(Updated 04/06)
Ethanol and your vehicle: "Fill 'er up!"
The ethanol industry: Production, jobs, use, and
more
Your pocketbook: How ethanol affects consumers
and the economy
Ethanol: It's good for the environment
Energy security: More ethanol = less foreign oil
How ethanol helps farmers and rural economies
Ethanol and Iowa: A great combination
Ethanol policy: national and local legislation
E85: Cars that can run on 85% ethanol!
E-diesel: Being tested in trucks, buses and farm
equipment
Fuel cells: Will ethanol be obsolete?
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A 10% ethanol-blended fuel is warranted for use by ALL auto manufacturers marketing vehicles in the U.S.
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All auto manufacturers, including General Motors and Chrysler, recommend the use of oxygenated fuels, such as ethanol, in their vehicles.
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Ethanol guards against gas line freeze by absorbing moisture that may get in the tank during cold weather.
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Ethanol is a proven octane enhancer and replacement for lead and other toxic compounds in gasoline.
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Ethanol is the highest performing fuel with an octane rating of 113.
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Ethanol-blended fuels are approved for use in small engines too -- including outboard motors, snowmobiles, lawn mowers, motorcycles, and chain saws. All small-engine manufacturers that have tested a 10% ethanol blend have approved its use.
For more information about using ethanol in your vehicle, see Ethanol Myths.
Production, Jobs, Use, and More
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One bushel of corn can produce at least 2.8 gallons of ethanol and 17-18 lbs of distillers grains.
- One acre of corn can produce around 500 gallons of ethanol -- enough to fuel six cars for one year with a 10% ethanol-blend.
- The U.S. ethanol industry has grown to over 6.2 billion gallons of production capacity from 113 refineries in 20 states.
- Since 2000, ethanol production in the US has increased by 300%.
- In 2006, 160,231 jobs were created in all sectors of the economy.
- In 2006, 4.9 billion gallons of ethanol were produced nationwide. This value-added processing required almost 1.8 billion bushels of corn or 17% of U.S. corn production.
- Ethanol blends account for 30% of all motor fuels sold in the U.S.
- 650 million bushels of Iowa corn was processed into ethanol in 2006.
How Ethanol Affects Consumers and the Economy
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Ethanol reduces the consumer cost of gasoline by extending supplies, providing an alternative to costly imported oil and leverage for independent gasoline marketers to compete against the larger, more powerful integrated oil companies.
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Consumers could save approximately $7.8 billion between 2002 and 2016 in the form of reduced government farm payments by expanding their purchases of renewable fuels.
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Increased production and use of renewable fuels would create an additional $91.5 billion in household income over the next 15 years.
- Ethanol production provides more than 200,000 U.S. jobs, spurring growth in many rural areas.
- In 2006, the ethanol industry supported the creation of more than 160,231 jobs in all sectors of the US economy. Boosting US household income by $6.7 billion.
- Ethanol production is the third-largest use of U.S. corn, using a little over 10 billion bushels or nearly 17% of grain in 2003.
- Ethanol is produced from field corn fed to livestock, not sweet corn fed to humans. Importantly, ethanol production utilizes only the starch portion of the corn kernel. The remaining vitamins, minerals, protein, and fiber are sold as high-value livestock feed.
- According to the USDA, ethanol production adds 25-50 cents to the value of every bushel of corn grown.
- Increased use of renewable fuels, such as ethanol, could provide an additional $6.6 billion of net cash income annually for America's farmers over the next 15 years.
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Ethanol, a renewable fuel made from agricultural feedstocks, is one of the best tools we have to fight air pollution.
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Ethanol lowers harmful carbon monoxide (CO) emissions by 30%.
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Ethanol reduces carbon dioxide (CO2) emissions by 27%.
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The use of clean-burning ethanol reduces the amount of noxious fumes and volatile organic compounds (VOCs) that standard gasoline spews into the air. Those VOCs eventually clog our lungs.
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Ethanol reduces particulate emissions, especially fine particulates that pose a health threat to children, senior citizens, and those with respiratory ailments.
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Ethanol is the safest component in gasoline today. A study by the Governors' Ethanol Coalition concluded that ethanol poses no threat to surface or ground water. Since ethanol is a naturally occurring substance produced during the fermentation of organic matter, it is expected to rapidly biodegrade in essentially all environments.
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The U.S. Environmental Protection Agency credits reformulated gasolines (that contain ethanol) with reducing and controlling hazardous emissions, which threaten air quality in many of America's cities.
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According to a study by the Argonne National Laboratory, vehicles that use ethanol actually help offset fossil fuels' greenhouse gas emissions, which contribute to global warming, by 35% to 46%.
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Ethanol is widely used in the federal winter oxygenated fuels program and the reformulated gasoline program in cities that exceed public health standards for carbon monoxide and ozone pollution.
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Today, more than one-third of the nation's gasoline contains some level of oxygenates (such as ethanol), in order to reduce harmful emissions and improve our nation's air quality.
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Renewable ethanol is extremely energy-efficient. Every 100 BTUs of energy used to produce ethanol (including planting, cultivating, harvesting, and processing) yield 167 BTUs of ethanol.
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Oil imports are now about 65% of total transportation fuel use. The Renewable Fuels Association is projecting that amount to increase to 71% by 2025.
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The U.S. spends roughly $50 billion each year for military protection of Mideast oil.
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About two-thirds of the world's proven oil reserves are in the perennially unstable Middle East.
- Record production and use of ethanol reduced oil imports by 170 million barrels.
- Ethanol-from Iowa and American corn growers-reduces our demand for imported oil by nearly 128,000 barrels each day.
- According to the Government Accounting Office, the U.S. has
spent more than $130 billion over the last 32 years in government
subsidies to the oil industry.
- Tripling ethanol use could replace 600,000 barrels of crude
oil daily, which is equivalent to the amount imported from Iraq
each day.
- One less barrel of imported oil is needed for every 28.3 gallons
of ethanol used.
- According to a study by the Argonne National Laboratory, the
use of corn-based ethanol results in 50% to 60% reductions in
fossil energy use.
- In 2006, the use of ethanol reduced the US trade deficit by $8.7 billion by eliminating the need to import 170 million barrels of oil.
How Ethanol Helps Farmers and Rural Economies
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Ethanol production helps boost U.S. farm income by $6.7 billion.
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A healthy demand for ethanol could add up to 25-50 cents to the value of every bushel of corn grown or 5.5 billion for the entire crop.
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Increased use of renewable fuels, such as ethanol, could provide an additional $6.6 billion of net cash income annually for America's farmers over the next 15 years.
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Ethanol production keeps Iowa's economy growing -- spending more than $28 billion on raw materials to produce 1.7 billion in ethanol.
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Iowa's 26 farmer-owned ethanol facilities will have the capacity to produce 1.7 billion gallons of ethanol, which will use approximately 630 million bushels of corn annually.
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In Iowa, Ethanol is produced from corn at 28 state-of-the-art facilities.
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About 690 million bushels of Iowa corn are processed annually into ethanol. When new plants come on line, purchases will rise to 1 billion bushels annually.
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More than 46,938 Iowa jobs are affected by ethanol, including 27,205 directly related to ethanol production.
- Ethanol demand boosts Iowa's state and local tax receipts by
$16 million -- the biggest increase of the top 10 corn-growing
states.
- Iowa's 28 ethanol facilities have the capacity
to produce 1.9 billion gallons of ethanol, which will use approximately
690 million bushels of corn annually.
- $156 million in additional farm income will be generated by
Iowa's farmer-owned ethanol plants, providing a 7 cent per bushel
increase in corn prices.
- When all Iowa ethanol plants are considered, Iowa has the processing capacity to manufacture nearly 1 billion gallons of ethanol.
Federal Ethanol Tax Incentive
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The Energy Security Act of 1979 created a federal ethanol tax incentive to help reduce U.S. dependence on foreign oil and create a value-added market for farmers.
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The program gives gasoline marketers and blenders an incentive to blend ethanol with their gasoline.
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The federal ethanol tax incentive can be claimed as either an excise tax exemption or a blenders income tax credit.
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The benefits of the tax credit extend far beyond ethanol producers and blenders. Clean air, new jobs, increased farm income, rural economic development, lower fuel costs, and reduced U.S. dependence upon foreign oil are good for ALL Americans.
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Ethanol production generates increased economic activity that boosts tax receipts in farm states. These revenues more than offset the cost of the tax exemption, and actually resulted in a net savings of $3.6 billion to the federal budget annually.
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Volumetric Ethanol Excise Tax Credit (VEETC):
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The American Jobs Creation Act includes the VEETC, which extended the ethanol tax incentive through Dec. 31, 2010, at 51 cents per gallon of ethanol. VEETC appreciably changed the structure of the tax credit by creating a new ethanol excise tax credit allowing a 51 cent-per-gallon refundable tax credit on all ethanol blended with all gasoline, diesel, and ETBE, including ethanol in E85 and the proposed E20 in Minnesota.
- Under VEETC, all blends of ethanol with gasoline from 1% to 99% would be allowed the same amount of tax credit at 51 cents per gallon of ethanol (5.1 cents when blended as E10, 10.2 cents when blended as E20, 43.35 cents when blended as E85
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Iowa's Ethanol Tax Incentive
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In 2001, the Iowa Legislature enacted an ethanol tax incentive to encourage gas retailers to increase ethanol sales.
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Under the legislation, once ethanol reaches 60% of a retailer's total fuel sales, the retailer can qualify for a 2.5 cent income tax credit for each additional gallon of ethanol blend sold.
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The program gives retailers incentive to set ethanol at prices that increase ethanol use and to offer ethanol in more than one pump.
- The 2002 Legislature modified the tax incentive to allow ethanol gallons used for E85 blending -- 85% ethanol/15%gasoline -- to be calculated in a retailer's total fuel sales.
Renewable Fuels Standard (RFS)
- On August 8, 2005, President Bush signed the Energy Policy Act of 2005 (H.R. 6) into law. The comprehensive energy legislation includes a nationwide renewable fuels standard (RFS) that will double the use of ethanol and biodiesel by 2012.
- RFS by 2012 would result in spending of $70 billion on goods and services required to produce 8 billion gallons of ethanol and biodiesel by 2012. Purchases of corn, grain sorghum, soybeans, corn stover, and wheat straw alone will total $43 billion.
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Enacting an RFS that increases ethanol use to 8 billion gallons by 2012 would:
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Increase household income by $43 billion.
- Create 234,840 new jobs in all sectors of the U.S. economy.
- Add $51 billion to farm income through 2012.
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The fuels agreement would lower the cost of gasoline for consumers. A recent analysis found that enacting the fuels agreement would reduce refiner costs by .2 cents per gallon compared to current law. The RFS will drive down consumer costs even further by ensuring additional domestic fuel supplies will be available to replace MTBE.
Flexible Fuel Vehicles and E85:
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E85 is a blend of 85% ethanol and 15% unleaded gasoline that can be used in cars called flexible fuel vehicles (FFVs).
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There are more than 6 million FFVs currently on America's roadways.
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Daimler Chrysler, Ford and General Motors provide the flexible fuel engine as standard on several models.
- Nearly 10 million gallons of E85 are sold annually.
- E85 sales increased 373% between 2005 and 2004 and 713% over the past 2 years.
- In 2006, 1.9 million gallons of E85 were sold in Iowa, an increase of 295%.
- In Iowa, one out of every 10 vehicles is a flexible fuel vehicle.
- There was a 54% increase in the number of FFV
For more information about E85 and FFVs, click here.