Higher Ethanol Blends: A Win for Corn Farmers, Consumers & the Environment

 Print

Ethanol is a renewable transportation fuel that can be made from domestically grown corn. Over 98% of the gasoline currently sold in the United States contains ethanol, typically a blend that is 10% ethanol and 90% gasoline. Autos that are 2001 and newer, over 92%[i] of the current fleet, can run on higher blends of ethanol (E15) but policy barriers limit availability despite infrastructure that is otherwise available to provide it. The National Corn Growers Association continues to advocate for higher blends of ethanol that would enhance market opportunities for our nation's corn growers, lower prices at the pump for our nation's consumers, and reduce greenhouse gas emissions in our environment.

Corn Based Ethanol Reduces Emissions

The transportation sector is the largest source of greenhouse gas emissions in the United States. In its most recent annual report[ii], the Environmental Protection Agency showed the transportation sector produced 28% of greenhouse gas emissions.

Ethanol is an oxygenate that reduces exhaust emissions by enhancing fuel combustion. Corn based ethanol is already shown to reduce greenhouse gas emissions by 44%-52%[iii] compared to pure gasoline, but consideration of climate smart agriculture practices and adoption of new technologies can further reduce emissions[iv]. These changes have the potential to more than fully offset emissions.

Corn based ethanol is a readily available solution for reducing greenhouse gas emissions that we could be using to a larger extent right now.

Corn Based Ethanol Reduces Prices at the Fuel Pump

The last three years have seen the highest average retail prices for reformulated gasoline in the past decade[v] despite continued efforts to reduce gasoline prices[vi].

Reformulated gasoline is a gasoline blend-stock that is ready for blending with an oxygenate like ethanol. Aside from reducing emissions, ethanol has a higher octane level than gasoline, increasing power and performance.

Not only does ethanol offer all these benefits, it's also lower priced than gasoline. On average over the first three quarters of 2024, ethanol has been $0.49 per gallon more affordable than reformulated gasoline[vii]. Ethanol is a renewable, lower emission and lower cost oxygenate. Higher blends of ethanol would mean lower-priced blended gasoline for consumers.

Corn Based Ethanol Offers Market Driven Demand for U.S. Farmers

Ethanol is an important market for U.S. corn growers. About one-third of the corn produced in the United States is used in ethanol production.

According to the U.S. Department of Energy, over 98% of the gasoline currently sold in the United States contains ethanol, typically "E10", a blend that is 10% ethanol and 90% gasoline[viii]. Other blends available in the U.S. are "E15", often marketed at the pump as UNL88, a blend composed of 10.5% to 15% ethanol and gasoline and "E85" a blend composed of 51% to 83% ethanol. Although most gasoline is E10, the average ethanol blend rate in 2023 was 10.38%, elevated above 10% by minor usage of E15 and E85.

On average, one bushel (56 pounds) of corn can be processed into about 3 gallons of ethanol plus animal feed and corn oil co-products. Given the 10.38% blend rate, approximately 4.74 billion bushels of corn were used to produce ethanol used domestically in 2023. For each 1% increase in the blend rate for 2023, we could have used an additional 457 million bushels of corn. The change in corn usage isn't constant from year to year because it's based on a percentage of finished motor gasoline use for a given year. A 5% increase in the average blend rate for 2023 would have boosted demand by 15.3% or 2.29 billion bushels of corn. That's nearly equal to the amount of corn produced in Illinois in 2023. Increasing use of corn in ethanol also translates to increased production of valuable ethanol co-products, dried distillers grains and distillers corn oil, that can be used in animal feed and biodiesel.

Over the next decade USDA projects excess corn ranging from 2.7 to 3.0 billion bushels that would be even larger if planted acres stayed the same as 2024 in the projections[ix]. Making E15 the standard provides a market-based demand opportunity for corn that can be met without additional land area as trend yield continues to increase and corn growers continue to produce more corn with fewer resources.

Summary

A 5% increase in average blend rate represents what could be achieved with a move from a 10% ethanol blend to a 15% ethanol blend as industry standard. A policy action to support this would allow for a meaningful market driven demand boost for corn, but the benefits extend well beyond the farm gate.

A switch to a higher ethanol-blend….

… drives demand to support corn prices which is critical as corn farmers face low prices and high costs in 2024 that pencils out to the biggest loss for corn since 2005.

…provides patrons with financial relief at the fuel pump as consumers still feel the impacts of high inflation and cost of living that remains elevated.

…. reduces greenhouse gas emissions immediately as our nation and world face increased burdens of climate change.

Back to The Corn Economy