Fueling the Future: How Ethanol Powers a Cleaner, Stronger America (Part 1)
A high-level guide to everything ethanol: what it is, how it works, and why it matters
This month’s topic got away from us — in the best possible way. We started writing about ethanol and quickly realized we couldn’t do it justice in a single issue. There’s too much history, too many policy dynamics, and too many opportunities unfolding right now. So, we’re releasing this month’s newsletter in two parts. This is Part One, the foundation. What ethanol is, where it came from, and how it’s used in the fuel market. Part Two, coming tomorrow, will dive into the key issues driving ethanol’s future: RFS2, LCFS, 45Z, and more. Stay tuned, and thanks for reading.
Too long, didn’t read:
Ethanol is already delivering — not just cleaner fuels, but economic value, rural growth, and consumer savings.
E15 expansion is the fastest, most practical way to unlock more market space for ethanol without rewriting the law.
Ethanol improves gasoline quality, reduces harmful emissions, and saves drivers money, all while supporting American farmers.
Ethanol: An Often Overlooked Piece of the Energy Picture
The conversation around energy, environment, and economic security is shifting faster than ever. Rising costs, supply chain disruptions, and uncertainty in global markets are reshaping national priorities. Rural America desperately needs new markets, and American consumers need relief on essential purchases.
Across all of these challenges, ethanol stands not as a future solution, but as a proven one, ready today. Ethanol is America’s first and most successful carbon market, a real marketplace where low-carbon innovation is rewarded, rural economies are revitalized, and consumers save real money.
This isn’t theory. It’s already happening. While policymakers debate what the future should look like, ethanol plants across the heartland are delivering cleaner energy, cutting emissions, and strengthening the foundation of tomorrow’s economy. With new opportunities like E15 expansion, 45Z incentives, and a growing global market for low-carbon fuels, ethanol stands poised to become an even more important part of the solution to many of the problems we face as a nation.
A Brief History of Ethanol: From Vision to Vital Industry
The roots of ethanol fuel stretch back over a century. Henry Ford, a fierce believer in renewable energy, famously envisioned a future where fuel could be made from crops like corn, weeds, and even sawdust. While the popular story that the Model T was designed to run on ethanol has been disputed, Ford’s optimism about biofuels was real and remarkably prescient.
In the early 20th century, Midwestern states championed gasohol, a blend of ethanol and gasoline, as a way to empower rural economies and diversify America’s energy sources. But Prohibition struck a devastating blow. Although industrial alcohol was technically exempt from the Volstead Act, enforcement was often blunt and destructive. Stills producing fuel alcohol were smashed right alongside illicit whiskey operations, stifling the young ethanol industry before it could mature.
Ethanol resurfaced during World War II, when wartime shortages drove a surge in production. Yet once the war ended and oil became cheap again, ethanol faded back into the shadows. It wasn’t until the energy crisis of the 1970s, and the founding of the Environmental Protection Agency in the wake of environmental disasters like the Cuyahoga River fire, that the United States began seriously reconsidering its energy dependencies and the environmental impacts of growing industrialization. As gasoline prices skyrocketed and environmental awareness grew, ethanol reemerged as a clean, renewable option.
The farm crisis of the 1980s gave ethanol new urgency. Small “barnyard” plants across the Midwest helped farmers add value to their grain. Companies like POET (then Broin Companies) and ADM radically scaled production and built modern bioprocessing facilities. In 1981, the Renewable Fuels Association was founded to advocate for the industry. The stage was set for the ethanol boom of the early 2000s, driven by high oil prices, mounting concerns about “peak oil,” and the passage of the Renewable Fuel Standard (RFS1 in 2005 and RFS2 in 2007). Most of the ethanol industry as we know it today was built during the boom that followed. In just a few years, dozens of new plants came online across the Corn Belt. The buildout was fast, massive, and hugely optimistic.
But the optimism didn’t last. The 2008 financial crisis hit hard. Fuel demand cratered, commodity prices surged, and ethanol margins collapsed. Plants closed. Investors fled. And just as the industry began recovering, the 2012 drought pushed corn prices to record highs — further squeezing producers. Meanwhile, post-recession gasoline demand never recovered to the levels Congress had assumed when RFS2 was written.
That’s when the market started breaking down. Unable to meet RFS2 targets under the constraints of 10% ethanol blending (E10), refiners began scrambling for compliance. RIN prices skyrocketed, triggering what came to be known as “RINsanity.” Merchant refiners without blending operations began lobbying for relief, and the EPA responded with a flood of Small Refinery Exemptions (SREs), effectively waiving RFS requirements for dozens of facilities. To make matters worse, the EPA also began setting Renewable Volume Obligations (RVOs) well below the statutory targets in the law, citing market constraints. Lawsuits followed, challenging both the exemptions and the rulemakings.
And that brings us to recent history. The lawsuits continue. Gasoline demand remains well below what Congress projected when it passed RFS2. And no one wants to open the law for fear of what might happen if the legislative process goes sideways. The truth is, there’s no politically viable way to reconcile Congress’s original vision with today’s fuel market, at least not at E10.
If only there were a way to grow the market without rewriting the law.
Oh wait — there is.
It’s E15.
E15: Unlocking Ethanol’s Full Potential
For more than a decade, ethanol production has bumped up against a hard reality known as the “Blend Wall” — the practical limit on how much ethanol can be blended into the U.S. gasoline supply under an E10 standard. As gasoline consumption declined after the Great Recession and vehicle fuel efficiency improved, the Blend Wall became a growing constraint. Yet America’s ethanol plants have capacity well beyond what E10 can absorb.
Enter E15, gasoline blended with 15% ethanol. E15 offers a ready solution to break through the Blend Wall, drive down emissions, create new markets for American farmers, and lower prices at the pump. Data shows that E15 can save drivers 5 to 10 cents per gallon compared to E10, without compromising engine performance or vehicle warranties for cars built after 2001.
For years, however, E15 was only available year-round in a handful of states, thanks to outdated fuel volatility rules known as Reid Vapor Pressure (RVP) regulations. Even though ethanol reduces volatility when blended properly, the rules prevented E15 from being sold in summer months unless a specific waiver was issued — which the EPA had been granting on an emergency basis year to year. This week saw the trend continue when the EPA announced a waiver that allows nationwide sales from May 1 through May 20, the maximum number of days allowed under the Clean Air Act.
With the immediate days covered, the industry will continue working with Congress and the Trump Administration to pass permanent legislation that offers Americans unfettered access to E15. Doing so will open a market pathway for ethanol producers that can absorb some idle capacity, offering an outlet for the gallons we’re capable of producing, but haven’t been able to sell under E10 limits. It will also boost investor confidence and send a clear market signal that ethanol demand has headroom to grow. For consumers, it will mean more consistent access to a cleaner, higher-octane, lower-cost fuel. With year-round availability secured, fuel retailers will have the incentive and certainty to invest in offering E15 at more locations, giving drivers more choice and more savings at the pump.
While E15 alone won’t solve every challenge facing the industry, it is a critical and immediate step forward. It will break the logjam, reduce regulatory uncertainty, and give ethanol room to grow within the existing fuel system — all without requiring new vehicle technologies or sweeping legislative reform.
Octane, Value and the Ethanol Advantage
Ethanol’s benefits extend beyond simply replacing petroleum. It improves petroleum itself.
Thanks to ethanol’s natural octane rating of about 110 — far higher than gasoline — refiners routinely produce suboctane base gasoline (around 82 octane) and use ethanol blending to reach the 87-88 octane levels consumers expect. This blending strategy saves refiners significant costs and helps consumers access cleaner-burning fuel at lower prices.
Without ethanol, refiners would be forced to add expensive aromatic hydrocarbons like benzene and toluene to boost octane. The use of these chemicals drives up the cost of fuel and contributes to harmful tailpipe emissions linked to cancer and respiratory diseases. With ethanol, America enjoys a cleaner, cheaper octane source that reduces greenhouse gas emissions and improves air quality. This blending advantage translates directly to savings at the pump. For instance, in early 2022, OPIS reported that ethanol was priced at $2.09 per gallon, a $0.13 decline from the monthly average. By contrast, ethanol-free gasoline (E0) components like 84-AKI blendstock and 87-AKI E0 gasoline rose by 26 to 29 cents per gallon. Based on these spreads, E10 could have been produced for 28 cents per gallon less than E0, while E15 offered a discount of 37 cents per gallon. That kind of cost advantage matters, especially for working families managing inflation and higher costs across the board.
Historical data reinforces ethanol’s value as an octane booster. From 2012 to 2020, ethanol consistently provided a significant octane premium, averaging $1.22 per gallon, while its energy penalty — due to lower energy content compared to gasoline — averaged just -$0.54 per gallon. This net benefit of about $0.68 per gallon highlights why refiners rely on ethanol: it delivers high-octane value at a lower cost. Even accounting for the energy difference, ethanol remains a cost-effective, cleaner-burning solution that strengthens fuel quality and affordability.
I’m sure you’ve heard that ethanol leads to reduced mileage and engine wear. However, concerns about reduced mileage are often overstated. Ethanol contains slightly less energy per gallon than gasoline, but real-world differences in fuel economy are small, typically less than 5%. And for many drivers, the cost savings more than offset the slight decrease in miles per gallon. On the question of engine wear, the facts are clear: every car built since 2001 can safely run on E15, and modern engines actually perform better with higher octane fuels. Ethanol isn’t just compatible with today’s engines — it’s an essential part of maximizing their efficiency and durability.
Ethanol is a strategic fuel component that improves gasoline’s quality, environmental profile, and affordability. It replaces toxic aromatics with a renewable, American-grown octane source. It gives refiners flexibility and lowers the overall cost of producing finished fuel. It gives consumers cleaner-burning, more affordable choices at the pump. And it helps the nation move closer to true energy independence by tapping into the productivity of American agriculture rather than relying on imported petroleum. Ethanol is the upgrade gasoline needed, and it’s delivering those benefits every day.
To be continued…
Stay tuned tomorrow for the rest of the ethanol story!
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