Report discusses Japan's ethanol demand, use
December 30, 2019
BY Erin Voegele
A report recently filed with the USDA Foreign Agricultural Service’s Global Agricultural Information Network provides insight into Japan’s fuel market and shows potential for increased imports of U.S. ethanol.
According to the report, Japan’s annual biofuel target of 500 million liters (132.09 million gallons) was reached on schedule in 2017 and continues unchanged until 2022. To achieve the target, Japan primarily imports biobased ethyl tert-butyl ether (ETBE). A small portion of the requirement is also met by domestic ETBE produced from imported ethanol.
Japan revised its environmental standards for ethanol in 2018, opening the market to U.S. corn ethanol. Japan imported ETBE made from U.S. corn ethanol for the first time in July 2019. The GAIN report, however, indicates that the country’s blend rate currently remains among the lowest of countries with a fuel ethanol program.
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Japan also imports some ethanol for use in non-fuel applications. The report estimates that the country imported 400 million liters of non-fuel ethanol in 2018. Of that total, 47 percent went to food use, 17 percent went to cosmetics and medicine, and 36 percent went to other industrial uses. Brail, Pakistan and the U.S. are listed as major industrial ethanol suppliers to Japan.
Japan’s import market for ethanol is also impacted by tariffs. According to the report, the Japanese government eliminated the 10 percent import tariff on ethanol for the production of bio-ETBE in 2016. The tariff exemption, however, does not apply to ethanol imports for use other than bio-ETBE production. For example, the report notes that ethanol imported for direct blending with gasoline would be subject to a 10 percent tariff and has not been imported by Japan.
In October 2019, the U.S. and Japan finalized a limited trade agreement under which Japan agreed to gradually eliminate the 10 percent tariff duty on U.S. ethanol by year 10 of the agreement, according to the report. There is no tariff on ethanol for industrial use.
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Japan produced approximately 200,000 liters of fuel ethanol in 2017, 2018, and 2019, down from 1 million liters in 2016 and 2 million liters in 2015.
Fuel ethanol imports are expected to reach 790 million liters in 2019, down from 820 million liters in 2018 and 816 million liters in 2017. Approximately 700 million liters of the volume imported in 2019 was imported as ETBE, while the remaining 82 percent was used in Japan to make ETBE. Similar proportions were also in place in 2018 and 2017.
A full copy of the report can be downloaded from the USDA FAS GAIN website.
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