Center for Advanced BioEnergy Research, University of Illinois at Urbana-Champaign

Thursday, August 25, 2011

The United States: From ethanol importer to ethanol exporter

Dairy Herd Network
U.S. Energy Information Administration Updated: August 24, 2011

After being a significant importer of ethanol in the 2006 through 2008 period, the United States became a significant exporter of ethanol in 2010 and the early part of 2011. As discussed below, the changing direction of ethanol trade flows in recent years has reflected both policy and market factors. Looking forward, Federal and State policies could drive a future in which the United States imports significant volumes of sugarcane ethanol from Brazil at the same time it continues to export corn-based ethanol to Brazil and other countries.

Significant ethanol imports in the 2006 to 2008 period reflected a decision taken by refiners, spurred by provisions of the Energy Policy Act of 2005, to eliminate the use of methyl tertiary butyl ether (MTBE) as a component of reformulated gasoline in the spring of 2006. The rapidly rising price of oil from the 2006 to mid-2008 period also provided an increasingly strong economic incentive to blend ethanol into conventional gasoline sold in areas not subject to reformulated gasoline requirements. The Volumetric Ethanol Excise Tax Credit (VEETC), which currently provides blenders with a tax credit of $0.45 per gallon of ethanol blended into gasoline, and provided a somewhat larger tax credit over the same period, was a significant driver of economically-motivated ethanol blending.

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