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RFA's "State of the Ethanol Industry" report highlights ethanol’s contribution to U.S. economy.
February 13, 2019
The U.S. ethanol industry faced a number of regulatory and marketplace challenges in 2018 but continued to make a remarkable contribution to the nation’s economy, according to a new study released at the Renewable Fuels Assn.’s (RFA) 24th annual National Ethanol Conference. The analysis, conducted by ABF Economics on behalf of RFA, found that the industry supported nearly 366,000 jobs and generated nearly $46 billion in gross domestic product (GDP) in 2018.
“The ethanol industry continues to make a significant contribution to the economy in terms of job creation, generation of tax revenue and displacement of crude oil and petroleum products,” the study found. “The importance of the ethanol industry to agriculture and rural economies is particularly notable. Continued growth and expansion of the ethanol industry through new technologies and feedstocks will enhance the industry’s position as the original creator of green jobs and will enable America to make further strides toward energy independence.”
RFA president and chief executive officer Geoff Cooper told nearly 1,000 National Ethanol Conference attendees on Feb. 12 that while the U.S. ethanol industry had a “tough year” in 2018, it “continued to deliver huge wins for consumers,” including lower gas prices, cleaner air, a more secure energy supply and increased job creation. As part of his "State of the Ethanol Industry" report, Cooper also outlined RFA’s plans to drive future growth and create new market opportunities for American-made ethanol.
The U.S. ethanol industry produced a record 16.1 billion gal. of high-octane, clean-burning renewable fuel in 2018, the sixth straight annual increase in production, Cooper noted. As a result, the ethanol industry continued to play a vital role in the U.S. economy, supporting more than 71,000 direct jobs and nearly 295,000 indirect and induced jobs across all sectors of the economy.
The analysis also estimated the impact the ethanol industry had on the state economy in top ethanol-producing states. Iowa, Nebraska and Illinois were the top three states in terms of economic impact, but states like Ohio, Kansas, Michigan, Texas, Missouri, California and New York also benefited from the contributions of ethanol plants.
The report found that ethanol added nearly $25 billion in income for American households. It also generated an estimated $4.8 billion in tax revenue to the Federal Treasury and $4 billion in revenue to state and local governments. Ethanol displaced an amount of gasoline refined from roughly 550 million barrels of imported crude oil, keeping $36 billion in the U.S. economy.
“One of the greatest successes for our industry in 2018 was growth in the export market,” Cooper said, pointing out that one out of every 10 gal. of ethanol produced in the U.S. was exported last year. “This accomplishment is even more impressive when you consider that U.S. ethanol faced punitive trade barriers in several key markets.” Ethanol supported more than 16,200 jobs and $6.3 billion in GDP through exports alone.
However, the ethanol industry experienced “demand destruction” in 2018 as the result of former Environmental Protection Agency Administrator Scott Pruitt’s egregious abuse of small refinery exemptions, which excused 48 refiners from their blending obligations under the Renewable Fuel Standard (RFS).
“While we were focused on fighting efforts by Texas Sen. Ted Cruz and others to cap RIN [renewable identification number] prices, allow exported renewable fuels to count toward the RFS, water down the RFS with RIN multipliers and any number of other really bad ideas, former EPA Administrator Scott Pruitt was busy cutting the legs out from underneath our industry,” Cooper said. “The RFS is all about moving the renewable fuels industry forward and growing the market. Unfortunately, that isn’t what happened in 2018. We didn’t take this lying down, however, and RFA and its partners continue to fight the small refiner exemptions in court, demanding that the lost volumes be reallocated.”
Cooper underscored that RFA and the industry will be prepared to quickly respond to important developments expected in the near term, including proposed EPA rule-makings for year-round use of E15 ethanol fuel blends and the RFS “reset” as well as efforts to reopen the export market to China.
“When EPA finally puts out its proposed rule to allow year-round sales of E15, we’ll be ready,” he said. “RFA will throw everything we’ve got into ensuring a defensible rule is finalized as quickly as possible, expanding the domestic ethanol market, enabling competition and eliminating — once and for all — a needless bureaucratic barrier that offers no economic or environmental benefit whatsoever.
“When EPA releases its proposal to reset the 2020 through 2022 RFS volumes, we’ll be primed to make the case that the reset should be used to increase the required volumes of all renewable fuels over current levels," he added. "The reset rule presents a perfect opportunity for the agency to restore the conventional renewable volumes that were inappropriately erased.”
Regarding the current trade impasse with China, Cooper said, “We’ll keep the heat on the Administration to resolve lingering trade disputes, and when China finally reopens its doors to U.S. ethanol imports, we’ll be prepared to deliver.”
Looking longer term, Cooper said RFA’s vision for the future includes not only strengthening the RFS but also pursuing a high-octane fuel standard. “The RFS and a high-octane, low-carbon fuel program are not mutually exclusive,” he said. “Rather, they can work in concert, not in conflict, to assure air quality improvements, carbon emissions reduction and consumer savings for decades to come.”
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