Ethanol & Public Policy
Ethanol Ownership & Investment
Ethanol & Other Fuels
Environment, Economy & Energy Security
Misconceptions About Ethanol
Participation in the Ethanol Industry
What is ethanol?
Ethanol is ethyl alcohol, essentially 200-proof grain alcohol used as a motor fuel. An ethanol plant (production facility or "biorefinery") produces pure fuel-grade ethanol, and then that ethanol is blended in a percentage with gasoline to create a finished motor fuel. A small amount of gasoline is blended into the ethanol at the plant to denature it, or make it unfit for human consumption.
What kinds of ethanol-blended fuels are available?
Ethanol can be blended into varying percentages in gasoline, the two most common blends being 10% and 85%.
- E10 - 10% ethanol and 90% unleaded gasoline - is the most common way ethanol is available to motorists. All automakers approve ethanol blends up to this 10% level by warranty, no matter the make or model of the vehicle. About 99% of America's ethanol is retailed as E10.
- E85 - 85% ethanol and 15% unleaded gasoline - is an alternative fuel for use in Flexible Fuel Vehicles (FFVs). FFVs can use unleaded gasoline or any blend of ethanol up to this 85% level.
Other ethanol blends are possible. California's gas, for example, contains 5.7% ethanol instead of the more common 10% blend. In addition, the American Coalition for Ethanol (ACE) is advocating the research of blends of ethanol beyond 10% in standard, unmodified vehicles. In the near future, blends such as E15 (15% ethanol), E20 (20% ethanol), E30, E40, or E50 may be feasible and available for motorists.
Will my vehicle run on ethanol-blended fuel?
All vehicles are "ethanol-capable" and can use a blend of up to 10% ethanol. Since the 1980s all automakers have covered up to 10% ethanol-blended fuel by warranty, no engine modifications necessary.
Can ethanol blends be used in small engines, such as boats, lawnmowers, or chainsaws?
Yes - manufacturers of small engines realize that up to a 10% blend of ethanol is very common in gasoline, so they make their engines compatible with this fuel.
What is E85? How do I know if my vehicle can use it?
E85 is an alternative fuel comprised of 85% ethanol and 15% unleaded gasoline for use in Flexible Fuel Vehicles (FFVs). FFVs are truly flexible in that they can operate on gasoline or any blend of ethanol up to the 85% blend. On some vehicles this E85-compatibility comes as an option, sometimes as a standard feature.
To identify whether a vehicle is E85-compatible, check the owners manual and inside the fuel cap. Visit "Using Ethanol" under the All About Ethanol menu heading on Ethanol.org to see a complete list of FFV makes and models.
Can my vehicle run on E85 even if it's not an FFV?
If your vehicle is not an FFV, use of any percentage of ethanol higher than 10% is not covered by warranty. The American Coalition for Ethanol believes it may be possible to use blends beyond 10% ethanol in standard automobiles and is currently conducting research on this topic.
How much ethanol-blended fuel is sold in the United States?
In 2007, about 6.5 billion gallons of ethanol was produced and consumed in the United States. Today, ethanol-blended fuel is available from nearly Coast to Coast. Ethanol is blended in to 70 percent of America's gasoline.
E85 is always labeled at the pump because it is an alternative fuel for use only in Flexible Fuel Vehicles. Because up to 10% ethanol can be used in any vehicle, labeling of this fuel is a decision made locally or by state. Some states require labeling of ethanol blends, and some states say it is not required or that it is voluntary. To determine your state's labeling requirements, visit ACE's state-by-state ethanol handbook by clicking on "Ethanol Stats & Laws" at the bottom of Ethanol.org's homepage.
Where can I buy E85 in my area?
A link to a complete list of gas stations offering E85 can be found at http://www.e85fuel.com/. Today there are more than 1,700 gas stations across the nation offering E85 and that number is increasing quickly.
Is there any funding available to add E85 to my gas station or convenience store?
Yes, sometimes there is. The National Ethanol Vehicle Coalition is a non-profit association that promotes the development of E85 vehicles and infrastructure. Contact them through www.e85fuel.com or by phone at (877) 485-8595.
What storage and dispensing conversion procedures should I consider before offering E85 at my gas station?
The technology for storing and dispensing gasoline can be applied to alcohol fuels such as E85 because alcohols and alcohol blends, like gasoline, are liquid fuels at ambient pressures and temperatures. However, only E85-compatible materials should be used in the storage and dispensing systems. Most operating problems with ethanol-fueled vehicles have been traced to contaminated fuel. Consequently, choosing the right materials for fuel storage and dispensing systems and following proper fuel handling procedures are crucial for successfully operating ethanol-fueled vehicles. Although material research and testing is expected to continue, the parts and materials discussed in this guidebook have performed well with E85. They can be obtained from your usual supplier.
What is cellulosic ethanol?
Cellulosic biomass, dubbed the most abundant material on earth, holds tremendous promise as a feedstock for ethanol production due to its widespread availability and potential for high fuel yields.
Examples of sources for cellulosic ethanol include corn stover (the stalks and husks left over after harvest), wheat and barley straw, sugarcane or rice bagasse, sawdust, paper pulp, small diameter trees, dedicated energy crops such as switchgrass and other perennial grasses, and even municipal waste or household garbage.
How is cellulosic ethanol made?
As with producing ethanol from grain, processing cellulosic sources extracts the fermentable sugars from the feedstock and distills them into alcohol. Unlike in grain, the sugars in cellulose are locked in complex carbohydrates called polysaccharides, or long chains of simple sugars. Separating these complex structures into fermentable sugars is essential to the efficient and economical production of cellulosic ethanol.
Is the ethanol from corn and cellulose the same?
Yes, the ethanol produced from corn or milo and the ethanol produced from cellulose are chemically identical.
What is switchgrass? Why is it a good potential source for ethanol?
Switchgrass, a perennial prairie grass, is one source likely to be tapped for ethanol production because of its potential for high fuel yields, hardiness, and ability to be grown in diverse areas. Switchgrass' long root system - actually a fifty-fifty split above ground and below - helps keep carbon in the ground, improving soil quality. It is drought-tolerant, grows well even on marginal land, and doesn't require heavy fertilizing.
How close is cellulosic ethanol to being commercialized?
The technology to create cellulosic ethanol is available today and is in the early stages of commercialization, but several factors need to be addressed in order to successfully commercialize this technology. Though most of the pieces are in place, the key is to continue to make it more cost-effective and economically competitive.
Chief among the efficiency issues is having enzymes that are strong enough to convert the complex carbohydrates into alcohol, yet cost-effective enough to allow efficient commercial-scale production. Another factor is overcome the capital cost of building a cellulosic facility, which is approximately twice the cost of a tradition dry mill corn-ethanol plant. There are federal loan guarantee and grant programs in place to assist with this capital cost. Feedstock considerations are often overlooked, but major issues must be addressed concerning the harvest, handling, transportation, and storage of these biomass products. Finally, sustainability is an important factor, meaning that consideration must be made regarding how much biomass can be removed from crop fields to still maintain soil nutrients and prevent erosion.
Pilot-scale cellulosic ethanol production is in place, and many companies are progressing toward commercial-scale production levels. Estimates chart the full-scale commercial production of cellulosic ethanol within 2 to 10 years.
ETHANOL & PUBLIC POLICY
What is the Renewable Fuels Standard?
The first Renewable Fuels Standard (RFS) was passed in the Energy Policy Act of 2005, and a new RFS was passed in the Energy Independence & Security Act of 2007. The RFS is a historic policy that calls for the United States to increase its consumption of renewable fuels like ethanol and biodiesel each year, beginning with a minimum of 9 billion gallons of use in 2008 and growing to 36 billion gallons of use by 2022.
What is the ethanol incentive?
The federal ethanol incentive is the Volumetric Ethanol Excise Tax Credit (VEETC), or the Blender's Credit. This 51 cent per gallon tax credit is an incentive not to ethanol producers, but to the petroleum industry to blend ethanol into its gasoline. The 51 cents would equate to a 5.1 cent credit on a gallon of E10. The credit amount lowers to 45 cents per gallon in 2009.
This lower tax rate serves as an incentive for oil companies to blend ethanol with gasoline, allowing petroleum marketers to offer a higher-quality, higher-octane fuel containing ethanol at a competitive price. The Blender's Credit benefits taxpayers because it is a rare tax credit that is passed on to the consumer in the form of lower prices at the pump for higher octane ethanol-enriched fuel.
Which states require the use of ethanol-blended fuel?
Nine states require the use of ethanol-blended fuel: Hawaii, Iowa, Kansas, Louisiana, Minnesota, Missouri, Montana, Oregon, Washington.
ETHANOL OWNERSHIP & INVESTMENTWhat companies control ethanol production?
Ethanol is a very diverse industry, not controlled by any one company. Over the past decade, the industry's growth has been drive by farmer- and locally-owned cooperatives or limited liability companies; taken together, these companies comprise nearly half of today's U.S. ethanol industry. The other half of the industry is made of privately held agriculture or ethanol companies and some publicly traded ethanol companies.
How can I invest in ethanol?
A few ethanol companies are publicly traded. Archer Daniels Midland is a large agribusiness that has several ethanol plants in addition to a wide range of other ag processing businesses ("ADM" on NYSE). Pacific Ethanol is a California-based ethanol production and marketing company ("PEIX" on NASDAQ). VeraSun is a South Dakota-based ethanol producer ("VSE" on NYSE), and Aventine Renewable Energy is a ethanol producer and marketer headquartered in Illinois ("AVR" on NYSE). US BioEnergy is listed under "USBE" on the NASDAQ.
ETHANOL & OTHER FUELS
What is MTBE? How is it different from ethanol?
MTBE is methyl tertiary butyl ether, a gasoline additive. Like ethanol, it is a fuel oxygenate, meaning it adds oxygen to the gasoline to help it burn more cleanly. Unlike ethanol, MTBE is a toxic substance and even small spills or leaks of the product have been found to contaminate ground water supplies. The use of MTBE has been banned in more than 25 states.
MTBE and ethanol were the two oxygenates of choice under the former Clean Air Act of 1990, but the use of MTBE went by the wayside in 2006 when its manufacturers did not receive the product liability protection they had hoped for in the Energy Policy Act of 2005. Ethanol, just as effective at adding octane and oxygen, has moved in to many former MTBE markets due to its beneficial properties and increasing availability.
What is the relationship between ethanol and biodiesel?
Ethanol and biodiesel are both domestically produced renewable fuels that seek to add to the fuel supply and reduce dependence upon petroleum-based fuels. Ethanol is blended into gasoline for gasoline engines and biodiesel is blended into diesel for diesel engines. Like ethanol, biodiesel can be blended in varying percentages to make a finished fuel - examples include B2 (2% biodiesel, 90% petroleum diesel), B5, B20, etc. B100, or pure biodiesel, can also be used as a finished fuel. Biodiesel is typically made from soybeans, though it can also be produced from other sources. Visit http://www.biodiesel.org/ to learn more.
What is butanol?
Butanol is a 4-carbon alcohol, similar to ethanol, that has been produced on an industrial scale since World War I. Butanol is certified by the EPA as a blending component in gasoline up to 11 percent. Butanol is made from petroleum, but its promoters say it can also be made from biomass sources. Some companies are researching how to make butanol from renewable sources, but production in this manner is limited to date.
ENVIRONMENT, ECONOMY & ENERGY SECURITY
How does ethanol-blended fuel benefit the environment?
Ethanol is a much cleaner burning fuel than gasoline, offering a significant reduction in carbon monoxide and hydrocarbon tailpipe emissions. Research shows that every city and state that has switched to ethanol-blended fuel has experienced improved air quality. According to the U.S. Department of Energy, in 2005 alone ethanol-blended fuels reduce CO2-equivalent greenhouse gas emissions by 7.8 million tons - this has the effect of removing the annual GHG emissions of more than 1 million automobiles from the road.
Ethanol production has a large positive impact on the U.S. economy, especially in the rural areas where most ethanol production takes place. An ethanol plant makes a large difference to the economy of its local area. A study conducted in 2002 found that an average sized ethanol plant (40 mgy) would: generate a one-time boost of $142 million through its construction; expand the local economic base by $110 million, generate an additional $19.6 million in household income and at least $1.2 million in new tax revenue.
How much oil can ethanol displace?
Every gallon of ethanol we produce here in the U.S. means that less gasoline will need to be used, thereby reducing our demand for crude oil. Research has determined that 1 barrel of ethanol (1 barrel = 42 gallons) can displace 1.2 barrels of petroleum at the refinery.
In 2006, the U.S. produced about 5 billion gallons of ethanol. The nations' annual consumption of gasoline is high, approximately 140 billion gallons annually. Given the reality of this large number, ethanol does make up a small percentage at this time - a small, but critically important percentage. Every gallon makes a difference, and the U.S. ethanol industry is ramping up to help give the U.S. energy options.
MISCONCEPTIONS ABOUT ETHANOL
Is it true that ethanol is driving up prices at the grocery store?
No - the role of corn and ethanol in grocery prices has been grossly exaggerated by critics who have much to gain in keeping ethanol's potential limited. Corn prices, made higher lately in part due to ethanol demand, do have some impact on foods in which corn is an ingredient - namely meat, dairy, and poultry. Energy prices have a much more dramatic impact on food prices because all foods are dependent upon this expensive energy for processing, packaging, and transportation. Research shows that energy prices have at least twice the impact as corn prices in the grocery aisle.
What does "net energy balance" mean? What is ethanol's energy balance?
Net energy balance is a term used to describe how much energy is needed to produce a product versus how much energy that product provides. Two professors that are long-time critics of ethanol claim that ethanol has a negative energy balance, but this is simply not true and has been debunked again and again by science. Scientific study after study has proven ethanol's energy balance to be positive. The latest USDA figures show that ethanol made from the drymill process provides at least 77% more energy as a fuel than the process it takes to make it. The bottom line is that it takes about 35,000 BTUs (British Thermal Units) of energy to create a gallon of ethanol, and that gallon of ethanol contains at least 77,000 BTUs of energy. The net energy balance of ethanol is simply a non-issue.
What impact does ethanol have on gasoline prices?
Ethanol adds to the overall supply of motor fuel in the U.S. and helps keep pump prices competitive and affordable. The blender's tax credit is usually passed down to consumers in the form of more competitive prices at the pump. An Iowa State University study shows that ethanol has saved American motorists up to 40 cents per gallon at the pump over the last several years.
There is virtually no difference in fuel economy between unleaded gasoline and E10, the 10% blend most commonly available to motorists. Research shows that, on average, the difference is only 1.5% - a negligible amount, much less than the impact of wind speed, stop-and-go driving, and tire pressure.
E85 (85% ethanol 15% gasoline fuel) does typically generate slightly lower fuel economy than E10 or unleaded, but this loss is made up for in the fuel's high performance and high octane rating (at least 105 octane), cooler burn and longer engine life for the vehicle, and more economical price at the pump.
PARTICIPATION IN THE ETHANOL INDUSTRY
We'd like to construct an ethanol plant. Where do we begin?
Ethanol plants need to be built where they make sense, so there are many necessary pieces that need to come together to make a plant successful. Rules of thumb:
- Grain availability: How many bushels of grain are available within 50 miles, 100, miles, 150 miles?
- Grain pricing: What is the local grain price for corn? What is the historic basis (difference between local price and Chicago price)?
- Natural gas or coal availability: What is the most economical fuel? A nearby pipeline is needed to use natural gas and coal requires expensive handling facilities. Figure about 35,000 BTUs per gallon of ethanol produced. Estimate delivered cost of each.
- Power: Calculate about 1 kWh of electricity per gallon of ethanol produced.
- Site issues: Site needs rail access, road access, and availability of 3.5 gallons of water for each gallon of ethanol produced.
- Distillers grain: Dried distillers grain can be sold by rail, but wet distillers grain should be used within 100 miles of the plant. DDG can be used for hogs, poultry, and cattle; WDG can be used for cattle. How many livestock are within 100 miles of the plant? Check historic prices for distillers grain in the area.
- Financing: There are many possible ownership and financing structures, but most require between 30%-50% equity. Ethanol plant costs decrease on a per gallon basis as plants get larger.
- Feasibility studies: There are many reputable firms and consultants that can help you conduct a feasibility study. It is crucial to determine whether you have all the necessary pieces in place before you begin.
- Design-build firms: Always use a reputable design-build firm that has experience in the ethanol industry. Check the "Service Providers" section on the bottom of the ACE website to see a list of companies providing these services.
How can I get a job in the ethanol industry?
One place to look for ethanol industry job listings is www.ethanoljobs.com.
Can I support ethanol in other ways?
Yes, definitely. If your local gas station does not carry ethanol-blended fuel, talk to the manager and encourage them to do so. Visit ACE's Legislative Action Center to see what ethanol-related bills are being debated by Congress and use the "Legislative Action Center" under the Take Action menu heading to send a letter to your Senators and Representative to express your views. If you are not already, become an ACE member to show your grassroots ethanol support and to receive the latest ethanol-related information through Ethanol Today magazine and other ACE resources.