using them is, number one, we're increasing the blend rates in light duty vehicles. The cars we drive every day in Brazil, their minimum blend rate is 27.5% ethanol, and then you can choose a hundred percent ethanol if you want.
India has just put out a mandate for 20% ethanol blends in their fuel supply. We're seeing southeast Asia. The United States is trying to go from 10% ethanol to 15% ethanol and higher. And all these things are because look, ethanol is obviously much better for the environment. We're at least 50% better than gasoline on a greenhouse gas emissions profile. We're also immediately available. We're also affordable. So it just makes sense, uh, in every aspect. Whether you're a market driven person, a climate driven person, biofuels really have something to offer for everybody from a benefit standpoint. And then the underlying thing, especially for this audience is the fact that biofuels are really the catalyst for successful agriculture. And successful agriculture is the key to solving the, the world's most pressing issues, including climate change, poverty, hunger and disease. Um, we need biofuels to keep agriculture strong and that's, that's a very important aspect that people are realizing around the world.
Joanna Guza:
And we'll get Doug's take on which country's the most successful with their biofuels. But before we jump into that question, what sources are countries using to produce the biofuels and how efficient are the processing plants?
Doug Berven:
From a bioethanol standpoint, corn and sugarcane are the two main feedstocks. Brazil is heavy into sugarcane. The United States is very heavy into corn. Brazil is doing more and more corn-based bio ethanol, I mentioned India earlier. They have a 20% mandate in that country and they are eliminating the use of sugarcane to ethanol and going strictly to corn-based ethanol because what they realize there is when they use sugarcane, they consume that sugar cane and that's taking a staple out of their diet. When they use corn, you only transform the starch of the corn kernel into ethanol. All the protein, the fiber, the oil goes right back to where corn is grown for in the first place. So you get food and you get fuel with corn. And it is probably the most elegant feedstock for biofuel production because when you harvest corn, you can store that indefinitely.
All that energy in that corn kernel just sits there waiting to be processed. And when we do process it, we create that energy in both the, the forms of food and fuel. So beyond corn and sugarcane, soybeans are used a lot for biodiesel. And then we have a number of, uh, waste oils, cooking oil and and things like that that are used to make biodiesel and renewable diesel. So we can make biofuels out of almost any plant material. The most important aspect is what are the most economical ways to do it. And so corn, number one, sugar cane number two, uh, soybeans number three are really the proven most economical ways to make the most amount of biofuels.
Joanna Guza:
But how efficient are the plants around the world com, you know, in the United States, to India, to Brazil, Southeast Asia? Are we all as efficient?
Doug Berven:
There are some differences. I would say the United States really started growing its biofuel industry here in the early two thousands. You could go back farther, but you know, the early two thousands we were about 1% and by 2010 we were at nearly 10% ethanol blend. So that was the big gain. And so we have a lot of very new plants of very efficient plants here in the United States and around the world where they're building their plants, they're very efficient as well. There are some older plants around the world that aren't as efficient, but for the most part I would say that biofuel production is pretty efficient throughout the world. The biofuel production facilities are probably more modern than the refining assets around the world. So we could make that argument as well.
Joanna Guza:
Right. And what countries have the most success with biofuels and why?
Doug Berven:
The United States is very successful with biofuels, obviously, but Brazil has the highest blend rate. They have a minimum blend rate in the country right now of 27.5%. So whatever you're fueling up, you're going to use a minimum of 27.5% ethanol as a fuel. The other choice they have, there is a hundred percent ethanol and people have been programmed to understand the different values of those two. And so there is a lot of switching between those different fuels. In Brazil, they've gained their energy independence by using high levels of, of bioethanol. In the United States, we have 10% in nearly every gallon of gasoline in this country and we wanna increase that to 15% because of the environmental, economic and national security benefits that we get out of that. But it is tough and it's tough because let's face it, we're taking market share from a very powerful political force in the oil industry.
I don't think we have to shy away from that fact. It, it's just the reality of why we aren't increasing our blend rates as fast in this country. But then, you know, I really hope that India comes through, uh, with our 20% blend mandate that's going to really help their economy, their ag sector and their environment. They really need it from an air quality standpoint in India, China is following, uh, Southeast Asia is very aggressive. Latin America is becoming more and more aggressive with higher blends. So you know, it's pretty universal around the world that everybody is trying to go to higher blends of biofuels.
Joanna Guza:
Just from your initial preview, it almost seems like the United States is a little behind though. Would you say the United States is a little behind?
Doug Berven:
Yeah, I would say we are behind. I, you know, if it was just up to the markets in the United States and there were no politics being played, I would guess that ethanol would be somewhere between 20 and 30% of the U.S. fuel market and we'd also be optimizing engines to run on it. Ethanol is such a superior fuel to gasoline when you build cars for it, it doesn't have a competition. Ethanol holds the world's speed record on both land and water. Not a lot of people know that, but ethanol is a very, very efficient, powerful fuel and we should be using more of it.
Joanna Guza:
What challenges have other countries faced in meeting their biofuel goals?
Doug Berven:
The biggest one is probably not enforcing the mandates that they put in place. So for example, if India has a mandate for 20% ethanol blend in their country and they don't enforce that mandate, there's no assurance for investment from biofuel producers that there will be a market there. Um, the United States was very successful early on when we passed the renewable fuel standard in 2005 and then increased those rates in 2007. We enforced those mandates on the obligated parties and so there was a market availability and we very, very quickly built 200 ethanol plants in the United States because the market was there and there was a surety there that, that we had an opportunity for a return on the investment. If you don't enforce the mandate, you're not going to get the investment. So that's one challenge that is out there. Another challenge is there are a number of countries that still believe they want to use cellulose ethanol and that's fine, but then they have to realize that they're going to be using a much more expensive fuel because it's much more expensive to make bioethanol out of say, corn stalks or wheat or straw than it is out of corn.
And so there's a trade off there. Let's see, another one that I deal with all the time is the misnomer of food versus fuel. I was just in Europe and they really believe that there is a food versus fuel argument. And we have disproved that over 20, 30, 40 years of production in the United States, the bioethanol industry from corn does not deplete the world of nutrition. It enhances the world of nutrition because it creates a market and we don't consume the corn, we just use the starch and all that. Protein, fiber and oil go back into the markets that corn has grown for in the first place, which means there is more nutrition, not less nutrition. And if you look at the statistics, you can see that biofuel growth has gone up and under nutrition around the world has come down. That's because we have offered a balanced market for people around the world to begin to start farming again.
That's really important. And then the other thing that other countries have is an unwillingness to import ethanol from the United States or Brazil. They want to do it all by themselves and I wish they wouldn't be trying to do that. When we passed the RFS early on in the early two thousands, we had to import ethanol, believe it or not, from Brazil, just to meet our mandate. But that gave us the surety that the mandate was going to be enforced and that gave us the ability to build it out domestically. And so a country like India should allow fuel ethanol to be imported so that they assure the domestic folks that there's going to be a return on their investment because the the mandate will be enforced.
Joanna Guza:
Doug, one challenge I'm surprised you didn't bring up was weather, but I know that's so uncontrollable and even last year we had such a drought, especially in Wisconsin, we went almost like 30 days with no rain after the corn was planted. Have you seen weather being one of those challenge pieces?
Doug Berven:
Yeah, in 2012 we had a major drought in this country and it was hard to source grain, but there were other places to get grain from around the world too. So you know, if, if Brazil is having a really bad year, we've got one of the biggest surpluses we've ever had in this country, they can import corn. So I think it's very important to increase blends and promote more agricultural productivity around the world. The United States should not be the grain producer for the world. We should all be balancing those grain markets, corn, wheat, soybeans, those are global commodities and it's important that we balance those markets around the world with growing markets. Agriculture needs more markets, not less markets because the technology and agriculture has been just exploding. Uh, last year for example, we had one of the worst growing conditions that I can remember.
It was a drought year in the United States and we still produced the largest corn crop in US history. 177.3 bushels per acre is the best bushel per acre average we've ever had in drought conditions. And that just goes to the fact that farmers are doing better managing their soils and the tech companies, whether that's the OEMs or the seed companies, they're providing better solutions for the farmers. So it just continues to go and I think weather is obviously an issue, but with some of the new technologies coming around and the new practices we're mitigating some of the weather problems that we could have had in the past.
Joanna Guza:
Two more questions for you Doug, as we wrap up this episode of Farm + Food + Facts. Are biofuels working in conjunction with other renewable energy sources?
Doug Berven:
Yes, absolutely. In fact, here in Sioux Falls, our headquartered is run partly by solar power. There are wind farms all over that are helping power a lot of the ethanol facilities. We have a solid fuel boiler at at two of our plants right now. So biomass is actually powering some of these facilities. Another one of our plants has a about a 16 mile pipeline that takes methane from a local landfill and is replacing natural gas with the methane from the landfill. So, uh, yes, other renewable sources are definitely being used and we're looking at all kinds of different options to use more renewable energy. Here's another thing that's really interesting, Joanna. Now we have biofuels as a byproduct of biofuels. So we're making ethanol and we're selling corn oil to biodiesel and renewable diesel. So yes, renewables have a long run runway and uh, they're going to be used a lot more in the near future.
Joanna Guza:
Well, last question for you Doug. What opportunities do we have for biofuels in the United States?
Doug Berven:
The options are almost limitless. You know, we have a lot of improvement to do with light duty fleet here. We should be increasing our blend rate from 10 to 15% immediately. We have the product. I think sustainable aviation fuel is a real opportunity. You see all the airlines saying they're going to move to lower carbon fuel in the near future, and alcohol to jet or ethanol to jet fuel is one of the best pathways they can pursue. So we're looking very, very hard at that. And that market is enormous. It's bigger than what we're providing today. The marine industry is very big. All of the major shipping companies are looking to decarbonize their fleet. They need cleaner biofuels and ethanol is a real option for them. And then off-Road is another option to increase the use of biofuels, whether that be in tractors in the field, or generators, whatever it might be. Biofuels have a tremendous future. You know, you look back at the last 20 years and it's been really exciting. I think looking at the next 20 years is even more exciting and, and that's because we are really getting efficient. We're really starting to understand the benefits and we'll start employing those more and more as we go.
Joanna Guza:
Okay. And now we have more tools in our toolbox, so we're just gonna keep on getting better. Well, it's always a pleasure connecting and learning from you, Doug. Our guest has been Doug Berven, he's the Vice President at POET. We hope that you learn something from this conversation. This podcast is brought to you by the U.S. Farmers & Ranchers in Action. USFRA plays the critical important role of creating opportunities for collaboration, information sharing, and solution development for the full agricultural value chain. We appreciate your time and we hope that you tune in. Again, I'm Joanna Guza for Farm + Food + Facts.
