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SIS International Research, November 2007:
ETHANOL
Ethanol is a clean burning, high-octave motor fuel that is produced from renewable sources. Normally ethanol is used as a blend with gasoline eg: E 10 - 10% ethanol & 90 % gasoline which are commonly used in the US. However there are higher blends eg: E85- 85% ethanol & 15% gasoline which is used in flexible Fuel Vehicles (FFV) which has also been introduced in the US by automakers. This could make a big difference to Ethanol business. American Coalition for Ethanol (ACE) is leading efforts to using higher ethanol blends - 20%, 30%, 40%, etc in standard automobiles which could mean dramatically higher amount of renewable fuel.
Ethanol production in the US has grown from about 3.4 billion gallons in 2004 to 4.89 billion gallons in 2006. This current annual capacity is reckoned at around 8 billion gallons from about 142 operating plants. Another 67 plants are reportedly under construction
Ethanol is currently blended into 46% of America’s gasoline as E10 (10% ethanol blend). E85 also has started making in roads with about 50 millions gallons of E85.
The Energy Policy Act of 2005, established the first-ever Renewable Fuels Standard (RFS) in federal law, requiring increasing volumes of ethanol and biodiesel to be blended with the U.S. fuel supply between 2006 and 2012 .The volume of renewable fuel required to be blended into gasoline was 7.5 billion gallons by 2012. The Energy Independence and Security Act of 2007 amended and increased the RFS, requiring 9 billion gallons of renewable fuel use in 2008, stepping up to 36 billion gallons by 2022. Many states have chosen to enact ethanol-related legislation. Seven states have enacted Renewable Fuels Standards that require the use of ethanol-blended fuel. Ten states have some type of retail pump incentives for ethanol. Twenty-two states have some type of incentive for ethanol producers. There are various tax credits offered to encourage the production and blend of ethanol such as VEETC, Small Ethanol Producer Tax Credit, Tax Credit for E85 Infrastructure etc.
Ethanol production is from renewable source materials including grains, sugar rich plants, and wood waste materials. Corn is the primary feed stock for U.S ethanol production & some grains sorghum is also used in the drier areas on the periphery of the corn belt.
Ethanol can be made either by the dry- mill or the wet-mill method. Wet-mill facilities were more common in the industry’s early days, but today dry-mill ethanol plants far out number them and present the method used by all new ethanol producers. .A wet-mill makes a variety of products from corn including ethanol, corn sweeteners and gluten feed. Dry-mill facilities are dedicated to the production of ethanol and its co-products.
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SIS Market Intelligences - “The Ethanol Industry”
