The Biden Administration and Ethanol's Uncertain Future

By Halderman

12 /21 /20

As a Biden administration looms, agro-centric industry planners must prepare to navigate the uncertainty of ethanol and related biofuel markets as they attempt to forecast demand. Participants in the ethanol industry seem generally enthusiastic for a Biden administration following luke-warm feelings during Trump's time in office. For many years now, corn-based ethanol has been the popular choice among alternative energy proponents to replace, supplement or transition from an energy sector bound to fossil fuel, but political calculation and the evolution of the marketplace threaten the status of corn ethanol as the best bet to fill this role.

Breaking it down

Simply put, better choices exist for pursuing cleaner and economically viable sources of energy than corn ethanol. Non-food-based cellulosic biofuels offer the carbon reduction desired without negatively impacting food supply pricing or creating water pollution concerns. These cellulosic biofuels come primarily from perennial grasses and waste products that typically have fewer and less expensive impacts on the greater environment and economy. However to date the industry has yet to find a competitive economic way to produce cellulosic ethanol and, in fact, many cellulosic plants closed.

Lip service

During the campaign, both parties attempted to placate the nation's farming and energy constituents by promising to continue or expand investment in the ethanol schematic. A Biden administration will likely support what has been entitled a "Clean Energy Revolution," and he has vowed an investment of $1.7 trillion toward renewable energy infrastructure. However, it would be remiss to ignore Biden's tacit commitment to the "Green New Deal" and its demands for carbon negation in the coming decade - a pursuit that would involve a transition from corn-based ethanol to more carbon-friendly alternatives.

Fresh ripe corn on the cobWill corn remain golden?

A more realistic view of likely incentives created by a Biden administration includes considerations of a societal push toward electric or "zero-emission" vehicles. Whether such a move toward carbon freedom is to be taken at the expense of corn ethanol investment remains to be seen, but it may be that technological progress within the realm of biofuels themselves will limit governmental interest levels in promoting the use of the former alternative standard-bearer. It appears that ethanol will remain an integral part of the alternative equation for the near term. However, the long-term sustainability of corn as the primary component used to meet biofuel demand is wavering, and a prudent investor will remain focused on technological improvements and policy shifts that are on the horizon.

Navigating the uncertainty

At Halderman Real Estate and Farm Management, we seek to provide our customers with reliable, timely advice based on the realities of the marketplace. For nearly a century, we have sought to educate ourselves on the complexities of the agricultural and real estate fields in order to help maximize your investment.

Our success is predicated upon your success. To reach our own goals of prosperity, it naturally follows that we must provide our customers with a valuable commodity. Halderman pursues this goal by accepting the challenge of becoming experts in the agro-economy and using this knowledge to your benefit. Whether we provide oversight and management assistance for your operations or help you acquire more land for an expanded footprint, our experts tailor a customized solution for your needs. Contact us today so that we may begin to work diligently toward your goals.

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