Electric vehicles are the only transportation that experienced a contrarian growth under the impact from the COVID-19 pandemic during 2020, though US farmers have been rather anxious about the rapidly expanding waves of electric vehicles since there is now one less solution for the corn that they mass planted.
Electric vehicles and corn, the two seemingly uncorrelated markets are concatenated through a special agricultural processed product, ethanol.
Ethanol, which is biomass alcohol, is an alternative of gasoline that was favored by the transportation industry for the past 20 years, and occupies approximately 5% of global fuel. The US has the largest production of ethanol, where over 60% of ethanol comes from the country, and the primary raw material is corn itself.
Ethanol was regarded as the most profitable agricultural byproduct more than 10 years ago, and the fact that it can replace gasoline without any processing procedures made it a rising star during the hyperinflation period of petroleum, which prompted numerous farmers to expeditiously produce corn for the production of ethanol.
However, the global acceleration on carbon reduction has resulted in the successive stipulation of policy on prohibiting the sales of fossil fuel vehicles, which has contracted the gasoline market, and the oil prices have surprisingly plummeted to rock bottom, where the continuous growth in the sales of electric vehicles has drastically diminished the sales of ethanol.
Ethanol is often mixed into unleaded gasoline for sales, and most pickup trucks and light vans in the US are able to use gasoline added with ethanol, with the most common one being E10 (10% ethanol). Although no aerosols are produced during combustion, ethanol does derive carbon monoxide, carbon dioxide, and hydrocarbon, thus research indicates that gasoline added with ethanol will create more severe carbon emission and smog, which dims the shinning appearance of the initial rising star.
▲ Manufacturing process of ethanol.
All simple market competition become complex and intriguing with the involvement of politics, and fuel is no different. As the US presidential election approaches, the Democratic Party, who is dedicated in anti-air pollution, hopes to expedite the comprehensive carbon neutrality in transportation, whereas the conserved Republican Party is opposing such action.
US President Trump announced a special order last month that allows the E10 gasoline added with 10% ethanol to become E15 (15% ethanol), which provides alleviation for farmers by increasing the consumption of ethanol. The Trump administration also released a subsidy solution of US$46 billion that is used to replenish the losses that farmers have sustained from the trade war, reduction of oil, and the COVID-19 pandemic.
However, the people in the US and the gasoline market have not received such implementation well. The reduction of oil prices, and the widely circulated image of air pollution, have almost eliminated the existence of the E15 gasoline, and numerous gas stations have even decided to remove the E15 fuel nozzle after the announcement of the new policy in order to save transportation cost.
The US government is also divided in terms of ethanol. Scott Pruitt, former administrator of the US Environmental Protection Agency, is a staunch oppose, and had even studied a report once regarding the reduction of ethanol usage, for which may have become the reason for the parting between him and Trump at the end. Adam Wheeler, successor to Pruitt, has been a tactful supporter of Trump’s implemented measures in corns.
In order to seize the votes of farmers, Joe Biden, Democratic presidential nominee, also commented that he will not blindly support the Green New Deal (expedition of comprehensive electrification), and will vigorously develop various renewable energy, including ethanol.
The future of ethanol is precarious judging from the various phenomena, and the successive request of subsidization prior to the popularization of electric vehicles may perhaps aggravate in the next 10 years, where farmers will have to face the crisis of a price collapse if the production volume of corn continues to plummet.
(Photo source: RFA)