Japan Opens Doors to U.S. Ethanol

On April 17, 2018, Japan’s Ministry of Economy, Trade and Industry (METI) announced a revision to
its biofuel policy that creates a market opportunity for up to 366 million liters of U.S. corn-based
ethanol valued at approximately $170 million at 2017 export prices. The revision is effective
immediately.
Keywords: JA8026, Corn, Ethanol, Biofuels
Midori Iijima
Jess K. Paulson
Biofuels
Japan Opens Doors to U.S. Ethanol
Tokyo
Japan
JA8026
4/20/2018
Voluntary Public
General Information:
On April 17, 2018, Japan’s Ministry of Economy, Trade and Industry (METI) announced a revision to
the Sophisticated Methods of Energy Supply Structure Act (Energy Supply Act), setting new
greenhouse gas (GHG) emissions reduction values for gasoline, Brazilian sugarcane-based ethanol, and
creating a value for U.S. corn-based ethanol. As a result, Japan may import U.S. ethanol for the first
time.
The Energy Supply Act requires the use of 500 million liters crude oil basis of biofuel (equal to 824
million liters of ethanol) annually between Japan fiscal year (JFY, March to April) 2018 and 2022.
Japan meets virtually all of this mandate through the use of ethanol in the production of bio-Ethyl TertButyl
Ether (ETBE), which is imported and blended with Japanese gasoline. Domestically-produced
ETBE (using only imported ethanol since 2014) is extremely limited, as is the domestic market for
biodiesel. The ethanol market for direct blending as E3 is even smaller. Until this revision, Brazilian
sugarcane-based ethanol has been the only source of ethanol that met Japan’s requirements.
However, in 2016, METI began reviewing the latest statistics and data available for the GHG emissions
of bioethanol and gasoline. For more information about METI’s evaluation of this data, please see the
Japan Biofuels Annual 2017 (JA7100).
Key points from METI’s April 17, 2018 announcement include:
 A new emissions value for gasoline, raising the value from 81.7 to 84.11 grams of carbon
dioxide equivalent per megajoule (gCO2eq/MJ).
 A revised emissions value of Brazilian sugarcane-based ethanol from 32.7 to 33.61 gCO2eq/MJ.
 Establishing an emissions value for U.S. corn-based ethanol of 43.15 gCO2eq/MJ.
 Raising the emissions reduction target for ethanol introduced into the fuel supply from 50 to 55
percent compared to emissions of gasoline.
 An incentive for oil refiners1
to use bioethanol produced from non-food feedstocks (such as
cellulosic ethanol).
METI is allowing the import of a maximum volume of U.S. ethanol relative to the volume of Brazilian
ethanol that meets the 55 percent emissions reduction target. Based on METI’s calculation to determine
the volume of ethanol that meets the GHG reduction target (see Calculation below), U.S. corn-based
ethanol may supply up to 44.44 percent (or 366 million liters) of Japan’s mandate for bio-ethanol. The
value of this volume is approximately $170 million at 2017 U.S. export prices.

Fuente: Usda

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