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Ethanol Key Topics
As countries seek to meet their COP 21 Paris Agreement commitments, they are turning to ethanol to reduce the carbon intensity of their transportation fuels. According the U.S. Department of Agriculture (USDA), corn ethanol is expected to reduce greenhouse gas (GHG) emissions by 50 percent compared to conventional gasoline by 2022.
In addition to reducing the carbon intensity of fuels, ethanol replaces harmful aromatics and MTBE in the fuel mix. Using ethanol reduces particulate matter and toxic emissions, which are harmful to human health, and replaces MTBE, which can negatively impact groundwater.
Ethanol provides economic benefits to countries with or without the ability to produce biofuels feedstocks such as corn, sugarcane and cassava. For countries with feedstock available, ethanol policies can offer economic support to feedstock producers and complementary industries, spurring rural development and other benefits throughout rural economies.
Countries that lack the ability to produce their own feedstocks will benefit economically from blending ethanol by replacing costly components of gasoline, such as aromatics and MTBE, which creates savings for oil refiners, blenders and consumers at the fuel pump.
Countries without the ability to produce sufficient ethanol to meet their domestic demand can supplement their output with imported ethanol from global suppliers.
By combining imports and domestic production, countries are able to meet their renewable mandates, reaping the benefits of high-quality renewable fuels policies and incentivizing additional investment in local production for which there is a guaranteed demand. Countries with ethanol policies that include a role for trade based on market demand include the United States and Brazil.
Almost all gasoline consumed in the United States is blended with 10 percent ethanol. A blend of 10 percent ethanol and 90 percent unleaded gasoline is known as E10. E10 accounts for more than 95 percent of fuel consumed in motor vehicles with gasoline engines in the United States.
E15 blends, containing 15 percent ethanol, are approved for use in vehicles built in model year 2001 or newer.
Since the commodity price spikes of the late 2000s, there has been increased concern that biofuels policies using grain or other food crops as feedstocks have increased commodity prices and contributed to a rise in food insecurity around the world. There are many factors that contribute to increased food prices, including oil prices, macroeconomic factors like wages, packaging costs and weather. Today, despite record levels of biofuel use globally, less than 5 percent of global grain production is used to make biofuels.
In the United States alone, planted acres of corn and other grains have declined despite increased ethanol production, largely due to technological advancements and improved production practices that have boosted the amount of biofuel that can come from each kernel. Other countries – including Brazil and Argentina – have achieved similar increases while maintaining successful biofuels policies. In some countries, like India and Thailand, biofuels policies serve as a market to boost rural farm income and limit waste from surplus crop production.
With grain stocks at some of the highest levels seen in history, and food prices at a decade low, it is clear there is room for food AND fuel.