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Ethanol Profile

By Connie Hardy, content specialist, AgMRC, Iowa State University, chardy@iastate.edu

Revised January 2014.


Ethanol and biodiesel are the primary renewable fuels produced in the US today.  Ethanol is a colorless, clear liquid that is also called grain alcohol, ethyl alcohol, or EtOH. It has the same chemical properties regardless of whether it is made from grain, sugar cane or beets, or cellulosic grasses and wood fibers.  As a motor fuel, it has a higher octane number than gasoline, which allows it to be blended in a 1:10 ratio, known as “E10” with lower-octane gasoline to meet the 87 octane minimum requirement for US passenger vehicles.  As of 2012, it is allowed to be blended as E15 for general use in vehicles.  Ethanol is the primary ingredient in E85 blends for flex-fuel vehicles that can use up to 85% ethanol in the fuel.  Although Henry Ford and other early automakers expected ethanol to be the world’s principal motor vehicle fuel, the availability of gasoline rapidly took over that market; however, the Clean Air Act of 1990 spurred the production and use of cleaner burning fuels.  In 2005, ethanol was widely adopted as a motor fuel additive to boost the octane level in gasoline, replacing the oxygenate, methyl-tertiary-butyl ether ( MTBE), that had been cited as causing groundwater pollution.  More broadly, ethanol offers a renewable alternative to fossil-based fuels that has already significantly reduced US dependence on foreign oil.

Corn grain is the most common feedstock for ethanol production in the US.  According to the US Department of Energy, recent studies using updated corn production methods show a positive energy balance for corn ethanol.  This means that the energy contained in the fuel is greater than the energy required to grow the corn and make the fuel.  Ethanol produced from cellulose is expected to improve on this energy balance under the assumption that non-food-based feedstocks, such as wood and grasses, require less fossil fuel energy to produce ethanol.  Cellulosic ethanol also results in lower levels of life cycle greenhouse gas emissions.

Production and Demand

U.S. ethanol production increased from 3.4 billion gallons in 2004 to 13.1 billion gallons in 2013. According to Ethanol Producer magazine, there are currently 216 ethanol plants in the United States with a capacity to produce nearly 13.9 billion gallons of fuel ethanol per year (bgy). These plants use primarily corn, sorghum, and wheat as feedstocks, but a few use sugar beets and waste sugars from beer manufacturing.  In addition, four new plants are under construction will add 223 million gallons per year (mgy) of production capacity.  In 2013, the existing ethanol plants that ferment sugar/starch – based feedstocks produced more than 13 billion gallons of ethanol.

Progress continues with the technology to produce ethanol from cellulosic feedstocks such as corn and wheat stover, grasses, wood fiber, and municipal waste.  In the US, ten existing plants have production capacity of over 18 mgy, and seven new and larger cellulosic plants are under construction, adding 93 mgy in production capacity.

The U.S. Renewable Fuel Standard (RFS) has served to not only set goals for the use of renewable fuels, but also to encourage production growth to meet the requirements.  The current RFS (amended in 2007) requires that 15 billion gallons of "conventional" biofuels (including corn/wheat/sugar-based ethanol and biodiesel made from vegetable oils and animal fat) be produced by 2015.  However, a recent proposal by the US Environmental Protection Agency (EPA) would lower the production requirements under the RFS, thereby reducing the incentive to produce more ethanol and other biofuels.  In 2012, the EPA had approved a 15 percent blend of ethanol with gasoline for general use in passenger vehicles. Prior to the 2012 approval, ethanol was included as a 10 percent blend.  Besides motor vehicles, ethanol blended fuel has also been approved for use small engines and boat motors. The approval of E15 in 2012 was expected to gradually increase ethanol consumption, but adoption by the vendors of motor fuels has been slow.

Nearly a decade ago, fuel ethanol production in the United States was hastened by the need for an oxygenate to replace Methyl Tertiary Butyl Ether (MTBE) in gasoline blends. MTBE is a petroleum-based oxygenate that was originally blended with gasoline as a substitute for lead to prevent pre-ignition pinging. Subsequently, the 1990 Clean Air Act required the use of oxygenates in winter gasoline blends and, later, in year-around blends to reduce pollution in selected cities. However, the use of MTBE as an oxygenate was later banned by 27 states because of suspected links between groundwater contamination caused by fuel spills and cancer. MTBE was first banned in California, New York and Connecticut. California is the largest consumer of ethanol, followed by Texas, Florida, and New York.

More than 82 percent of U.S. ethanol is produced by dry-mill plants and the remainder by wet mills. The size of new dry-mill plants is increasing. In 2003, typical production capacity of new dry mills was 20 to 50 million gallons per year. Today’s dry mills have capacities of 100 million gallons (or larger) per year, and some 50 mgy plants have recently been remodeled to double of their original size.

Internationally, ethanol has experienced substantial growth in countries such as Brazil, Argentina, United Kingdom, Canada, China and Thailand. Each of these countries have implemented some form of ethanol requirements to address either environmental or fuel dependency concerns.

Corn Fractionation

As ethanol production expands, production improvements are being adopted to use corn more efficiently and improve the production economics. One way to do so is with “fractionation”, the process of separating a corn kernel's endosperm (starch-rich portion), germ (protein-rich and oil-rich portion) and bran (fiber-rich portion) before the fermentation step. The term “fractionation” might also refer to the separation of oil after the fermentation step, commonly called "back-end fractionation." With this modified fractionation process, ethanol plants produce “distillers corn oil” (DCO), which is being sold into other markets, primarily as either a biodiesel feedstock or as a feed additive.

Fractionation at the front end of the process has been a part of food corn milling for many years, but is not yet as common among ethanol producers. Currently, dry-mill ethanol plants move the entire corn kernel through the process, allowing the fermentation step to use the starch portion of the corn, and the remaining protein, oil and fiber to become part of the co-product called "distillers grains." Fractionation offers a way to better control corn kernel separation, improve production efficiencies and develop new co-products. Fractionation could allow ethanol producers an opportunity to manage risk through the development of a portfolio of co-products that are suitable for many markets.

Distillers Grains

Ethanol is made by fermentation of the starch/sugar portion of corn or other grains.  Where one bushel of corn (56 lbs.) will yield 2.8 gallons of ethanol, it also yields about 17 pounds of distillers grains.  Distillers grains are the protein, fiber, and fat portions of the grain that are not consumed while making ethanol.  Distillers Dried Grains with Solubles (DDGS) have become an important and abundant feed ingredient in cattle, swine, and poultry rations.  Because each ethanol plant uses its own operating protocol, the color and texture of DDGS may vary, but nutritionally, they are similar.  DDGS are sold at approximately 10 percent moisture, so they can be stored and transported without high risk of spoilage.  Today, DDGS is sold throughout the US and has become an important export product.  Wet Distillers Grains with Solubles (WDGS) are fed to cattle in close proximity to the ethanol plant.  The “shelf life” of WDGS is short (2-3 days), so it is important that they are fed directly, yet they are a nutritious, palatable, and economical cattle feed for herds located near ethanol plants.

As described in the Corn Fractionation section, some ethanol plants use fractionation to physically separate germ, endosperm, and seed coat portions of corn.  In the case of “back-end fractionation”, oil is removed from the distillers grains following the fermentation step and before drying.  Depending on how and when the fractionation is done, the resulting distillers grains will vary in nutrient content.  With nearly 80% of the ethanol plants using back-end fractionation, a variation of DDGS is now being sold as “High Protein Distillers Grains”.

Supply Chain Elements

The location of ethanol plants is critical to their profitability. Favorable locations are those near ample corn supplies in order to reduce corn transportation costs and local basis effects. In addition, access to natural gas pipelines, electricity transmission lines, rail service and highways are important factors. Ethanol cannot be blended with gasoline and then transported in pipelines because of its tendency to collect water that cannot later be removed. Therefore, 75 percent of ethanol is transported by rail and 25 percent by truck to blenders and retailers. In addition, proximity to users of ethanol byproducts (distillers grains, oil, carbon dioxide) is important for profitability.


Bioenergy, Economic Research Service, USDA.

Iowa Grain Quality Initiative, Iowa State University.

Renewable Fuels Association.

Selected Developments Impacting the Ethanol Industry, AgMRC Renewable Energy Newsletter, 2012.

U.S. Department of Energy.


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