Fuel Ethanol: Background and Public Policy Issues (CRS Report for Congress)
Premium Purchase PDF for $24.95 (27 pages)
add to cart or
subscribe for unlimited access
Pro Premium subscribers have free access to our full library of CRS reports.
Subscribe today, or
request a demo to learn more.
| Release Date |
Revised April 24, 2008 |
| Report Number |
RL33290 |
| Report Type |
Report |
| Authors |
Brent D. Yacobucci, Resources, Science, and Industry Division |
| Source Agency |
Congressional Research Service |
| Older Revisions |
-
Premium Revised July 30, 2007 (27 pages, $24.95)
add
-
Premium Revised Jan. 24, 2007 (26 pages, $24.95)
add
-
Premium Revised Oct. 19, 2006 (26 pages, $24.95)
add
-
Premium Revised March 3, 2006 (26 pages, $24.95)
add
-
Premium Jan. 24, 2006 (26 pages, $24.95)
add
|
Summary:
Ethanol plays a key role in policy discussions about energy, agriculture, taxes, and the environment. In the United States it is mostly made from corn; in other countries it is often made from cane sugar. Fuel ethanol is generally blended in gasoline to reduce emissions, increase octane, and extend gasoline stocks. Recent high oil and gasoline prices have led to increased interest in alternatives to petroleum fuels for transportation. Further, concerns over climate change have raised interest in developing fuels with lower fuel-cycle greenhouse-gas emissions. Supporters of ethanol argue that its use can lead to lower emissions of toxic and ozone-forming pollutants, and greenhouse gases, especially if higher-level blends are used. They further argue that ethanol use displaces petroleum imports, thus promoting energy security. Ethanol's detractors argue that various federal and state policies supporting ethanol distort the market and amount to corporate welfare for corn growers and ethanol producers. Further, they argue that the energy and chemical inputs needed to turn corn into ethanol actually increase emissions and energy consumption, although most recent studies have found modest energy and emissions benefits from ethanol use relative to gasoline, depending on how the ethanol is produced.
The market for fuel ethanol is heavily dependent on federal incentives and regulations. Ethanol production is encouraged by a federal tax credit of 51 cents per gallon. This incentive allows ethanolâwhich has historically been more expensive than conventional gasolineâto compete with gasoline and other blending components. In addition to the above tax credit, small ethanol producers qualify for an additional production credit. It has been argued that the fuel ethanol industry could scarcely survive without these incentives.
In addition to the above tax incentives, the Energy Policy Act of 2005 (P.L. 109-58) established a renewable fuel standard (RFS). This RFS was expanded by the Energy Independence and Security Act of 2007 (P.L. 110-140), and requires the use of 9.0 billion gallons of renewable fuels in 2008, increasing each year to 36 billion gallons in 2022. Much of this requirement will likely be met with ethanol. In addition, the bill requires that an increasing share of the mandate be met with "advanced biofuels"âbiofuels produced from feedstocks other than corn starch. Potential "advanced biofuels" include domestic ethanol from cellulosic material (such as perennial grasses and municipal solid waste), ethanol from sugar cane, and diesel fuel substitutes produced from a variety of feedstocks. The United States consumed approximately 6.8 billion gallons of ethanol in 2007, mostly from corn. A significant supply of cellulosic ethanol is likely several years off. Some analysts believe the RFS could have serious effects on motor fuel suppliers, leading to higher fuel prices.
Other issues of congressional interest include support for purer blends of ethanol as an alternative to gasoline (as opposed to a gasoline blending component), promotion of ethanol vehicles and infrastructure, and imports of ethanol from foreign countries. This report supersedes CRS Report RL30369, Fuel Ethanol: Background and Public Policy Issues, by Brent D. Yacobucci and Jasper Womach (out of print but available from the authors).
