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Ethanol Industry

Ethanol is a high octane, clean burning, American-made renewable fuel. Its production and use offer a myriad of benefits to the United States and its citizens.
The production of ethanol is an economic engine for the United States, adding value to U.S. agricultural products and bringing billions of dollars to the nation's economy each year. The use of ethanol reduces harmful auto emissions, offers consumers a cost-effective choice at the pump, and decreases the amount of expensive crude oil needed to satisfy the nation's thirst for transportation fuel.
Ethanol is produced at more than 175 facilities across the nation and blended in to unleaded gasoline in varying percentages. Ethanol is most commonly retailed as E10, the blend of 10 percent ethanol (90% gasoline) for use in all automobiles. Increasingly, ethanol is also available as E85, the 85 percent ethanol blend for use in Flexible Fuel Vehicles. Study is being done on allowing the use of blends beyond 10 percent in standard automobiles

What is Ethanol?              

Ethanol is a clean-burning, high-octane motor fuel that is produced from renewable sources. At its most basic, ethanol is grain alcohol, produced from crops such as corn. Because it is domestically produced, ethanol helps reduce America's dependence upon foreign sources of energy.

Unblended 100% ethanol is not used as a motor fuel; instead, a percentage of ethanol is combined with unleaded gasoline. The most common blends are:

E10 - 10% ethanol and 90% unleaded gasoline
E10 is approved for use in any make or model of vehicle sold in the U.S. Many automakers recommend its use because of its high performance, clean-burning characteristics. Today about 70% of America's gasoline contained some ethanol, most as this E10 blend.

E85 - 85% ethanol and 15% unleaded gasoline
E85 is an alternative fuel for use in flexible fuel vehicles (FFVs). There are currently more than 6 million FFVs on America's roads today, and automakers are rolling out more each year. In conjunction with more flexible fuel vehicles, more E85 pumps are being installed across the country. When E85 is not avaialble, these FFVs can operate on straight gasoline or any ethanol blend up to 85%.

It is important to note that it does not take a special vehicle to run on "ethanol". All vehicles are "ethanol vehicles" and can use up to 10% ethanol with no modifications to the engine. Often people confuse E85 for "ethanol", believing incorrectly that not all vehicles are ethanol-compatible.

Mid-range blends of ethanol: between E10 and E85
ACE is leading efforts to attend to any technical or regulatory hurdles to using ethanol blends above 10%, such as E20, E30, or E40. If these higher percentages of ethanol could be used in standard automobiles, the U.S. could use a dramatically higher amount of renewable fuel, thus significantly decreasing our dependence on petroleum.

New research ("Optimal Ethanol Blend-Level Investigation," released 12/5/07) shows that mid-range ethanol blends can in some cases provide better fuel economy than regular unleaded gasoline - even in standard, non-flex-fuel vehicles. Previous assumptions that ethanol's lower energy content directly correlates with lower fuel economy were found to be incorrect. Instead, the research suggests there is an "optimal blend level" of ethanol and gasoline (most likely E20 or E30) at which vehicles will get better mileage than predicted based on the fuel's per-gallon Btu content.  View ACE's press release, an Executive Summary, or download the full report.

ACE has also collaborated on research to examine the impact of using higher blends of ethanol in standard automobiles. A non flex-fuel 2001 Chevrolet Tahoe, which had traveled more than 100,000 miles almost exclusively on E85, was donated to research and was torn down to examine the fuel's impact on the engine components. View a brief video documenting this research.

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Benefits of Ethanol

Economy & Job Creation Benefits

The production and use of ethanol benefits our economy on all levels - local, state, and national. From the local communities where the crops are grown and processed to the metropolitan areas where drivers fill up with a domestically produced fuel, American-made ethanol propels the economy.

In its 2002 study "Ethanol and the Local Community", AUS Consultants and SJH & Company found that:

  • With an approximate cost of $60 million for one year of construction, an ethanol plant expands the local economic base by $110 million each year.

  • Ethanol production will generate an additional $19.6 million in household income annually.

  • Tax revenue for local and state governments will increase by at least $1.2 million a year.

  • Nearly 700 permanent jobs will be created in the area near an ethanol plant.

Related Reading: 

Ethanol's Impact on the Local Community: Ethanol Today June 2005

"Economic Impact of Ethanol Production"

"Contribution of the Ethanol Industry to the Economy of the United States" by John Urbanchuk (LECG)

Agriculture, Farmers & Rural Communities

Ethanol production and use benefit U.S. agriculture and lead rural economic development. Because it is made primarily from corn and other agricultural products, ethanol increases demand for these crops, increases the prices farmers receive for these crops, and brings economic development opportunity to the rural areas where the ethanol is made.

Over the past decade, farmer-owned and locally-owned ethanol plants have driven the dramatic growth in the U.S. ethanol industry. Of the nation's total ethanol production capacity, about 40% is owned and controlled by U.S. farmers and other local investors. This represents the largest single ownership category in the industry. 

The U.S. ethanol industry has increased demand for corn and has played a role in bolstering chronically low corn prices, allowing farmers to earn a modest, market-based profit on their crop. Studies have shown that the local price of corn increases by at least 5-10 per bushel in the area around an ethanol plant, adding significantly to the farm income in the area.

USDA estimates that the Renewable Fuels Standard will generate an additional $2 billion to $4 billion in net farm income by 2012.

Energy Security & Independence

American-made, renewable ethanol directly displaces crude oil we would need to import, offering our country critically needed independence and security from foreign sources of energy.

Current U.S. ethanol production capacity of 6 billion gallons per year can reduce gasoline imports by more than one-third and effectively extends gasoline supplies at a time when refining capacity is at its maximum.

According to the Energy Information Administration, the 7.5 billion gallon ethanol production level minimum set in the Renewable Fuels Standard could reduce oil consumption by 80,000 barrels per day.

Ethanol is key to reducing our country's trade deficit in crude oil, a figure that has been steadily increasing: $27 billion in 1987 up to $100 billion in 2002. The U.S. Commerce Department estimates that each $1 billion of trade deficit costs the U.S. 19,100 jobs.

Energy Independence Facts:

  • The U.S. imports about two-thirds of its oil, and some experts predict our dependence upon foreign crude could climb to 70% in the years to come.

  • For every barrel of ethanol produced (1 barrel = 42 gallons), 1.2 barrels of petroleum are displaced at the refinery. (Information Resources Inc.)

  • In addition to importing record amounts of oil, the U.S. has also been importing record amounts of finished gasoline: 37 million gallons per day. (Energy Information Administration)

  • U.S. fuel consumption increased from 12 billion gallons per year in 1970, to 160 billion gallons in 2002. (Federal Highway Administration)

Related Reading:

The "Real Cost of Oil" within the Ethanol Research section.

Environment & Clean Air

Fossil fuel-based gasoline is the largest source of man-made carcinogens and the number one source of toxic emissions, according to the U.S. EPA. Ethanol is a renewable, environmentally friendly fuel that is inherently cleaner than gasoline. Ethanol reduces harmful tailpipe emissions of carbon monoxide, particulate matter, oxides of nitrogen, and other ozone-forming pollutants.

The use of ethanol-blended fuel helps reduce the environmental and economic impacts of gasoline consumption on our society.

Read more in the research Clearing the Air - a Review of the Real-World Impacts of Using Ethanol-Blended Fuel and in Ethanol: A Convenient Solution to the Inconvenient Truth

Ethanol Clean Air Facts:

  • Ethanol blends are likely to reduce carbon monoxide emissions in vehicles by between 10% - 30%, depending upon the combustion technology. (U.S. EPA)

  • The American Lung Association of Metropolitan Chicago credits ethanol-blended fuel with reducing smog-forming emissions by 25% since 1990.

  • The use of 10% ethanol blends reduces greenhouse gas emissions by 12-19% compared to conventional gasoline. (Argonne National Lab)

  • In 2004, ethanol use in the U.S. reduced CO2-equivalent greenhouse gas emissions by approximately 7 million tons, equal to removing the emissions of more than 1 million cars from the road. (Argonne National Lab)

  • Research shows a 35-46% reduction in greenhouse gas emissions and a 50-60% reduction in fossil energy use due to the use of ethanol as a motor fuel. (Argonne National Lab)

  • Ethanol contains 35% oxygen, making it burn more cleanly and completely than gasoline.

  • E85 has the highest oxygen content of any fuel available, making it burn even more cleanly and even more completely than any other fuel.

  • E85 contains 80% fewer gum-forming compounds than gasoline.

  • Ethanol is highly biodegradable, making it safer for the environment.


Issue Briefs

Issue Brief: The Net Energy Balance of Ethanol Production
Have you heard the myth that ethanol has a negative energy balance? This publication looks at all research on the topic, separating real science from the science that is politically motivated.

Issue Brief: Energy Security
One of ethanol's benefits to this country is to our energy security. This issue brief looks at the components of energy security and the danger of continuing dependence upon foreign and/or nonrenewable energy sources.

Issue Brief: Economic Impact
The replacement of imported oil with domestically produced ethanol is an appealing prospect for a host of reasons. Perhaps the most significant of these reasons is the economic impact associated with the domestic production and use of renewable ethanol.

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Ethanol Production Cycle


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Did you know?

Tests have shown ethanol can reduce knocking and pinging in engines, and concluded that it will not harm seals, valves or increase corrosion. Ethanol is safe to use in your vehicle and helps the environment and economy as well.

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