ETHANOL2016 ETHANOL INDUSTRY STRONG OUTLOOK 2018 ETHANOL INDUSTRY OUTLOOK

RFA BOARD OF DIRECTORS

Absolute Energy, LLC East Kansas Agri-Energy, LLC Little Sioux Corn Processors, LLLP

OFFICERS Bill Pracht Steve Roe Rick Schwarck www.ekaellc.com www.littlesiouxcornprocessors.com Mick Henderson, Chairman www.absenergy.org Commonwealth Agri-Energy, LLC Fox River Valley Ethanol, LLC Merrick & Co. www.commonwealthagrienergy.com Ace Ethanol, LLC Neal Kemmet Neal Kemmet John Kosanovich www.aceethanol.com www.frvethanol.com www.merrick.com Neil Koehler, Vice Chairman Pacific Ethanol, Inc. Adkins Energy, LLC Glacial Lakes Energy, LLC Mid America Agri Products/ www.pacificethanol.net Ray Baker Jim Seurer Wheatland, LLC www.adkinsenergy.com www.glaciallakesenergy.com Robert Lundeen Charles Wilson, Treasurer Trenton Agri Products, LLC Al-Corn Clean Fuel, LLC Golden Grain Energy, LLC Mid-Missouri Energy, Inc. www.trentonagriproducts.com Randall Doyal Jim Boeding Chris Wilson www.al-corn.com www.goldengrainenergy.com www.midmissourienergy.com

Bob Dinneen, President Badger State Ethanol, LLC Grain Processing Corp. Parallel Products Renewable Fuels Association Erik Huschitt Mark Ricketts Bob Pasma www.EthanolRFA.org www.badgerstateethanol.com www.grainprocessing.com www.parallelproducts.com

Big River Resources West Granite Falls Energy, LLC Quad County Corn Processors Burlington, LLC Steve Christensen Delayne Johnson Raymond Defenbaugh www.granitefallsenergy.com www.quad-county.com www.bigriverresources.com Guardian Energy, LLC Redfield Energy, LLC Bushmills Ethanol, Inc. Jeanne McCaherty Dana Lewis Erik Osmon www.guardiannrg.com www.redfieldenergy.com www.bushmillsethanol.com Guardian Hankinson, LLC Show Me Ethanol, LLC Butamax Advanced Biofuels, LLC Jeanne McCaherty Richard Hanson Adam Schubert www.guardianlima.com www.showmeethanolllc.com www.butamax.com Guardian Lima, LLC Siouxland Ethanol, LLC Chippewa Valley Ethanol Co. Jeanne McCaherty Pam Miller Chad Friese www.hankinsonre.com www.siouxlandethanol.com www.cvec.com Heartland Corn Products Southwest Iowa Renewable CHS, Inc. Gary Anderson Energy, LLC Steve Markham Brian Cahill www.chsinc.com Highwater Ethanol, LLC www.sireethanol.com Brian Kletscher CIE www.highwaterethanol.com Tate & Lyle Ryan Drook Dan Smith www.cie.us Homeland Energy Solutions, LLC www.tateandlyle.com Pat Boyle Corn Plus www.homelandenergysolutions.com The Andersons, Inc. Mike Jerke Mike Irmen www.cornplus.com Husker Ag, LLC www.andersonsethanol.com Seth Harder Dakota Ethanol, LLC www.huskerag.com Western New York Energy, LLC Scott Mundt Tim Winters www.dakotaethanol.com Ingredion www.wnyenergy.com Kevin Keiser Didion Ethanol, LLC www.ingredion.com Western Plains Energy, LLC John Didion Derek Peine www.didionmilling.com KAAPA Ethanol Holdings, LLC www.wpellc.com Chuck Woodside DuPont Cellulosic Ethanol www.kaapaethanol.com White Energy, Inc.–Hereford Troy Wilson Greg Thompson www.dupont.com Lincolnland Agri-Energy, LLC www.white-energy.com Eric Mosbey E Energy Adams, LLC www.lincolnlandagrienergy.com Carl Sitzmann www.eenergyadams.com With low commodity prices jeopardizing the farm economy, ethanol stands as a pillar of strength, providing a value-added market that continues to WE ARE rejuvenate rural communities. With gasoline prices rebounding and vexing consumers once again, ethanol remains the lowest-cost octane on the ETHANOL planet, providing savings to both refiners and consumers. With the U.S. stepping away from global climate agreements, ethanol is reducing carbon STRONG emissions anyway—by at least 43 percent compared to gasoline. And, with U.S. crude oil imports on the rise again, ethanol production is hitting new heights, representing a critical backstop for energy security. Indeed, faced with challenges to America’s economic, environmental, and energy security, the United States remains Ethanol Strong.

While the industry has been challenged by stubbornly high stocks, protectionist trade barriers, and policy uncertainty, the long-term market fundamentals remain solidly bullish and producers are facing the new year with confidence.

Part of that optimism is attributable to a new President whose steadfast support has reassured the market that the Renewable Fuel Standard is truly back on track, whose commitment to regulatory reform promises to reduce costs and open new market opportunities, and whose “America First” approach to trade has provided refreshing advocacy for ethanol in addressing a myriad of unfair trade barriers. The chaos and drama in Washington, D.C. may provide fodder for political pundits, but the business of Washington, D.C. is still getting done and providing investors and consumers with renewed enthusiasm for domestic renewable fuels.

Still, as always, there are challenges that remain, necessitating the industry’s vigilance and attention. We must continue to build demand, here and abroad, to assure future growth. That means securing fair treatment in the regulation of higher-level ethanol blends so that consumers can choose the fuel that makes the most sense for their cars and their wallets – be it E15 or blends for flex fuel vehicles like E25, E30 and E85. That also means addressing the troubling protectionist winds blowing across international biofuels markets. We need to stem these destructive efforts, lest consumers across the globe be denied access to the world’s lowest cost ethanol and U.S. farmers be denied the export opportunities that often mean the difference between profit and loss. We must also continue to work toward a more united industry—speaking as one voice on major policy and marketplace issues, and encouraging a more constructive dialogue with our customers that recognizes the need for mutual success.

This year’s Outlook provides the statistics, analyses and technical underpinning for the debates ahead. It reflects an industry that is poised for continued success, sober about the challenges we face, but confident in the knowledge that we remain now, and always, Ethanol Strong.

Sincerely,

Bob Dinneen, President & CEO

2010 Ethanol Industry OUTLOOK 2017 ETHANOL PRODUCTION STRONGER THAN EVER

he strength of America’s ethanol industry was on full Even in the face of new trade barriers in key markets, ethanol display in 2017, as producers battled through exports surged to a record level. Undeniably, more nations adversity to achieve new records for both production around the world are embracing U.S. ethanol as a proven tool for Tand demand. reducing carbon emissions.

Located in 28 states, 211 ethanol biorefineries produced a Meanwhile, by creating value-added markets for nearly 5.5 billion record 15.8 billion gallons of renewable fuel in 2017, along with bushels of corn, ethanol helped strengthen and stabilize a farm 41.4 million metric tons of animal feed and 3.6 billion pounds sector facing historic grain surpluses, decade-low commodity of distillers oil. A wave of new construction and expansions also prices, and global trade uncertainties. Despite these headwinds, swept across the industry in 2017, as investors showed renewed American farmers achieved a record average corn yield and confidence in ethanol’s future. harvested the second-largest crop in history—demonstrating once again they are the most productive and efficient in the Ethanol’s superior octane value, exceptional emissions benefits, world. and favorable blending economics drove consumption to new heights both in the U.S. and abroad. And, for the first time since Overall, 2017 was a year of both challenge and triumph, and 2013, the Renewable Fuel Standard’s (RFS) conventional biofuel America’s ethanol industry emerged stronger than ever. requirement was enforced as intended by Congress, leading to unprecedented consumption of E15 and blends for flex fuel vehicles like E25, E30, and E85. 2017 15,800*

16,000 HISTORIC U.S. FUEL ETHANOL PRODUCTION 14,000

12,000

10,000

8,000 Million Gallons

6,000

4,000

1980 175 2,000

- 2017 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: U.S. Energy Information Administration and RFA *Estimated

2 U.S. ETHANOL PRODUCTION CAPACITY BY STATE PRODUCTION FACILITIES (Million Gallons per Year)

Existing Operating Under Total Installed Operating Biorefineries “Rest assured that Production Production Construction/ Capacity Ethanol Ethanol Under Constr./ Capacity Expansion Biorefineries Biorefineries Expansion your President and this Iowa 4,177 4,127 120 4,297 43 43 1 Administration value the Nebraska 2,229 2,176 - 2,229 26 24 - importance of renewable Illinois 1,779 1,679 - 1,779 14 14 - fuels to America’s economy Minnesota 1,217 1,177 105 1,322 22 20 2 and to our energy Indiana 1,173 1,173 - 1,173 14 14 - independence. Renewable South Dakota 1,080 1,080 80 1,160 15 15 1 fuels are essential Ohio 548 548 80 628 7 7 1 to America’s energy Kansas 516 491 70 586 12 11 1 strategy.” Wisconsin 583 583 - 583 9 9 - – President Donald J. Trump, in North Dakota 465 465 - 465 5 5 - letter addressed to attendees Texas 385 385 - 385 4 4 - of RFA’s 2017 National Ethanol Conference Michigan 354 354 - 354 5 5 -

Missouri 276 261 - 276 6 6 -

Tennessee 225 225 - 225 2 2 -

California 223 218 - 223 6 5 -

Oregon 162 42 - 162 3 2 -

New York 150 150 - 150 2 2 -

Colorado 127 127 - 127 4 4 -

Georgia 120 120 - 120 1 1 -

Pennsylvania 110 110 - 110 1 1 -

Virginia 64 64 - 64 2 2 -

Idaho 60 60 - 60 1 1 -

North Carolina 60 - - 60 1 - -

Mississippi 54 54 - 54 1 1 -

Arizona 50 50 - 50 1 1 -

Kentucky 36 36 10 46 2 2 1

Wyoming 10 - - 10 1 - -

Florida 8 - - 8 1 - - U.S. FUEL ETHANOL

TOTAL U.S. 16,241 15,755 465 16,706 211 201 7 BIOREFINERIES BY STATE Source: RFA, as of January 2018

WA ME MT ND VT HISTORICAL MN NH ID WI MA BIOREFINERY OR MI SD NY CT WY RI COUNT AND Installed Total Average PA NJ NE OH Ethanol Installed Capacity MD PRODUCTION DE NV IA DC Biorefineries Production per UT CO CAPACITY IN WV Capacity Biorefinery IL VA KY CA MO (MGY) (MGY) KS NC TN 1992 59 1,335 22.6 AZ NM OK AR SC 1997 56 1,790 32.0 MS GA AL 2002 66 2,707 41.0 LA TX 2007 136 7,437 54.7 FL 2012 213 14,837 69.7 Installed Ethanol Biorefinery 2017 211 16,241 77.0 New Biorefinery Under Construction* Source: RFA *As of December for each year specified *Excludes expansion projects

2018 ETHANOL INDUSTRY OUTLOOK 3 THE ETHANOL PROCESS HOW IT’S MADE

hile ethanol’s use as a motor fuel dates back to the In dry milling, the entire grain kernel is first ground into “meal,” days of farm stills and Henry Ford’s Model T, the then slurried with water to form a “mash.” Enzymes are added modern ethanol production process is light years to the mash to convert starch to sugar. The mash is cooked, Wahead of its humble beginnings. Today, high-tech biorefineries then cooled and transferred to fermenters. Yeast is added and use state-of-the-art processes to convert grain starch, beverage the conversion of sugar to alcohol begins. After fermentation, and food waste, cellulosic biomass, and other feedstocks into the resulting “beer” is separated from the remaining “stillage.” high-octane ethanol and a variety of valuable co-products. The ethanol is then distilled and dehydrated, then blended with about 2 percent denaturant (such as gasoline) to render it Two processes are used for making fuel ethanol—dry milling undrinkable. It is then ready for shipment. The stillage is sent and wet milling. Nearly 90 percent of the ethanol produced through a centrifuge that separates the solids from the solubles. today comes from the dry milling process, with the remaining These co-products eventually become distillers grains, as well as 10 percent coming from wet mills. corn distillers oil.

U.S. ETHANOL PRODUCTION BY U.S. ETHANOL TECHNOLOGY TYPE PRODUCTION CAPACITY BY FEEDSTOCK TYPE Wet Mill 10.1%

Sorghum Starch 2.2%

Other Grain Starch Dry Mill 89.9% Corn Starch 0.5% 95.8% FoodBeverageProcessing Waste 0.4%

Cellulosic Biomass 1.1% Source: U.S. Dept. of Agriculture

Source: RFA based on data from U.S. Dept. of Agriculture

ON AVERAGE,1 BUSHEL OF CORN (56 POUNDS) PROCESSED BY A DRY MILL ETHANOL BIOREFINERY PRODUCES:

• 2.87 gallons of denatured fuel ethanol

• 16.4 pounds of distillers grains animal feed (10% moisture) In 2017, ethanol biorefineries • 0.75 pounds of corn distillers oil captured more than 2.5 million

tons of CO2, which was used • 16.5 pounds of biogenic carbon dioxide for bottling, food processing, dry ice production and other uses.

4

In wet milling, the grain is first separated into its basic components through soaking. After steeping, the slurry is processed through grinders to separate the corn germ. The remaining fiber, gluten and starch components are further segregated. The gluten component (protein) is filtered and dried to produce animal feed. The remaining starch can then be fermented into ethanol, using a process similar to the dry mill process.

DRY MILL ETHANOL PROCESS

Grain Receiving and Storage Milling Cooking Liquefaction Fermentation

Dried Distillers Grains Dryer Bottling, Dry Ice and Distillers Other Uses Grains to Livestock and Poultry Syrup Tank Evaporator Liquids

Distillers Centrifuge Source: U.S. Dept. of Agriculture Grains to Corn Distillers Oil Market Distillation Feed

Biodiesel

Wet Distillers Grains Solids Denaturant

Ethanol to Market Ethanol-Blended Ethanol Storage Molecular Sieve Gasoline to Consumer

Source: RFA

2018 ETHANOL INDUSTRY OUTLOOK 5 ETHANOL’S ECONOMIC IMPACT FUELING THE HEARTLAND

ural America continued to struggle with a host of Fortunately, ethanol biorefineries provided a lifeline in economic challenges in 2017. According to Creighton communities across the Heartland, helping to stabilize University, bank loan volumes in the Midwest region commodity markets and stem further economic losses. Rwere down, hiring dropped off, retail sales decreased, and As incremental growth in ethanol production continues, land values were lower. In the farm sector, decade-low the industry is attracting new investment, generating new commodity prices, historically high grain stocks, and rising employment opportunities, stimulating the tax base, and input costs dramatically affected bottom lines. crucially adding value to farm products.

Ethanol’s Value-Added Proposition A recent study published in the American Journal of Agricultural Economics found that “the current RFS Based on average prices and product yields in program considerably benefits the agriculture sector.” November 2017, an Iowa dry mill ethanol plant Key conclusions included: was adding $2 of additional value—or 63%—to • Ethanol production under the RFS provided a every bushel of corn processed. $14.1 billion boost in the value of the U.S. farm

sector in 2015, or $6,800 per American farm.

• Corn prices averaged $3.68 per bushel in 2015, but

VALUE OF OUTPUTS PER BUSHEL would have averaged just $2.75 per bushel without the RFS and a robust ethanol industry. CORN COST Ethanol $4.02 PER BUSHEL Distillers Grains $0.98 Source: G. Moschini, H. Lapan, H. Kim; The Renewable Fuel Standard in Competitive Equilibrium: Market and Welfare Effects, American Journal of Agricultural $3.20 Corn Distillers Oil $0.20 Economics, Volume 99, Issue 5, 1 October 2017, Pages 1117–1142 TOTAL $5.20

Ethanol Co-products 2017 $45,000 $6,664

$40,000 $24,332

$35,000

$30,000 GROSS VALUE OF U.S. ETHANOL $25,000

INDUSTRY OUTPUT $20,000 Million Dollars $15,000

$10,000

$5,000

$0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: RFA based on U.S. Dept. of Agriculture data *Estimated 6 ETHANOL’S ECONOMIC IMPACT FUELING THE HEARTLAND

Overall, the production of 15.8 billion gallons of ethanol in Surveys show that workers in the ethanol industry are well 2017 directly employed 71,906 American workers. In addition, compensated, satisfied with their jobs, and proud of the the ethanol industry supported 285,587 indirect and induced contributions they make to our nation’s environmental quality jobs across all sectors of the economy. The industry created and energy security. In fact, a new U.S. Department of Energy $24 billion in household income and contributed $45 billion survey revealed that 19 percent of ethanol sector employees to the national Gross Domestic Product (GDP). Moreover, are veterans of the U.S. military, underscoring the strong ethanol producers paid nearly $10 billion in federal, state sense of patriotism and American pride that percolates and local taxes, and spent $32 billion on raw materials, through the industry. inputs, and other goods and services.

In 2017, the production of 15.8 billion gallons of ethanol and 43 million metric tons of co-products and distillers oil had substantial economic impacts, including: “Producing renewable fuel from crops grown on American family farms allows us to continue • 71,906 direct jobs • 285,587 indirect and induced jobs honoring a commitment to make our nation • $45 billion contribution to GDP stronger and more independent. Veterans working • $24 billion in household income in the ethanol industry take great pride in knowing • $10 billion in tax revenue we are improving our nation’s energy security,

Source: ABF Economics economic vitality and environmental quality each and every day.”

– Tony Leiding, Director of Operations, ETHANOL INDUSTRY Trenton Agri-Products, LLC and former U.S. Army Captain WORKFORCE DEMOGRAPHICS

Ethanol Industry Petroleum National Workforce Fuels Industry (All Industries)

30% 25% GENDER 47% 70% 53% Female 75% Male

55 AND OVER 23% 22% 22%

UNIONIED 8% 12% 11%

MILITARY 10% 11% VETERANS 19%

AVERAGE HOURS/WEEK 40.4 42.4 40.1

Sources: U.S. Dept. of Energy; U.S. Bureau of Labor Statistics

2018 ETHANOL INDUSTRY OUTLOOK 7 ETHANOL AND THE U.S. FUEL MARKET DRIVING CHANGE

he emergence of ethanol as a major gasoline ethanol content near 13 percent, while Iowa was second component has unquestionably revolutionized at approximately 12 percent. This clearly dispels the oil our nation’s motor fuel market. Today, ethanol is industry myth that ethanol should be limited to 9.7 percent Tblended into gasoline from coast to coast and border to of the gasoline pool. border, extending domestic fuel supplies and lowering Nationally, ethanol consumption has grown from 1.7 billion consumer prices. gallons (bg) in 2000 to 14.4 bg in 2017—a 750 percent In 2017, ethanol accounted for slightly more than 10 percent increase. Meanwhile, gasoline blendstock consumption has of the U.S. gasoline pool, marking the second year in a stagnated, registering at 128.6 bg in 2000, dipping as low as row that the blend rate exceeded the fictional “blend 121 bg in 2012, and recently rebounding to 2000-era levels. wall” perpetuated by ethanol opponents. In fact, several When these dramatic shifts in market share are considered, states saw average ethanol blend rates well above 10 it’s easy to understand why many in the oil industry oppose percent in 2017. Minnesota led the nation with an average further growth in renewables.

“Having an extra 10 percent of our gasoline provided by ethanol is increasing the total amount of fuel available while eliminating the need for other oxygenates and octane boosters, thus exerting a downward pressure on petroleum prices.”

– Asst. Prof. Daniel Ciolkosz, Ph.D., P.E., Penn State University

8 ETHANOL AND THE U.S. FUEL MARKET COMPARISON OF 2017 WEEKLY GASOLINE AND ETHANOL DRIVING CHANGE FUTURES PRICES Gasoline Blendstock Ethanol $2.00

$1.90

Not only has increased ethanol use kept gasoline consumption $1.80

in check, it has also resulted in lower fuel prices for American $1.70

families. Even in an era of relatively inexpensive crude oil, $1.60

wholesale ethanol was priced 8 percent below gasoline $/Gallon $1.50 blendstock on average in 2017, with the spread widening to as $1.40 much as 23 percent late in the year. $1.30

As the evolution of our transportation sector continues, ethanol $1.20 -17

will continue to drive positive change for consumers across an-17 J Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov

the country. Source: CME Group

AVERAGE ETHANOL COMPOSITION CONTENT OF OF U.S. GASOLINE FINISHED GASOLINE, POOL, 2000-2017 2010-2017 2017* 2017 10.07% 14.4 10.20% 128.6 Gasoline Blendstock Ethanol

145 10.00% 10.02% 9.91% 140 9.80% 9.83%

2000 9.75% 1.7 135 128.6 9.60% 9.65% 9.61%

130 9.40% 9.33%

Billion Gallons 125

9.20% 120

9.00%

115 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2010 2011 2012 2013 2014 2015 2016 2017

Source: U.S. Energy Information Administration and RFA *Estimated based on EIA Nov. 2017 Short-Term Energy Outlook Source: U.S. Energy Information Administration and RFA *Estimated based on Jan.-Oct. 2017 data

A recent study published in the American Journal of Agricultural Economics found that ethanol consumption under the RFS resulted in the following benefits to the U.S. economy in 2015: • $17.8 billion savings on gasoline spending, equivalent to $142 per household • 9.5% reduction in gasoline prices, equivalent to $0.18 per gallon

Source: G. Moschini, H. Lapan, H. Kim; The Renewable Fuel Standard in Competitive Equilibrium: Market and Welfare Effects, American Journal of Agricultural Economics, Volume 99, Issue 5, 1 October 2017, Pages 1117–1142

2018 ETHANOL INDUSTRY OUTLOOK 9 ETHANOL’S OCTANE ADVANTAGE FULL-STRENGTH FUEL

he message from automobile manufacturers could has grown, refiners have optimized operations to reduce not be clearer: they want—and need—more octane. hydrocarbon octane production and take advantage of As automakers introduce more efficient engine ethanol’s superior octane properties. Ttechnologies, the demand for higher-octane fuels continues Most refiners today produce gasoline blendstock with an to grow. In fact, sales of premium gasoline hit a 15-year high octane rating of 84, then upgrade it to 87 (the minimum in 2017. But traditional petroleum-based octane boosters are allowed in most states) by adding 10 percent ethanol. This expensive and in short supply. offers significant savings, reduced energy use, and lower Fortunately, ethanol stands ready to deliver. With a blending emissions at the refinery. octane rating of 114, ethanol is the cleanest and most Ethanol’s role as an octane source has an even brighter affordable source of octane on the planet. future. Already, E15 offers an octane rating of 88, giving In the past, refiners produced all the octane they needed consumers an added boost at a lower cost. Moreover, a from hydrocarbons. But refinery processes to increase octane are costly and energy intensive. Thus, as ethanol availability

BLENDING OCTANE RATINGS OF VARIOUS GASOLINE OCTANE BOOSTERS 114 “Transitioning the fleet to higher-octane Ethanol gasoline would result in significant economic 120 and environmental benefits through reduced 117 115 110 gasoline consumption.” 110 107 104 – Massachusetts Institute of Technology 105 101 100 84 95 95 Gasoline 93 Blendstock

Octane Rating 90

85

80

75

70 Gasoline n-Butane Alkylate Benzene Toluene Xylene MTBE Ethanol Methanol Blendstock

Source: U.S. Department of Energy and MathPro, Inc.

10 ETHANOL’S OCTANE ADVANTAGE FULL-STRENGTH FUEL

future high-octane fuel like E20-E40 could deliver the same—or better—fuel economy as regular gasoline when paired with an optimized engine, but with less energy expended per mile and fewer emissions. That’s why automakers view ethanol-based high-octane fuels as a winning strategy for compliance with more stringent future fuel economy and emissions standards.

In addition to ethanol’s economic benefits as an octane source, it is also the cleanest and safest option available. Aromatic hydrocarbon octane boosters like benzene are toxic and worsen air pollution.

WHAT IS OCTANE AND WHY IS IT IMPORTANT?

A fuel’s octane rating is the measure of its ability to resist “knock- ETHANOL’S ing” in the engine, which is caused when the air/fuel mixture BLENDING detonates prematurely during combustion. According to the U.S. OCTANE NUMBER Department of Energy, “Using a lower octane fuel than required can cause the engine to run poorly and can damage the engine and emissions control system over time. It may also void your warranty.”

Ethanol’s pure component octane number is 100 AKI. But its blending octane number is 109-119 AKI, depending on the octane of the finished fuel. MONTHLY SPOT

Ethanol’s blending octane number is highest when used PRICES FOR ETHANOL with lower-octane hydrocarbon blendstock. VS. OTHER OCTANE BOOSTERS

Regular Grade

120

118 Average

116

114 Premium Grade 112

110 Cents/Gallon

Ethanols Blending Octane (AKI) 108 86 87 88 89 90 91 92 93 94

Finished Gasoline Octane (AKI)

Source: MathPro, Inc.

Source: Argus Media

20182010 ETHANOL Ethanol INDUSTRY Industry OUTLOOK OUTLOOK 11 INTERNATIONAL ETHANOL TRADE A GLOBAL FORCE

merica’s ethanol industry exerted itself as a global Unfortunately, with record exports came a raft of new trade force in 2017, with ethanol exports surging to a new barriers and unprecedented protectionism in 2017. The year record of more than 1.3 billion gallons. Thus, the began with China—the third-largest export market in 2016— AUnited States was not only the world’s top ethanol producer raising tariffs on U.S. ethanol imports. In response, exports to and consumer in 2017, but it was also the world’s top exporter China collapsed in 2017. In the fall, Brazil implemented a tariff by far. rate quota and 20 percent tariff on ethanol imports. Finally, the European Union remained effectively closed to U.S. U.S. ethanol remained the lowest-cost source of octane on ethanol due to its long-running import tariff. the planet, resulting in both increased exports to longtime customers as well as shipments to new destinations. For As 2018 began, RFA continued to work with its partners to the third year in a row, Brazil and Canada were the top two resolve these barriers and stimulate growth in the global markets for U.S. exports, receiving roughly 60 percent of 2017 ethanol marketplace. shipments. India, the Philippines, the United Arab Emirates, Peru, and South Korea were other leading destinations in 2017.

Meanwhile, U.S. ethanol imports continued to languish. “We are facing an acute problem of pollution While not cost competitive with U.S.-produced corn ethanol, due to the use of crude oil. And due to the roughly 80 million gallons of Brazilian sugarcane ethanol were unavailability of jobs in the rural sector, imported only because it receives favorable treatment under people are migrating to cities. Diversification the California Low Carbon Fuel Standard (LCFS) and RFS. of agriculture towards energy and power is the solution to all these issues. An integrated approach needs to be brought as far as the use of ethanol in India is concerned.”

– Nitin Gadkari, India’s Minister of Road Transport and Highways

VALUE OF U.S. ETHANOL EXPORTS 2017* $2,350

$2,500

$2,000 s r

Global fuel ethanol ll a

o $1,500 D

production hit a new record n $1,000 illi o

of more than 27 billion gallons in 2017, with the M $500 United States again accounting for nearly 60 $- percent of the world’s production. 2013 2014 2015 2016 2017

Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics

12 *2017 estimated based on Jan.-Nov. 2017

INTERNATIONAL ETHANOL TRADE TOP DESTINATIONS FOR U.S. ETHANOL EXPORTS IN 2017 A GLOBAL FORCE

Canada 26%

Netherlands 2%

South Korea Rest 3% of World 7% United Arab Mexico Emirates 3% 2% amaica 2% India 13% Philippines 6%

Peru Brazil 3% 33%

U.S. ETHANOL EXPORTS Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics. Based on Jan.-Nov. 2017 AND IMPORTS 2017 1,300 80 2017 GLOBAL Exports Imports Net Exports 1,220 FUEL ETHANOL 1,400 PRODUCTION 1,200 BY COUNTRY 1,000 s

n 800

Brazil ; 7,060 ; ll o a 600 26% G

European Union; 400 1,415 ; 5% n 200 China; 875 ; 3% illi o

M 0 Canada; 450 ; 2% 200 United States; Thailand; 395 ; 2% 15,800 ; 58% 400 Argentina; 310 ; 1% 600 India; 280 ; 1% 800 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Rest of World; 465; 2%

(Country; million gallons; share of global production) Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics

Source: RFA analysis of public and private data sources *2017 estimated based on Jan.-Nov. 2017

Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics *2017 estimated based on Jan.-Nov. 2017 2018 ETHANOL INDUSTRY OUTLOOK 13

ANIMAL FEED PRODUCTION PROTEIN POWER

nce considered “byproducts” of ethanol production, Far from creating a “food or fuel” dilemma, the ethanol process distillers grains and other co-products have since creates both fuel and high-protein animal feed. Indeed, one- evolved into a critical component of the global third of every bushel of grain that enters the ethanol process is Oanimal feed market—and a vital contributor to the industry’s enhanced and returned to the feed market, most often in the bottom line. In 2017, the U.S. ethanol industry generated a form of distillers grains. Only the starch portion of the grain is record 41.4 million metric tons (mmt) of distillers grains, gluten made into ethanol; the remaining protein, fat, and fiber pass feed and gluten meal. In addition, the industry also produced through to the co-products. nearly 3.6 billion pounds of corn distillers oil, used as a feed ingredient or biodiesel feedstock. CORN 2017 Distillers Grains 37,051 DISTILLERS Corn Gluten Feed 3,638 OIL PRODUCTION Corn Gluten Meal 712 2017* 45,000 3,575

U.S. ETHANOL 40,000 4,000 INDUSTRY 35,000 3,500

CO-PRODUCT s s 3,000 n

30,000 o un d 2,500

ANIMAL FEED OUTPUT T

o c

P 2,000

n 25,000 tr i

e 1,500 M illi o 1,000 d

20,000 M n 500 a s u

15,000 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 o h T 10,000

5,000 Source: RFA based on U.S. Dept. of Agriculture data *Estimated

0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Source: RFA and U.S. Dept. of Agriculture Note: All co-products converted to 10% moisture basis *Estimated DISTILLERS GRAINS PRODUCTION BY TYPE Canada 6%

DISTILLERS GRAINS CONSUMPTION Wet Distillers Ireland Grains, 31% Modified Wet BY SPECIES 3% Distillers Grains, 10% South China Condensed Korea apan Turkey 4% Poultry, 7% Other, 1% Distillers Solubles Spain 8% 4% Dried 13% (Syrup), 3% 3% Distillers Grains w/Solubles, Dried Distillers 45% Grains, 11% Mexico Swine , 20% Thailand Rest 7% 14% of World Beef Cattle, 26% 47% Source: U.S. Dept. of Agriculture Dairy Cattle, Indonesia 31% Types of Distillers Grains Typical Moisture Content 6% Dried Distillers Grains (DDG) 10-12% Dried Distillers Grains w/Solubles (DDGS) 10-12% Wet Distillers Grains (WDG) 65% or more Source: Distillers grains marketing companies Condensed Distillers Solubles (CDS or “Syrup”) 70-80% Modified Wet Distillers Grains (MWDG) 40-64% 14 ANIMAL FEED PRODUCTION PROTEIN POWER Feeding the World The low cost and nutritional properties of distillers grains make it one of the most valuable feed ingredients in the world. In fact, one out of every three tons of distillers

As demand for protein and caloric energy continues to grains produced in 2017 was exported. Mexico was the top grow both in the U.S. and internationally, America’s ethanol market for U.S. distillers grains exports, receiving nearly 20 producers stand ready to meet the needs of a growing percent of total shipments. Turkey, South Korea, Canada, population. and Thailand were other top markets in 2017.

As with ethanol, protectionist trade barriers also affected

U.S. DISTILLERS exports of distillers grains. Once the destination for more GRAINS than half of U.S. distillers grains exports, China accounted EXPORTS for less than 5 percent of U.S. exports in 2017 * 2017 due to imposition of restrictive tariffs. 11,025 14,000 Similarly, exports to Vietnam collapsed s n

o 12,000 in early 2017 as the country instituted T

c 10,000

tr i new import policies. By the fall, e

M 8,000

however, the Vietnamese market d

n 6,000

a had reopened and there was s

u 4,000

o growing optimism that other h T 2,000 trade barriers would soon

- 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 be resolved.

Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics *2017 estimated based on Jan.-Nov. 2017

Source: RFA based on U.S. Dept. of Agriculture data *Estimated TOP DESTINATIONS FOR U.S. DISTILLERS GRAINS EXPORTS IN 2017

Canada 6%

Ireland 3% South China Korea apan Turkey 4% Spain 13% 8% 4% 3%

Mexico 20% Thailand Rest 7% of World 26% Source: U.S. Dept. of Agriculture

Indonesia Types of Distillers Grains Typical Moisture Content 6% Dried Distillers Grains (DDG) 10-12% Dried Distillers Grains w/Solubles (DDGS) 10-12% Wet Distillers Grains (WDG) 65% or more Sources: U.S. Dept. of Commerce, U.S. Census Bureau, Foreign Trade Statistics. Based on Jan.-Nov. 2017 Condensed Distillers Solubles (CDS or “Syrup”) 70-80%

Modified Wet Distillers Grains (MWDG) 40-64%

2018 ETHANOL INDUSTRY OUTLOOK 15 THE RENEWABLE FUEL STANDARD STRENGTH AND STABILITY

he Renewable Fuel Standard (RFS) has been the single Meanwhile, the doomsday outcomes threatened by opponents most successful clean fuels policy in the United States, of the RFS2 simply have not materialized. U.S. cropland helping to generate jobs, revive rural economies, continues to shrink as forestland and grassland expand, Treduce oil imports, lower gasoline prices, reduce air pollution Amazon deforestation rates continue to decline, and U.S. and and cut greenhouse gas emissions. First enacted in 2005 and global food price inflation rates are lower than before the RFS expanded in 2007, the RFS has ushered in tremendous growth was adopted. in the U.S. biofuels sector. The biofuels industry needs consistent policy in place for In 2017, the expanded program (often called “RFS2”) continued growth and innovation, and the first year of the celebrated its 10th anniversary. A decade after the RFS2 Trump administration indeed brought that stability. For was adopted, enormous progress has been made toward 2018, EPA finalized a slight increase in the total RFS volume achieving the objectives of this landmark policy. America’s and maintained the statutory 15-billion-gallon allotment for dependence on petroleum—particularly imports—is down conventional biofuel. The 2018 RFS requirements provide significantly. Greenhouse gas emissions and harmful tailpipe certainty, while continuing to offer consumers greater access to pollution from the transportation sector have fallen. The value cleaner, lower-cost biofuels. of agricultural products and farm income have been buoyed. And, communities across the country have benefited from the job creation, increased tax revenue, and heightened household income that stem from the construction and operation of a biorefinery.

A Renewable Identification Number (RIN) is a numbered credit assigned to each gallon of biofuel for the purpose of tracking its production and use under the RFS. Obligated WHAT parties (refiners and importers) turn in RINs to EPA to demonstrate that they fulfilled their annual renewable fuel blending obligations. Obligated parties who do not wish to IS A RIN blend renewable fuels may instead purchase RINs from other parties who blended more than their obligated volume. As RFS requirements escalate, RIN supplies tighten and RIN CREDIT? prices rise. This creates greater incentive to blend more renewable fuels.

WHAT HAPPENS TO THE RFS AFTER 2022? Contrary to a popular myth, the RFS does not “phase out” or “sunset” at the end of 2022. In adopting the Energy Independence and Security Act of 2007 (EISA), Congress specified RFS volumetric requirements through the year 2022 for total renewable fuels, advanced biofuels, cellulosic biofuels, and biomass-based diesel. For years after 2022, the law clearly states that required volumes of each renewable fuel shall be determined by the EPA Administrator, in coordination with the Secretary of Energy and the Secretary of Agriculture. In other words, the law requires EPA to set RFS volumes for 2023 and beyond, according to certain criteria defined in the statute.

16

THE RENEWABLE FUEL STANDARD WHAT HAS HAPPENED SINCE THE RFS2 WAS ADOPTED IN 2007?

The number of ethanol plants has almost doubled… …and ethanol industry jobs are up nearly 50% STRENGTH AND STABILITY 250 250 211 211 400,000400,000 357,493357,493 250200250200 211 211 400,000400,000 357,493357,493 300,000300,000 238,238541, 541 250 211 400,000 357,493 200250150200150 110 110 211 400,000 357,493 250 300,000400,000300,000 238,541238 ,541 250 211 211 200,000200,000400,000 357,493357,493 Jobs 200 200 Jobs 150250100150100250 110 110 211 211 300,000400,000300,000400,000 238,238541, 541 357,493357,493 200 200 200,000200,000

Jobs 300,000

Jobs 238,541 1001502005010015020050 110 110 100,000100,000300,000 238,541 200,000300,000200,000300,000 238,541238 ,541 Operational Plants 150Operational Plants 110 Jobs 150 110 Jobs 100,000100,000 10015050 0100501500 110 110 200,000- -

Jobs 200,000 Operational Plants Operational Plants 100 100 100,000200,000Jobs 100,000200,000 50 50 20072007 20172017 Jobs Jobs 20072007 20172017 1000 1000 100,000- - Operational Plants Operational Plants 50 100,000 50 20072007 20172017 100,000100,000 20072007 20172017 Operational Plants 500 050 - - Operational Plants

Operational Plants 0 Operational Plants - Corn production0 is 2007up 200712%… 2017 2017 …but land dedicated- 200 to7200 growing7 corn201 is down72017 3% 150 0 14.614.6 - - 93.593.5 15 2007 2007 2017 2017 94 94 2007 2007 2017 2017 2007 2007 2017 2017 2007 2007 2017 2017 15 15 14.6 14.6 9493 9493 93.5 93.5 93.5 1514 1514 14.614.6 939492 939492 93.5 15 14.6 93.5 90.490.4 14 1415 13 13 14.6 929491 92939194 93.5 15 15 14.6 14.6 93 93.5 93.5 94 94 90.4 90.4 1413 1413 13 13 919390 91929093 9293 93 Billion Bushels 14 Billion Bushels 92 90.4 13 1314 13 909189 90918992 90.4 14 14 13 92 92 90.4 Billion Bushels Billion Bushels Million Acres Planted 91 Million Acres Planted 90.4 1312 1312 13 13 899088 89908891 90.4 90.4 13 13 91 91

Billion Bushels 20072007 20172017 2007 2017 Billion Bushels 13 90 2007 2017 Million Acres Planted 12 1213 8889 Million Acres Planted 888990

Billion Bushels 13 13 90 90

Billion Bushels 20072007 20172017 89 2007 2017

Million Acres Planted 2007 2017

12 Million Acres Planted Billion Bushels 12 Billion Bushels 8889 8889 89 12 2007 2017 Million Acres Planted 88 2007 2017 12 2007 2017 Million Acres Planted 88 2007 2017 1,40012 1,40012 2007 2017 Million Acres Planted 41088 410Million Acres Planted 88 2007 1,3591,3592017 2007402 2007402 2017 2017 U.S. forest and grassland2007 2007 has expanded…2017 2017 …as total cropland2007 has2007 fallen 7% 2017 2017 1,4001,400 410 1,3501,350 GrasslandGrassland1,3591,359 410 402 1,2961,296 400 400 402 1,3501,4001,3501,400 1,3591,359 410 410 1,3001,300 GrasslandGrassland 400 400 402 402 1,400 1,2961,296 1,359 410 1,3501,400 1,359 390 390410 402 1,3001,3501,4001,2501,3001,2501,400 GrasslandGrassland 1,3591,359 410400410 402 1,350 1,2961,296 1,1971,197 400 402 402 1,350 1,1831,183GrasslandForestForest 390400390 376 376 Million Acres 1,300 1,296 Grassland Million Acres 1,2501,3001,3501,2001,2501,2001,350 1,296GrasslandGrassland 380 380400 000 Square Miles 000 Square Miles 1,2961,296 1,1971,197 400 400 1,300 1,1831,183 ForestForest 390 390 376 376

1,300 Million Acres 380Million Acres 380 1,2001,2501,3001,1501,2001,2501,1501,300 390370

000 Square Miles 370 000 Square Miles 1,1971,197 390 1,250 1,183 ForestForest 390 390 376 376

1,183 Million Acres

Million Acres 380 1,2001,2001,250 20072007 1,19720172017 380 20072007 20172017 1,1501,250000 Square Miles 1,1501,250 1,197 370 370 376 000 Square Miles 1,183 Forest 1,183 Forest 1,1971,197 Million Acres 380 376 1,200 Million Acres 380 376 376 000 Square Miles 20071,18320071,183ForestForest20172017 2007 2017 1,200 Million Acres 380 Million Acres 380 2007 2017 1,1501,2001,150000 Square Miles 1,200 370 370 000 Square Miles 1,150000 Square Miles 1,150 20072007 20172017 370 370 20072007 20172017 1,1504.01,150 2007 2017 3708 3708 2007 2017 4.0 3.663.662007 2017 6.336.332007 2017 2007 2007 2017 2017 2007 2007 2017 2017 4.0 4.0 8 8 Crude oil3.5 imports3.5 are3.66 down…3.66 …and6 so6 are gasoline6.33 6.33 imports 4.0 4.0 8 8 Imported 3.66 Imported Imported 3.5Imported 3.66 2.912.91 6 6 6.336.33 4.0 3.5 84 4 3.0 3.04.0 3.66 3.66 8 6.33 Imported Imported Imported 8 8 3.54.0Imported 3.54.0 3.66 3.66 2.91 2.91 6 6 6.33 4 4 6.33 6.33 3.03.5 3.0 6 Imported 2 2 Imported

2.5 2.5 Imported Imported 3.5 2.912.91 6 0.530.53 3.5 3.5 6 4 6

3.0 Imported 4 Imported 3.0 2.91 Imported 2.5 Imported 2.5 2.91 2 2 0.53

Imported 4 Imported 0.53 Imported 3.02.0Imported 2.03.0 2.91 2.91 0 04 Billion Barrels

Billion Barrels 4 4 Billion Gallons 2.53.0 2.53.0 2Billion Gallons 2 2007 2017 20072007 20172017 0 0 2007 0.530201.537 2.02.5 2.0 2

Billion Barrels 0.53 Billion Barrels 2 Billion Gallons 2.5 2007 2017 Billion Gallons 20072007 20172010.753 2.02.5 2.02.5 2007 2017 02 0 2 0.53 0.53 Billion Barrels Billion Gallons Billion Barrels

Billion Gallons 0 2.0 2.0 20072007 20172017 0 20072007 20172017 Billion Barrels 2.0 2.0 Billion Gallons 0 0

Billion Barrels 2007 2017 2.002.00 1.9820071.98 2017 $2,500Billion Gallons $2,500 $22007,384$2, 384 2017 Billion Barrels Billion Barrels 2007 2017 2007 2007 2017 2017 Billion Gallons Billion Gallons 2007 2007 2017 2017 2.00 2.00 1.98 1.98 $2,500$2,500 $2,384$2 ,384 1.951.95 $2,300$2,300 1.981.98 $2,384 GHG 2.00emissions2.00 from transportation are falling… …and$2,300$2,500 household$2,300$2,500 spending$2,384 on fuel is down 1.95 1.95 1.98 $2,100$2,100 $2,384 $1,909$1, 909 2.001.901.902.00 1.98 $2,500$2,500 $2,384 1.98 1.98 $2,100$2,300$2,300 $2,384$2 ,384 1.952.001.952.00 1.851.85 $2,500$1,900$2,100$1,900$2,500 $1,909$1 ,909 1.90 1.90 $2,300 Household 1.95 Household $2,300 1.851.851.95 $1,900$2,100$2,100 1.95 1.95 1.85 1.85 $2,300$1,700$1,900$1,700$2,300 $1,909$1, 909 Billion Tons CO2e 1.90Billion Tons CO2e 1.90 $2,100 Household 1.85 Household $2,100 $1,909 1.901.85 1.851.85 $1,700$1,900$2,100$1,700$1,900 $2,100 $1,909 Gasoline Spending per 1.801.80 Gasoline Spending per $1,500$1,500 Billion Tons CO2e Billion Tons CO2e 1.90 $1,909$1 ,909

1.90 1.90 1.85 $1,900Household 1.85 Household 1.85 20072007 201720171.85 $1,700$1,700$1,900 20072007 20172017 Gasoline Spending per 1.80 1.80 1.85 1.85 $1,500Gasoline Spending per $1,900$1,500 $1,900 Billion Tons CO2e Household Billion Tons CO2e 1.85 1.85 $1,700Household Household Household Billion Tons CO2e 1.85 1.85 20072007 20172017 $1,700 20072007 20172017

1.80 Gasoline Spending per $1,500 Billion Tons CO2e 1.80 Gasoline Spending per $1,500$1,700$1,700 Billion Tons CO2e Billion Tons CO2e

1.80 20072007 20172017 Gasoline Spending per $1,500 20072007 20172017

1.80 Gasoline Spending per $1,500

1.80 1.80 Gasoline Spending per $1,500Gasoline Spending per $1,500 2007 2007 2017 2017 2007 2007 2017 2017 2007 2007 2017 2017 2007 2007 2017 2017

Sources: RFA, ABF Economics, U.S. Dept. of Agriculture, U.S. Environmental Protection Agency, U.S. Energy Information Administration, U.S. Bureau of Labor Statistics 2018 ETHANOL INDUSTRY OUTLOOK 17 E15 MARKET UPDATE GAINING GROUND

onsumers found greater choice at the pump in 2017, Chrysler, General Motors, Ford, Toyota, Honda, Hyundai/Kia, as the number of retail gas stations offering E15 Volkswagen, and other automakers in approving E15. EPA’s more than doubled from the previous year. Thanks fuel waiver allowing the use of E15 in all vehicles built in 2001 Cto the U.S. Department of Agriculture’s Biofuels Infrastructure or later means approximately 90 percent of the vehicles on Partnership grant program and ethanol industry initiatives like the road today are legally approved to use E15. Prime the Pump, E15 was available at more than 1,200 stations However, widespread consumer access to E15 remained across 29 states as 2018 began. hampered by nonsensical and outdated fuel volatility E15 was found in both major metropolitan areas and in small regulations. EPA’s decades-old Reid vapor pressure (RVP) towns across the Heartland. And leading retailers, including regulations essentially prohibit retail gasoline stations from Sheetz, Kum & Go, Murphy USA, RaceTrac, Thornton’s, and selling the fuel blend in more than two-thirds of the nation’s QuikTrip, added E15 to their slate of fuel offerings. gasoline market during the summer months. Whether through administrative or legislative action, the RFA is working to Meanwhile, progress continued on automaker approval secure parity in the volatility regulation of E10, E15, and other of E15, with 90 percent of new 2018 model year vehicles ethanol blends. explicitly approved by the manufacturer to use E15. For the first time, Nissan Motor Company approved the use of E15 in most of its model year 2018 vehicles. Nissan joins Fiat-

2017 1,215 U.S. RETAIL STATIONS OFFERING E15

1,200

1,000

800

600 429 400

182 Number of Stations 200 85 11 36 0 2012 2013 2014 2015 2016 2017

Source: RFA

18 E15 MARKET UPDATE E15 APPROVAL STATUS FOR CONVENTIONAL GAINING GROUND (NON-FFV) AUTOMOBILES

MODEL YEAR

2012 2013 2014 2015 2016 2017 2018 U.S. Market Share*

BMW Group BMW 1.7% Mini** 0.3% Daimler (Mercedes-Benz) 2.1% FCA (Chrysler, Dodge, Fiat, Jeep, Ram) 11.9% Ford Motor Company (Ford, Lincoln) 14.9% General Motors (Buick, Cadillac, Chevrolet, GMC) 17.2% Honda Motor Company (Honda, Acura) 9.5% Hyundai Motor Company (Hyundai, Kia)*** 7.5% Mazda 1.7% Mitsubishi Motors Corporation 0.6% Nissan Motor Company (Nissan, Infiniti) 9.3% Subaru 3.7% Tata Motors (Jaguar, Land Rover) 0.6% Toyota Motor Corporation Lexus 14.2% Toyota Volkswagen Group Audi 1.3% Porsche 0.3% Volkswagen 2.0% Volvo Car Group 0.5% All Others 0.7%

* Motor Intelligence (Jan.-Nov. 2017) E15 Approved by Automaker in ALL Models ** Approved the use of up to 25% ethanol blends *** Approved the use of E15 for all models except Hyundai Sonata “We are facing an acute problem of pollution E15 Approved by due to the use of crudeAutomaker oil. in And SOME due Models to the unavailability of jobs in the rural sector, In the six years since E15 was formally approved people are migratingE15 Approvedto cities. by Diversification EPA only; of agriculture towardsNot Approved energy by and Automaker power is for use by EPA, American drivers have logged the solution to all these issues. An integrated approximately 2.2 billion miles on the fuel without approach needs to be brought as far as the use a single reported case of “engine damage,” of ethanol in India is concerned.” misfueling, or inferior performance. – Nitin Gadkari, India’s Minister of Road Transport and Highways

2018 ETHANOL INDUSTRY OUTLOOK 19 E85 AND FLEX FUELS FLEXING FUEL CHOICE

he market for E85 and other flex fuels achieved two Flex fuels could be found in 45 states across the country key milestones in 2017. First, the number of flex fuel in 2017. Minnesota continued to lead the nation with 422 vehicles (FFVs) in the U.S. auto fleet hit 24 million, stations, but states outside the Corn Belt, including California, Tmeaning one out of every 10 vehicles on the road today is Texas, Florida, North Carolina and Pennsylvania, experienced approved to use E85 and other flex fuels. Second, the number significant growth. Most of these new stations also offered of retail gas stations selling flex fuels topped 4,000, giving E15 and mid-level ethanol blends like E20, E30 and E40, consumers greater access than ever before. providing drivers with even more choice at the pump.

CAN YOU FLEX FUEL?

The following model year 2018 vehicles are available WHAT as Flex Fuel Vehicles (FFVs) ARE FLEX Chevrolet Express (6.0L) Ford Transit T150 (3.7L) Chevrolet Impala (3.6L) GMC Savana (6.0L) FUELS? Chevrolet Silverado (4.3L, 5.3L) GMC Sierra (4.3L, 5.3L) Chevrolet Silverado HD (6.0L) GMC Sierra HD (6.0L) Dodge Grand Caravan (3.6L) Jeep Cherokee (2.4L) Flex fuels are gasoline-ethanol blends Dodge Journey (3.6L) Jeep Renegade (2.4L) Dodge Ram 1500 (3.6L) Mercedes-Benz CLA250 (2.0L) containing between 51-83 percent Ford Escape (2.5L) Mercedes-Benz GLA250 (2.0L) ethanol (excluding denaturant). Flex fuels Ford Explorer (3.5L) Mercedes-Benz GLE350 (3.5L) Ford F-150 (3.5L, 5.0L) Nissan Frontier (4.0L) are intended for use in flex fuel vehicles Ford F-Series Super Duty (6.2L) Toyota Sequoia (5.7L) (FFVs) only. Historically, flex fuels had Ford Taurus (3.5L) Toyota Tundra (5.7L) Ford Transit Connect (2.5L) been commonly referred to as "E85"

because prior to 2012, the fuels were Available for Fleet Purchase Only:

limited to 70-85 percent denatured Chevrolet Suburban (5.3L) ethanol and E85 was the most popular Chevrolet Tahoe (5.3L) Chrysler 300 (3.6L) blend. Today, the actual amount of Dodge Charger (3.6L) ethanol in the flex fuel depends Ford Police Interceptor (3.5L, 3.7L) GMC Yukon (5.3L) on economics. GMC Yukon XL (5.3L)

Is your pre-2018 vehicle an FFV? Find out at www.e85vehicles.com 2022 E85 AND FLEX FUELS FLEXING FUEL CHOICE

E85 was the lowest-priced motor fuel on the planet in 2017, with

FFV drivers experiencing unprecedented savings on their fuel NATIONAL AVERAGE purchases. Thanks to low ethanol prices and the effect of RIN RETAIL PRICES (Renewable Identification Number) credits, consumers saw E85 FOR E10 AND E85 priced at a 20 percent discount to E10 on average in 2017. E10 E85 What’s more, E85 and other flex fuels continue to deliver $2.70 significant emissions benefits, from reducing greenhouse gas $2.50

emissions to lowering carbon monoxide, air toxics, and other n $2.30 ll o a $2.10 G

harmful pollutants. / $ $1.90

$1.70

$1.50

U.S. RETAIL STATIONS an-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 J OFFERING E85 AND Source: E85prices.com OTHER FLEX FUELS

20174,077 4,077

4,500 4,000 3,500 3,174 3,316 3,000 2,781 2,500 2,078 2,000 1,500 1,208 1,000 Number of Stations 436 500 154 188 0 2001 2003 2005 2007 2009 2011 2013 2015 2017

Source: RFA and U.S. Dept. of Energy

2018 ETHANOL INDUSTRY OUTLOOK 21 ETHANOL AND ENERGY SECURITY SECURING OUR FUTURE

dependence on imported petroleum While the United States has made great strides in improving continued to wane in 2017, thanks its energy security, challenges and risks remain. On a gross to booming domestic production of basis, the United States imported more than 2.9 billion barrels U.S.both renewable fuels and crude oil. Net U.S. imports of crude of crude oil in 2017, meaning 42 percent of the oil processed oil and petroleum products fell to their lowest level since the by U.S. refineries was imported. Moreover, 45 percent of our early 1980s, as ethanol production hit a new record and U.S. oil oil imports came from OPEC nations. That means the U.S. output rebounded from a lull in 2016. economy sent some $63 billion—or nearly $500 per American household—to countries like Iraq, Nigeria, Saudi Arabia, and On a net basis, U.S. dependence on imported crude oil and Venezuela in 2017 to pay for oil. petroleum products fell to just 20 percent in 2017. However, without the addition of 15.8 billion gallons of ethanol to the Meanwhile, a series of hurricanes racked Gulf Coast oil domestic fuel supply, U.S. net import dependence would refineries in 2017, sending gas prices higher and reminding have been above 27 percent. In fact, an additional 560 million American consumers once again about the dangers of barrels of imported crude oil would have been needed to overreliance on a single fuel source. Fortunately, increased produce an amount of gasoline equivalent to last year’s record ethanol production continues to help diversify our nation’s fuel ethanol production. pool and dampen the impacts of petroleum market shocks.

OCT. U.S. CRUDE OIL PRODUCTION AND IMPORTS 2017 298,732 235,946

325,000

300,000 “While our demand has basically been flat, oil s l 275,000 is a global commodity and imports have long e r r a B been ingrained in our own market, so we still

d 250,000 n a s

import about 35-50% of the oil that we use. u

o 225,000 h

The main reason U.S. imports are still very high T is because our shale oil boom and the light oil 200,000

surge hasn’t been a great match for 175,000 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 2013 2014 2015 2016 2017 our refiners.” 2013 2014 2015 2016 2017 ------t t t t t r r r r r n n n n n c c c c c ul ul ul ul ul p p p p p a a a a a J J J J J J J J J J O O O O O – Forbes Magazine A A A A A U.S. Crude Oil Production U.S. Crude Oil Imports (Gross)

While U.S. crude oil production has increased to nearly 300 million barrels per month, our nation still imports about 240 million barrels per month on a gross basis.

Source: U.S. Dept. of Energy

22 ETHANOL AND ENERGY SECURITY Transferring American Wealth to OPEC

Even though U.S. oil production has increased in recent SECURING OUR FUTURE years, our nation's economy still transfers tens of billions of dollars every year to the OPEC cartel. In 2017 alone, the U.S. sent some $63 billion—or $500 per American HISTORIC OIL IMPORT household—to OPEC nations to pay for crude oil imports. DISPLACEMENT BY ETHANOL * OPEC Nation U.S. Spending on Crude Oil Imports 2017 (Billion $) 560 Saudi Arabia $ 19.4 600 Venezuela $ 12.8 525 543 494 507 Iraq $ 11.9 471 468 471 500 Nigeria $ 5.9 387 400 Ecuador $ 4.0 330 Kuwait $ 3.0 300 231 Angola $ 2.6 200 Algeria $ 1.5 Libya $ 1.1 100 Other OPEC $ 0.8

0 Million Barrels of Oil Displaced TOTAL $ 63.0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: RFA based on U.S. Dept. of Energy data Source: RFA based on U.S. Dept. of Energy data *Estimated

U.S. PETROLEUM NET IMPORT DEPENDENCE WITH AND WITHOUT ETHANOL

65% 61% 2017 27% 60% 54% 55% 58% 20% 47% 50% 53% 45% 40% 35% 40% 30% 25% 20% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Actual Net Import Dependence Net Import Dependence without Ethanol

On a net basis (i.e., after accounting for U.S. exports), the United States relied on imports to meet 20% of its petro- leum demand in 2017. Without the contribution of 15.8 billion gallons of ethanol, U.S. import dependence would have been equivalent to 27% of petroleum demand.

Source: RFA based on U.S. Dept. of Energy data *Estimated

Source: U.S. Dept. of Energy 2018 ETHANOL INDUSTRY OUTLOOK 23

2018 ETHANOL INDUSTRY OUTLOOK 23 CELLULOSIC AND ADVANCED BIOFUELS GEARING UP FOR GROWTH

he ethanol industry’s evolution continued in 2017. While corn kernel fiber technologies made headlines in 2017, Once thought of simply as “ethanol plants,” facilities ethanol producers also continued to seek out other advanced across the country are quietly transitioning into and low-carbon biofuel opportunities. Onsite production T“integrated biorefineries” capable of processing multiple of biodiesel and renewable diesel from corn distillers oil feedstocks into a diverse array of biofuels and bioproducts. continued at several ethanol biorefineries, while others pursued carbon capture and sequestration as another means of adding Last year, dozens of existing biorefineries across the country value and lowering carbon intensity. Meanwhile, progress began to adopt “bolt-on” technologies allowing them to continued toward commercial production of cellulosic ethanol produce ethanol from the cellulosic fibers found in the corn from crop residues at stand-alone facilities in Iowa and Kansas. kernel. These facilities can produce both cellulosic ethanol and starch-based ethanol from the same feedstock. If universally Like all nascent technologies, cellulosic and advanced biofuels adopted across the existing fleet of biorefineries, these need steady and reliable policy. Unfortunately, the 2018 RFS low-cost technologies could add roughly 1 billion gallons of volume requirements for cellulosic biofuels represented a step cellulosic biofuel to the nation’s fuel supply. backward for these emerging technologies, as EPA slightly reduced the 2018 volume from the 2017 final requirement. Cellulosic ethanol from corn kernel fiber offers a new economic opportunity for ethanol producers, as the fuel’s superior GHG performance rating under both state Low Carbon Fuel Standards (LCFS) and the federal Renewable Fuel Standard (RFS) results in substantial price premiums. ANNUAL RFS CELLULOSIC BIOFUEL VOLUME LIFECYCLE CARBON REQUIREMENTS INTENSITY OF APPROVED CELLULOSIC ETHANOL 2018 PATHWAYS UNDER 400 288 CALIFORNIA LCFS 350 311 300 99.8 s 100 n 230 ll o 250 a G 200 80 n

66-78% GHG reduction vs. gasoline illi o 150 123 60 M 100 33.8 32.8 40 31.2 29.2 24.2 21.6 50 33 0.8

grams CO2e/mega joule 20 0 2013 2014 2015 2016 2017 2018 0 California GranBio Synata Bio Little Sioux Siouxland Synata Bio POET/DSM Source: U.S. Environmental Protection Agency Average Corn Energy Processors Cooperative Gasoline Sugarcane Corn Stover Corn Kernel Corn Kernel Wheat Corn Stover Straw Fiber Fiber Straw (Edeniq) (Edeniq)

Source: California Air Resources Board

24 CELLULOSIC AND ADVANCED BIOFUELS GEARING UP FOR GROWTH

The endosperm makes up 82% of One Feedstock, the corn kernel by weight and is mostly starch. Multiple Biofuels

The pericarp, or seed coat, makes Dozens of existing biorefineries are investing up 6% of the kernel and is mostly in technologies to produce both conventional cellulosic fiber. starch-based ethanol as well as cellulosic The germ makes up 11% of the ethanol from the same corn kernel. Other kernel and contains oil, cellulosic facilities are making biodiesel or renewable fiber, protein and starch. diesel from the oil found in the corn kernel. The tip cap makes up 1% of the On a dry basis, starch makes up about kernel and is mostly 75 percent of the corn kernel, while cellulosic cellulosic fiber

fiber accounts for about 9 percent. Protein, Source: Bunge North America oil, ash and sugars make up the remainder.

Photo: National Renewable Energy Laboratory 2018 ETHANOL INDUSTRY OUTLOOK 25 ETHANOL AND FOOD/FEED MARKET IMPACTS SHATTERING MYTHS

ny remaining embers of the outrageous “food vs. enacted, compared to an annual average of 3.0 percent in fuel” myth were decisively extinguished in 2017, as the 20 years leading up to RFS adoption. record grain supplies, historic grain surpluses, and Globally, the supply of coarse grains, wheat and rice was Alow food prices put to rest any notion that biofuels somehow also the second-largest ever, falling only slightly behind the adversely affect feed and food markets. In reality, the U.S. record 2016 supply. On a net basis, the U.S. ethanol industry ethanol industry adds to the world feed supply by stimulating used less than 3 percent of the world grain supply, and grain increased grain production and generating nutrient-dense available for feed and food use hit a new high. Additionally, animal feed co-products. the United Nations reports that global food prices remain In the United States, farmers produced the second-largest well below the oil price-induced highs of 2008-2014, while corn crop ever, trailing only the record harvest of 2016. As a malnourishment rates continued to fall. result, more corn and co-products were available to livestock In the end, the events of 2017 provided even more evidence and poultry feeders than ever before in 2017, and the corn that the U.S. ethanol industry creates a “food and fuel” surplus remaining after all demands are met is projected to dynamic, not a “food vs. fuel” dilemma. hit a 30-year high.

Meanwhile, retail food price inflation rates continued to trend lower, with food prices just 1 percent higher in 2017 than in 2016. Annual average food price inflation has averaged just 2.3 percent since 2005 when the RFS was

What Does $1 Spent on Food Really Pay For? WORLD OIL PRICES DRIVE GLOBAL FOOD PRICES

World Food Price Index Brent Crude Oil Price ($/Barrel) Farm Ingredients Transportation, Energy, Labor, Packaging, Advertising, Etc. 250

225 ) l e

) 200 r x r a e b d

/ 175 $ (I n (

e e c c i i 150 r r P P

il 125 O

oo d e F

d

u 100 O r A C

F 75 N en t U r B 50 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 25 17% 83% 0 07 14 05 07 12 14 06 13 11 Source: U.S. Dept. of Agriculture 05 12 10 17 06 13 10 17 08 09 15 16 09 16 ------r r t t r r y y v v n n c c a a ul ul p p ec ec a a o o ug ug a a un eb eb J J J J J O O A A Sep Sep F F D D M M A A N N M M

Source: United Nations Food & Agriculture Org. and U.S. Dept. of Energy 26 ETHANOL AND FOOD/FEED MARKET IMPACTS

“Despite population growth, 167 million SHATTERING MYTHS fewer people suffered from hunger and undernourishment in 2015 than a decade earlier. Over the same decade, biofuel production expanded rapidly along with the GLOBAL number of people suffering early mortality PREVALENCE OF and disease from consuming too much of UNDERNOURISHMENT the wrong foods. Despite a rapid increase in biofuel production, there is no evidence of biofuel impacts on food-related health.” 15% – Oak Ridge National Laboratory, World Bank, 14% International Food Policy Research Institute, Imperial College London, University of Saõ 13% Paulo, Delft University of Technology, University 2015 of Twente, Institute of Rural Engineering 10.7% (Argentina), World Agroforestry Centre, 12% and BEE Energy Undernourished 11%

Percent of Global Population 10% 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: U.N. Food and Agriculture Organization

U.S. FOOD PRICE INFLATION AND ETHANOL 2017 PRODUCTION Year-over-year Inflation Rate (Left Axis) 15,800 Ethanol Production (Right Axis) 1.00% Inflation Rate Trend What Does $1 Spent on Food Really Pay For? 9.0% 18,000 8.0% 16,000 7.0% 14,000 s 6.0% 12,000 n ll o a

5.0% 10,000 G

n 4.0% 8,000 illi o Year Food Inflation - M n 3.0% 6,000 o - r

a 2.0% 4,000 e Y 1.0% 2,000 0.0% - 2017 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Source: U.S. Bureau of Labor Statistics and RFA *Estimated

2018 ETHANOL INDUSTRY OUTLOOK 27 ETHANOL AND THE ENVIRONMENT CLEAN FUEL, CLEANER AIR

ver the past four decades, ethanol has served as an Plants that are ultimately made into biofuels absorb carbon affordable and effective tool for reducing harmful dioxide from the atmosphere as they grow, and that same emissions from the transportation sector. Because amount of carbon dioxide is re-released when the biofuel Oethanol is a pure compound that is 35 percent oxygen, it burns is combusted in an engine. In this way, ethanol and other more cleanly and completely than gasoline, which can contain biofuels are simply recycling atmospheric carbon. as many as 1,000 unique compounds. According to the U.S. Departments of Energy and Agriculture, By displacing hydrocarbon substances like aromatics in corn ethanol from a typical dry mill reduces GHG emissions by gasoline, ethanol helps reduce emissions of air toxics, 40-45 percent compared to gasoline—even when hypothetical particulate matter, carbon monoxide, nitrous oxides, and land use change emissions are included. But data from EPA exhaust hydrocarbons. These pollutants cause smog and show that agricultural land use is actually shrinking and forest ground-level ozone and adversely affect human health. and grassland are expanding, undermining the land use Reducing these emissions means fewer cases of respiratory change theory. illness and asthma, heart disease, lung disease, cancer, and As emissions standards tighten and nations around the world even fewer premature deaths. prioritize GHG reduction, ethanol can play an even larger role Ethanol also serves as a low-cost option for reducing in cleaning our air. greenhouse gas (GHG) emissions from transportation.

U.S. EPA DETERMINATION OF AGRICULTURAL LAND USE VS. 2007 BASELINE

405 402

400 398 “Numerous studies in which ethanol was splash-blended with 395 392 a fixed gasoline blendstock have demonstrated reductions of vehicle 390 exhaust emissions, particularly 385 384 particulate matter (PM), non-methane Million Acres 380 380 hydrocarbons (NMHC), and the air 379 380 378 toxics 1,3-butadiene and benzene.” 376 – Ford Motor Company, General Motors, 375 and AVL Powertrain

370 2007 2010 2011 2012 2013 2014 2015 2016 2017

Source: U.S. Environmental Protection Agency

28 ETHANOL AND THE ENVIRONMENT

In addition to reducing GHG emissions, ethanol is the best CLEAN FUEL, CLEANER AIR tool available to reduce tailpipe emissions of other harmful pollutants. Adding ethanol to gasoline reduces tailpipe emis- sions of the following pollutants, among others:

• Carbon monoxide, which can cause harmful health Clearing effects by reducing oxygen delivery to the body’s organs. • Exhaust hydrocarbons, which contribute to ozone, the Air with irritate the eyes, damage the lungs, and aggravate respi- ratory problems. ETHANOL • Air toxics like benzene, which can cause cancer and reproductive effects or birth defects.

• Fine particulate matter, which can pass through the throat and nose and enter the lungs, causing serious health effects.

BIOFUELS LIKE ETHANOL RECYCLE ATMOSPHERIC CARBON Carbon “The use of oil transfers into today’s dioxide absorbed atmosphere GHGs that had been sequestered by biomass crops and secured for millennia and would have remained out of Earth’s atmosphere if not for human intervention. A bioenergy cycle can Carbon Carbon be managed while maintaining atmospheric in biomass dioxide converted conditions similar to those that allowed released as to liquid fuel burns humans to evolve and thrive on Earth. In biofuel contrast, massive release of fossil fuel carbon alters this balance, and the resulting changes to atmospheric concentrations of GHGs will Liquid biofuel impact Earth’s climate for eons.” combusted to power – Duke University, Oak Ridge National Laboratory, vehicle and the University of Minnesota

The use of ethanol in gasoline in 2017 reduced CO2-equivalent greenhouse gas emissions from the transportation sector by 53.5 million metric tons. That’s equivalent to removing 11.4 million cars from the road for an entire year, or eliminating the annual emis- sions from 13 coal-fired power plants.

SOURCE: RFA analysis using U.S. Dept. of Energy GREET model

2018 ETHANOL INDUSTRY OUTLOOK 29 RFA COMMITTEES, EDUCATION AND OUTREACH ACTION, ADVOCACY, AND EXPERIENCE

ince 1981, the RFA has proudly served as the ethanol The RFA Co-Products Committee focuses on issues industry’s national trade association. The Association relevant to co-products from ethanol production, including advances policy and regulatory initiatives that support distillers grains, corn distillers oil, corn gluten, carbon Sindustry growth, educates key decision-makers, serves as dioxide and other products. Committee members address the voice of the industry through public and media relations operational and regulatory issues concerning production, efforts, and provides the technical foundation to move the storage and handling, transportation, international trade, industry forward. RFA’s Board of Directors is solely comprised animal nutrition, and animal feed safety. of ethanol producers who are ascribed one vote per Committee Chair: Sean Broderick, CHS, Inc. company. In addition, a broad cross-section of RFA producer, associate, and supporting members participate on standing The RFA Plant & Employee Safety Committee committees that address issues important to the industry. leads the industry in advocating safe practices in ethanol The RFA Technical Committee focuses on fuel production, storage and handling, transportation, and use. specifications and standards development by ASTM Committee members monitor and share information on International, National Conference of Weights and hazardous materials, safety standards, and federal and state Measures, regulatory bodies, and other organizations. safety regulations. The Committee also supports continuing Committee members monitor technical issues impacting education for every link of the ethanol supply chain. day-to-day plant operations, such as storage and handling, Committee Chair: Joe Oswalt, E Energy Adams, LLC transportation, and fuel quality, as well as state and regional regulations and international blending practices.

Committee Chair: Cathy Woodliff, The Andersons Albion Ethanol LLC

30 RFA COMMITTEES, EDUCATION AND OUTREACH ACTION, ADVOCACY, AND EXPERIENCE

The RFA Environmental Compliance Committee The Renewable Fuels PAC builds a stronger voice examines and educates industry stakeholders on for American-made renewable fuels on Capitol Hill. the implementation of environmental regulations for Organized and operated by RFA members and staff, production, storage and handling, and transportation this Political Action Committee promotes consistent and of ethanol. The committee tackles complex regulatory forward-looking public policy essential to the growth issues and provides guidance to members. and evolution of the industry by focusing on federal election activity. Committee Chair: Steve Schleicher, Pinnacle Engineering, Inc. Committee Chair: Randall Doyal, Al-Corn Clean Fuel, LLC

The RFA Export Committee assesses opportunities and challenges in growing international demand for U.S. ethanol. The group advocates for free and fair trade Navigating the Regulatory Landscape policies, examines technical and regulatory barriers, interacts with U.S. trade officials, and Nearly every facet of the ethanol industry—from production monitors data and trends in the global trade. at the facility to consumption in the vehicle—is affected by a plethora of federal and state regulations. Ethanol producers face a multitude of registration, reporting, recordkeeping, and compliance requirements, and the regulatory landscape is constantly changing and is becoming more complex. Providing analyses of important regulations and technical issues has long been a hallmark of the RFA, and we strive to ensure our member companies know exactly how their operations—and industry—will be affected by new, pending, or amended regulations. On behalf of its members, RFA staff frequently interact with the following regulatory bodies (among others):

• Alcohol Tobacco Tax and Trade Bureau (TTB)

• Federal Trade Commission (FTC)

• Occupational Safety & Health Administration (OSHA)

• U.S. Department of Agriculture (USDA)

• U.S. Department of Commerce (DOC)

• U.S. Department of Energy (DOE)

• U.S. Department of Transportation (DOT)

• U.S. Environmental Protection Agency (EPA)

2018 ETHANOL INDUSTRY OUTLOOK 31

Our Staff Washington, DC Headquarters

Bob Dinneen President and CEO Our Mission Edward S. Hubbard, Jr., Esq. General Counsel Drive expanded production and Samantha Slater Vice President, Government Affairs use of American-made renewable Jessica Bennett Vice President, External Affairs fuels and bio-products worldwide. Mary Giglio Director, Special Projects and Events Rachel Gantz Communications Director Emily Druckman Communications Manager Tony Dennis Office Manager Our Expertise Public Policy & Regulation St. Louis Office Fuel Ethanol Technical Issues Geoff Cooper Executive Vice President Trade Policy & Export Promotion Kelly Davis Vice President, Regulatory Affairs Ann Lewis Research Analyst Safety Training & Emergency Response Kelsey Quargnenti Digital Marketing Coordinator Ethanol Market Development Research & Analysis Midwest Staff Communications, Media & Public Relations Robert White Vice President, Industry Relations Consumer Advertising, Promotions & Education Cassie Mullen Director, Market Development Missy Ruff Technical Services Manager

Find bios and contact info at www.EthanolRFA.org/about/staff.

Board of Directors Mission RFF Chairman Meet the research and education needs Dana Lewis of the U.S. fuel ethanol industry. Redfield Energy, LLC www.renewablefuels-foundation.org Focus RFF Vice Chairman Brian Cahill Collaboration with academia, industry, Southwest Iowa and public policymakers on new Renewable Energy, LLC uses, feedstocks, and technologies to promote a growing and sustainable RFF Treasurer renewable fuels industry. Chris Wilson Mid-Missouri Energy, Inc.

32

Associate Members

AgMotion, Inc. Fagen, Inc. KATZEN International, Inc. Pinnacle Engineering Inc. www.agmotion.com www.fageninc.com www.katzen.com www.pineng.com

BASF Enzymes LLC Farm Credit Services of America K•Coe Isom Protec Fuel Management, LLC www.basf.com/us/en.html www.fcsamerica.com www.kcoe.com www.protecfuel.com

Buckman Fluid-Quip Process Technologies Lallemand Biofuels & Distilled Spirits PRX Geographic, Inc. www.buckman.com www.fqptech.com www.lallemandbds.com www.prxgeo.com

Christianson PLLP Fremont Industries, Inc. Merjent, Inc. Renewable Fuels Nebraska www.christiansoncpa.com www.fremontind.com www.merjent.com www.renewablefuelsne.com

CoBank Hartland Fuel Products Minnesota Bio-Fuels Association Renewable Products Marketing www.cobank.com www.hartlandfuels.com www.mnbiofuels.org Group, LLC www.rpmgllc.com COFCO Hawkeye Gold LLC, a subsidiary of Minnesota Corn Growers Association www.cofco.com/en J.D. Heiskell & Co. www.mncorn.org RSM US LLP www.hawkgold.com www.rsmus.com Compeer Financial Murex, LLC www.compeer.com Hydro-Klean, LLC www.murexltd.com Syngenta US www.hydro-klean.com www.syngenta-us.com CTE Global Inc. NALCO Water www.cte-global.com/ ICM, Inc. www.ecolab.com/nalco-water TrinityRail www.icminc.com www.trinityrail.com D3MAX, LLC National Corn Growers Association www.bbiinternational.com Innospec Fuel Specialties, LLC www.ncga.com USD Group www.innospecinc.com www.usdg.com DyStar Foam Control Novozymes www.dystar.com INTL FCStone, Inc. www.novozymes.com/advance-your- U.S. Water www.intlfcstone.com business/bioenergy www.uswaterservices.com Eco-Energy, Inc. www.eco-energy.com Iowa Renewable Fuels Association Phibro EPG Whitefox Technologies www.iowarfa.org www.ethanolperformancegroup.com www.whitefox.com Edeniq, Inc. www.edeniq.com Kansas Corn Commission www.kscorn.com/kcc ERI Solutions, Inc. www.erisolutions.com

Supporting Members

Agriculture Retailers Association Iowa Corn Growers Association Mississippi State University – South Dakota Corn Utilization Council Department of Forestry Bemidji (MN) State University Jamestown/Stutsman Development Southeastern Illinois College Corporation Missouri Corn Growers Association Bismarck State College Steele-Waseca Cooperative Electric Kentucky Corn Promotion Council Morton College Colorado Corn Growers Association Sugar Processing Research Institute Kentucky Energy and Environment National Corn-To-Ethanol Colorado Farm Bureau Cabinet-Department for Energy Research Center Texas Renewable Energy Industries Development and Independence Association Corn Marketing Program of Michigan National Grain Sorghum Producers Maryland Grain Producers United Association Distillers Grains Technology Council Utilization Board Nebraska Corn Board United Sorghum Checkoff Program Ethanol Producers and Consumers Michigan State University- North Dakota Corn Council Water Assurance Technology Energy Great Falls Development Authority Department of Agricultural, Food, and Resource Economics Ohio Corn Marketing Program Resources Illinois Corn Marketing Board Minnesota Corn Research & Renew Kansas Wisconsin Pipe Trades Association Indiana Corn Marketing Council Promotion Council South Dakota Corn Growers Association Iowa Central Fuel Testing Laboratory Minnesota Department of Agriculture 2018 U.S. ETHANOL PRODUCTION CAPACITY BY PLANT

Under Production Operating Construction/ Company Location State Feedstock Capacity Production Expansion (mgy) (mgy) Capacity (mgy)

ABE South Dakota, LLC Aberdeen SD Corn 53 53

ABE South Dakota, LLC Huron SD Corn 32 32

Absolute Energy, LLC St. Ansgar IA Corn 125 125

Ace Ethanol, LLC Stanley WI Corn 48 48

Adkins Energy, LLC Lena IL Corn 52 52

Aemetis Keyes CA Corn/Sorghum 60 60

Al-Corn Clean Fuel Claremont MN Corn 50 50 70

Alliance Bio-Products Vero Beach FL Cellulosic Biomass 8 *

Archer Daniels Midland Co. Plant 1 Cedar Rapids IA Corn 300 300

Archer Daniels Midland Co. Plant 2 Cedar Rapids IA Corn 240 240

Archer Daniels Midland Co. Clinton IA Corn 238 238

Archer Daniels Midland Co. Plant 1 Columbus NE Corn 100 100

Archer Daniels Midland Co. Plant 2 Columbus NE Corn 313 313

Archer Daniels Midland Co. Decatur IL Corn 300 300

Archer Daniels Midland Co. Marshall MN Corn 40 40

Archer Daniels Midland Co. Peoria IL Corn 185 85

Arkalon Ethanol, LLC Liberal KS Corn 110 110

Badger State Ethanol, LLC Monroe WI Corn 90 90

Big River Resources Boyceville, LLC Boyceville WI Corn 57 57

Big River Resources Galva, LLC Galva IL Corn 110 110

Big River Resources West Burlington, LLC West Burlington IA Corn 105 105

Big River United Energy, LLC Dyersville IA Corn 110 110

Blue Flint Ethanol Underwood ND Corn 65 65

Bonanza BioEnergy, LLC Garden City KS Corn/Sorghum 55 55

Bridgeport Ethanol Bridgeport NE Corn 50 50

Buffalo Lake Advanced Biofuels, LLC Buffalo Lake MN Corn 18 -

Bushmills Ethanol Inc. Atwater MN Corn 65 65 35

Butamax Advanced Biofuels Scandia KS Corn 10 10

Calgren Renewable Fuels LLC Pixley CA Corn 55 55

Carbon Green BioEnergy Woodbury MI Corn 55 55

Cardinal Ethanol Union City IN Corn 100 100

Cargill, Inc. Blair NE Corn 210 210

Cargill, Inc. Eddyville IA Corn 35 35

Cargill, Inc. Fort Dodge IA Corn 115 115

Center Ethanol Company, LLC Sauget IL Corn 54 54

Central Indiana Ethanol, LLC Marion IN Corn 55 55

Central MN Renewables, LLC/Green Biologics Little Falls MN Corn 22 -

Chief Ethanol Fuels, Inc. Hastings NE Corn 70 70

Chief Ethanol Fuels, Inc. Lexington NE Corn 50 50

Chippewa Valley Ethanol, Co. Benson MN Corn 50 50

CHS Inc. Annawan IL Corn 125 125

CHS Inc. Rochelle IL Corn 133 133

Columbia Pacific Bio-Refinery/Global Partners Clatskanie OR Corn 120 -

Commonwealth Agri-Energy, LLC Hopkinsville KY Corn 33 33 10

Corn Plus, LLP Winnebago MN Corn 40 40

Corn, LP Goldfield IA Corn 60 60

Dakota Ethanol, LLC Wentworth SD Corn 48 48

Dakota Spirit AgEnergy LLC Spiritwood ND Corn 65 65

DENCO II, LLC Morris MN Corn 24 24

Diamond Ethanol Levelland TX Corn 40 40

Didion Ethanol LLC Cambria WI Corn 50 50

DuPont Cellulosic Ethanol Nevada IA Cellulosic Biomass 30 *

E Energy Adams, LLC Adams NE Corn 80 80 Under Production Operating Construction/ Company Location State Feedstock Capacity Production Expansion (mgy) (mgy) Capacity (mgy)

East Kansas Agri-Energy, LLC Garnett KS Corn 42 42

Elite Octane, LLC Atlantic IA Corn - - 120

Ergon BioFuels, LLC Vicksburg MS Corn 54 54

ESE Alcohol Inc. Leoti KS Waste Seed Corn 2 2

Flint Hills Resources, LLC Arthur IA Corn 120 120

Flint Hills Resources, LLC Camilla GA Corn 120 120

Flint Hills Resources, LLC Fairbank IA Corn 120 120

Flint Hills Resources, LLC Fairmont NE Corn 120 120

Flint Hills Resources, LLC Iowa Falls IA Corn 120 120

Flint Hills Resources, LLC Menlo IA Corn 120 120

Flint Hills Resources, LLC Shell Rock IA Corn 120 120

Fox River Valley Ethanol LLC Oshkosh WI Corn 65 65

Front Range Energy, LLC Windsor CO Corn 40 40

Gevo Luverne MN Corn 22 22

Glacial Lakes Energy, LLC Mina SD Corn 100 100

Glacial Lakes Energy, LLC Watertown SD Corn 120 120

Golden Cheese Company of California Corona CA Cheese Whey 5 -

Golden Grain Energy, LLC Mason City IA Corn 115 115

Golden Triangle Energy, LLC Craig MO Corn 20 5

Grain Processing Corp. Muscatine IA Corn 20 20

Grain Processing Corp. Washington IN Corn 20 20

Granite Falls Energy, LLC Granite Falls MN Corn 62 62

Green Plains Inc. Atkinson NE Corn 55 55

Green Plains Inc. Bluffton IN Corn 120 120

Green Plains Inc. Central City NE Corn 110 110

Green Plains Inc. Fairmont MN Corn 119 119

Green Plains Inc. Fergus Falls MN Corn 55 55

Green Plains Inc. Hereford TX Corn 105 105

Green Plains Inc. Hopewell VA Corn 60 60

Green Plains Inc. Lakota IA Corn 124 124

Green Plains Inc. Madison IL Corn 90 90

Green Plains Inc. Mt. Vernon IN Corn 90 90

Green Plains Inc. Obion TN Corn 120 120

Green Plains Inc. Ord NE Corn 61 61

Green Plains Inc. Riga MI Corn 60 60

Green Plains Inc. Shenandoah IA Corn 75 75

Green Plains Inc. Superior IA Corn 60 60

Green Plains Inc. Wood River NE Corn 121 121

Green Plains Inc. York NE Corn 50 50

Guardian Energy, LLC Janesville MN Corn 110 110

Guardian Hankinson, LLC Hankinson ND Corn 132 132

Guardian Lima, LLC Lima OH Corn 54 54

Heartland Corn Products Winthrop MN Corn 100 100

Heron Lake BioEnergy, LLC Heron Lake MN Corn 64 64

Highwater Ethanol, LLC Lamberton MN Corn 59 59

Homeland Energy Solutions, LLC Lawler IA Corn 140 140

Husker Ag, LLC Plainview NE Corn 76 76

ICM Element Colwich KS Corn/Sorghum - - 70

Ingredion Inc. Cedar Rapids IA Corn 45 45

Iroquois Bio-Energy Company, LLC Rensselaer IN Corn 50 50

KAAPA Ethanol Revenna, LLC Ravenna NE Corn 90 90

KAAPA Ethanol, LLC Minden NE Corn 80 80

Kansas Ethanol LLC Lyons KS Corn 60 60

Land O' Lakes Melrose MN Cheese Whey 3 3

LifeLine Foods, LLC St. Joseph MO Corn 50 50 Under Production Operating Construction/ Company Location State Feedstock Capacity Production Expansion (mgy) (mgy) Capacity (mgy)

Lincolnland Agri-Energy, LLC Palestine IL Corn 60 60

Lincolnway Energy, LLC Nevada IA Corn 55 55

Little Sioux Corn Processors, L.P. Marcus IA Corn/Cellulosic Biomass 135 135

Louis Dreyfus Commodities Grand Junction IA Corn 100 100

Louis Dreyfus Commodities (Elkhorn Valley) Norfolk NE Corn 45 45

Marquis Energy LLC Hennepin IL Corn 300 300

Marquis Energy-Wisconsin, LLC Necedah WI Corn 60 60

Marysville Ethanol, LLC Marysville MI Corn 50 50

Maumee Express, Inc. (MXI) Abingdon VA Waste Alcohol 4 4

Mercuria Investments US South Bend IN Corn 102 102

Merrick & Company Aurora CO Brewery Waste 5 5

Mid-America BioEnergy, LLC Madrid NE Corn 46 46

Mid-Missouri Energy, LLC Malta Bend MO Corn 50 50

Midwest Renewable Energy, LLC Sutherland NE Corn 28 -

Nebraska Corn Processing, LLC Cambridge NE Corn 44 44

NuGen Energy, L.L.C. Marion SD Corn 130 130

One Earth Energy Gibson City IL Corn 120 120

Pacific Ethanol Inc. Plant 1 Aurora NE Corn 45 45

Pacific Ethanol Inc. Plant 2 Aurora NE Corn 110 110

Pacific Ethanol Inc. Boardman OR Corn 40 40

Pacific Ethanol Inc. Burley ID Corn 60 60

Pacific Ethanol Inc. Madera CA Corn/Sorghum 40 40

Pacific Ethanol Inc. (ICP) Pekin IL Corn 90 90

Pacific Ethanol Inc. Plant 1 Pekin IL Corn 100 100

Pacific Ethanol Inc. Plant 2 Pekin IL Corn 60 60

Pacific Ethanol Inc. Stockton CA Corn/Sorghum/Cellulosic Biomass 60 60

Parallel Products Louisville KY Beverage Waste 3 3

Parallel Products Rancho Cucamonga CA Beverage Waste 3 3

Pennsylvania Grain Processing, LLC Clearfield PA Corn 110 110

Pinal Energy, LLC Maricopa AZ Corn 50 50

Pine Lake Corn Processors LLC Steamboat Rock IA Corn 38 38

Plymouth Energy, LLC Merrill IA Corn 50 50

POET Biorefining - Alexandria Alexandria IN Corn 68 68

POET Biorefining - Ashton Ashton IA Corn 56 56

POET Biorefining - Big Stone Big Stone SD Corn 79 79

POET Biorefining - Bingham Lake Bingham Lake MN Corn 35 35

POET Biorefining - Caro Caro MI Corn 53 53

POET Biorefining - Chancellor Chancellor SD Corn 110 110

POET Biorefining - Cloverdale Cloverdale IN Corn 92 92

POET Biorefining - Coon Rapids Coon Rapids IA Corn 54 54

POET Biorefining - Corning Corning IA Corn 65 65

POET Biorefining - Emmetsburg Emmetsburg IA Corn 55 55

POET Biorefining - Fostoria Fostoria OH Corn 68 68

POET Biorefining - Glenville Albert Lea MN Corn 42 42

POET Biorefining - Gowrie Gowrie IA Corn 69 69

POET Biorefining - Groton Groton SD Corn 53 53

POET Biorefining - Hanlontown Hanlontown IA Corn 56 56

POET Biorefining - Hudson Hudson SD Corn 56 56

POET Biorefining - Jewell Jewell IA Corn 69 69

POET Biorefining - Laddonia Laddonia MO Corn 50 50

POET Biorefining - Lake Crystal Lake Crystal MN Corn 56 56

POET Biorefining - Leipsic Leipsic OH Corn 68 68

POET Biorefining - Macon Macon MO Corn 46 46

POET Biorefining - Marion Marion OH Corn 68 68 80

POET Biorefining - Mitchell Mitchell SD Corn 68 68 Under Production Operating Construction/ Company Location State Feedstock Capacity Production Expansion (mgy) (mgy) Capacity (mgy)

POET Biorefining - North Manchester North Manchester IN Corn 68 68

POET Biorefining - Portland Portland IN Corn 68 68

POET Biorefining - Preston Preston MN Corn 46 46

POET Research Center Scotland SD Corn 11 11

Prairie Horizon Agri-Energy, LLC Phillipsburg KS Corn 40 40

Pratt Energy Pratt KS Corn 55 55

Project LIBERTY (POET/DSM) Emmetsburg IA Cellulosic Biomass 20 *

Quad County Corn Processors Galva IA Corn/Cellulosic Biomass 38 38

Red River Energy LLC Rosholt SD Corn 25 25

Red Trail Energy, LLC Richardton ND Corn 50 50

Redfield Energy, LLC Redfield SD Corn 60 60

Reeve Agri-Energy Garden City KS Corn/Sorghum 12 12

Ringneck Energy Onida SD Corn - - 80

Show Me Ethanol, LLC Carrollton MO Corn 60 60

Siouxland Energy Cooperative Sioux Center IA Corn 60 60

Siouxland Ethanol Jackson NE Corn 80 80

Southwest Iowa Renewable Energy, LLC Council Bluffs IA Corn 130 130

Spectrum Business Ventures Inc. Mead NE Corn 25 -

Sterling Ethanol LLC Sterling CO Corn 42 42

Summit Natural Energy Cornelius OR Waste Sugars/Starch 2 2

Sunoco Ethanol Fulton NY Corn 85 85

Synata Bio Hugoton KS Cellulosic Biomass 25 -

Tate & Lyle Loudon TN Corn 105 105

Tharaldson Ethanol Casselton ND Corn 153 153

The Andersons Albion Ethanol LLC Albion MI Corn 136 136

The Andersons Clymers Ethanol LLC Clymers IN Corn 110 110

The Andersons Denison Ethanol LLC Denison IA Corn 55 55

The Andersons Marathon Ethanol LLC Greenville OH Corn 110 110

Three Rivers Energy, LLC Coshocton OH Corn 50 50

Trenton Agri Products LLC Trenton NE Corn 40 40

Tyton NC Biofuels LLC Raeford NC Corn/Tobacco 60 -

United Ethanol, LLC Milton WI Corn 50 50

United Wisconsin Grain Producers, LLC Friesland WI Corn 58 58

Valero Renewable Fuels-Albert City Albert City IA Corn 130 130

Valero Renewable Fuels-Albion Albion NE Corn 130 130

Valero Renewable Fuels-Aurora Aurora SD Corn 135 135

Valero Renewable Fuels-Bloomingburg Bloomingburg OH Corn 130 130

Valero Renewable Fuels-Charles City Charles City IA Corn 135 135

Valero Renewable Fuels-Fort Dodge Fort Dodge IA Corn 135 135

Valero Renewable Fuels-Hartley Hartley IA Corn 135 135

Valero Renewable Fuels-Jefferson Jefferson WI Corn 105 105

Valero Renewable Fuels-Linden Linden IN Corn 130 130

Valero Renewable Fuels-Mount Vernon Mount Vernon IN Corn 100 100

Valero Renewable Fuels-Welcome Welcome MN Corn 135 135

Western New York Energy LLC Medina NY Corn 65 65

Western Plains Energy LLC Campus KS Corn/Sorghum 50 50

White Energy Hereford TX Corn/Sorghum 120 120

White Energy Plainview TX Corn 120 120

White Energy Russell KS Corn/Sorghum/Wheat Starch 55 55

Wyoming Ethanol Torrington WY Corn 10 -

Yuma Ethanol Yuma CO Corn 40 40

U.S. TOTALS 16,241 15,755 465

*Actual operating production unknown; not included in total. U.S. Headquarters St. Louis Office 425 3rd Street, SW 16024 Manchester Road Suite 1150 Suite 200 Washington, DC 20024 Ellisville, MO 63011 TEL: 202-289-3835 TEL: 636-594-2284 FAX: 202-289-7519 FAX: 636-594-2222

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