Policy obstacles—especially ongoing trade disputes and the U.S. Environmental Protection Agency’s granting of RFS compliance waivers to dozens of small refineries —dampened the U.S. ethanol industry’s economic contributions in 2019, according to a new study released today at the Renewable Fuels Association’s 25th annual National Ethanol Conference.
Still, despite these challenges, the ethanol industry supported nearly 350,000 jobs and generated almost $43 billion in gross domestic product in 2019, according to the analysis conducted by ABF Economics.
“The U.S. ethanol industry was buffeted by several factors that forced producers to cut operating rates and, in some cases, shut plants—resulting in only the second decline in annual industry output in two decades,” the report noted. “This was primarily the result of regulatory concerns associated with the EPA’s continued support for small refinery exemptions, effects of the U.S.-China trade war, and declining gasoline demand. Nevertheless, the ethanol industry continues to make a substantial positive contribution to the American economy.”
According to the analysis, the production and use of 15.8 billion gallons of ethanol in 2019:
- Supported more than 68,600 direct jobs and just over 280,000 indirect and induced jobs across all sectors of the economy;
- Added more than $23 billion in income for American households;
- Generated an estimated $4.1 billion in tax revenue to the federal treasury and $3.8 billion in revenue to state and local governments;
- Supported more than 14,700 jobs and $5.8 billion in GDP through exports alone; and
- Displaced an amount of gasoline refined from more than 500 million barrels of imported crude oil, keeping $32 billion in the U.S. economy.
The analysis also estimated the impact of the ethanol industry on the state economy in top ethanol-producing states. Iowa, Nebraska, and Illinois were the top three states in terms of economic impacts, but states like Ohio, Kansas, Michigan, Texas, Missouri, California, and New York also benefited from ethanol plants’ contributions.
“Given the policy uncertainty and regulatory challenges faced by the industry in 2019, we were not surprised to see slight decreases in the industry’s economic impacts compared to 2018,” said RFA President and CEO Geoff Cooper. “At the same time, we have seen many positive developments in the last few months that give reason for optimism in 2020 and beyond, whether it’s the new trade agreement with China or the renewed commitment by the Trump administration to uphold the Renewable Fuel Standard. We remain bullish on the industry’s future and know our best days lie ahead.”