By Growth Energy Senior Vice President of Global Markets Craig Willis
Yesterday, we celebrated that the U.S-Mexico-Canada Agreement (USMCA) officially entered into force, which modernizes the previous trade pact, and strengthens the trade relationship between these North American nations. As this trade agreement is a monumental occasion, below is an updated on each of our neighboring countries.
Canada is the U.S’s second-largest ethanol export market, accepting 330 million gallons of ethanol in 2019. The Canadian market has the potential to increase materially over the next 10 ten years due to changes in both federal and provincial policy, including pushes by Ontario and Quebec to move to a fifteen percent blend.
Mexico is the largest dried distillers grains (DDGs) export destination, constituting over 25 percent of DDGs exports in 2019. This potential 1.2 billion gallon ethanol market holds both opportunities and challenges. While E10 is approved for use today outside of Mexico’s three largest metropolitan areas, in January, the Mexican Supreme Court of Justice struck down a regulation (NOM-016-CRE-2016) that allowed the sale of 10 percent ethanol blends. Originally issued by Mexico’s Energy Regulatory Commission (CRE) in June 2017, the rule increased ethanol blending from 5.8 percent to 10 percent outside those metropolitan areas.
The NOM was struck down not because of the merits of ethanol, but because of arguments against the process to modify the fuel specification. If there is a silver lining to this decision it would be that the Supreme Court of Justice will allow for a 180-day grace period, which today extends into February 2021, during which the NOM will remain in place. That still allows the CRE time to rework the specification and permits stakeholders to have a say in the process for enabling 10 percent blends.
Alongside the U.S. Grains Council, Growth Energy will continue to offer our partners in Mexico technical and scientific information as we collectively work to ensure North America leads the region in the reduction of greenhouse gases in the transport sector and become conscientious stewards of the global environment.