And while ethanol’s expansion has contributed to higher farm commodity prices, supply and demand adjustments in the agricultural sector have helped mitigate overall impacts (see “ U.S. corn utilization used to produce ethanol rose from 6 percent in 1999/2000 to 24 percent in 2007/08 and is projected to range from 30 to 35 percent over the next decade. The increased use of ethanol was fueled by a combination of market conditions and policy factors, including rising oil prices, Federal tax credits, the first Renewable Fuel Standard established under the Energy Policy Act of 2005, and the elimination of methyl tertiary butyl ether (MTBE) as an oxygenating gasoline additive.Īlmost all ethanol produced in the U.S. gasoline supply has grown from just over 1 percent in 2000 to 7 percent in 2008. Expanded Use of Ethanol Was Within Easy Reach The technology for producing corn-based ethanol was already available, for example, and existing agricultural policy did not hinder the shift to increased corn acreage to support greater ethanol output.Īchieving further large-scale gains will depend on whether the industry can overcome challenges in producing ethanol through cellulosic technologies and on expanding use of ethanol in automobiles. The large gains in the scale of the industry over the past decade were achieved by “picking the low-hanging fruit” on both the supply and demand sides of the market. ethanol industry since 2000 may soon be behind us. Even so, the years of full-throttle expansion in the U.S. The Energy Independence and Security Act of 2007 specified an ambitious agenda to significantly expand biofuel use in the United States.

motor vehicles are restricted by manufacturers’ warranties to use gasoline containing no more than 10 percent ethanol, which will limit growth in biofuel demand. New production technologies and supporting infrastructures will be needed to reach cellulosic biofuel mandates. Constraints to future growth of the ethanol industry will present challenges to meeting the ambitious mandates for expanded biofuel use set forth in the Energy Independence and Security Act of 2007.

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