Brown Eyed Baby, Blue Sky Horizon

C-MACC Weekly Sustainability and Energy Transition Report

Brown Eyed Baby, Blue Sky Horizon

• 1st Topic of the Week: US ethanol production margins remain under pressure as producers await potential shifts in fuel policy and the confirmation of tax incentives – we view the corn market as a significant long-term winner.
• 2nd Topic of the Week: Chinese battery costs remain significantly below Western levels, and we discuss the risk surrounding this market and the start-up of a Tesla Megapack battery production facility in China last week.
• Otherwise: We discuss ethanol production technology that consumes CO2, an ethanol-to-PP technology, and give views on European refinery carbon costs, brand-owner PCR content shifts, and Neste’s capital markets day.

Exhibit 1: US ethanol production margins reflect downward pressure amid rising corn prices and ethanol oversupply.

Source: Bloomberg, C-MACC Analysis, February 2025