WASHINGTON, December 22, 2011 — America’s ethanol industry has been in a state of rapid evolution since the beginning of 2000. Record-setting production, policy development, and market expansion have all moved forward with dramatic speed and helped to create the world’s largest, most efficient, most cost effective renewable fuels industry.

However, developments in 2011 have set the stage for a new chapter in American ethanol history. Here are the Top 5 stories of 2011 as seen through the eyes of the Renewable Fuels Assn.

1.  EPA gives final approval to E15 for MY2001 and newer vehicles. For the first time ever, Americans driving conventional vehicles will be provided the opportunity to choose ethanol blends in excess of 10%.  While a strong argument could be made for the end of the tax incentive as the year’s top story, the impact of an expanded market through E15 blends will have an exponentially greater impact on the U.S. ethanol market than the temporary adjustment caused by the end of VEETC. 

2. End of VEETC and the secondary tariff. Without protest, U.S. ethanol producers allowed the $0.45 per gallon tax incentive for ethanol blending to expire.  The offsetting secondary tariff on imported ethanol will also expire.  The domestic ethanol industry has evolved, policy has progressed, and the market has changed making now the right time for the incentive to expire.  Ethanol producers never intended for the tax incentive to be permanent.  Like all incentives, it was put in place to help build an industry and when successful, it should sunset.  Unfortunately, the same mentality does not extend to century-old tax subsidies supporting 20th century petroleum technologies.

3. U.S. exports set all-time highs. As the U.S. worked to move beyond artificial barriers in the domestic market, new international markets emerged as opportunities for domestic ethanol producers.  An estimated one billion gallons of denatured and undenatured ethanol – gallons never blended with gasoline or eligible for the tax incentive – were exported in 2011.  Additionally, U.S. exports of ethanol feed co-products, largely distillers grains, also surged.  An estimated 8-9 million metric tons of this high value livestock feed was exported in 2011.

4. Restarting the advanced and cellulosic ethanol engine. Weathering the economic collapse of 2008, advanced and cellulosic ethanol producers made big strides in 2011 to bring these promising technologies to commercial production.  A number of advanced and cellulosic ethanol companies, including Abengoa, Coskata, and Mascoma are beginning construction on ethanol biorefineries that will expand America’s ability to fuel its economy with a broader range of renewable feedstocks.  (An RFA side note:  The formation of the Advanced Ethanol Council in partnership with the RFA was a pivotal step forward in forcefully and effectively advocating for the accelerated commercialization of advanced and cellulosic ethanol technologies.)

5. Emergence of the integrated biorefinery model. 

Ethanol production is far more than fuel and feed.  Today, approximately 40% of all ethanol facilities are capturing and selling corn oil.  An ever-increasing number of ethanol producers are also deploying technologies to produce proteins, biochemicals and other co-products that can further displace oil in marketplace.  Anything made from oil can be made from biomass.  It is matter of know-how and American ethanol producers are proving that it can be done and be done at scale.

It is these five developments that defined 2011 and are setting the stage for 2012 and beyond.  In the first week of January, the RFA will be publishing a companion piece to this that looks at the Top 5 stories to watch for U.S. ethanol in 2012.

Source: Renewable Fuels Assn.