Ethanol production in the United States: The roles of policy, price, and demand

Emily Newes, Christopher Clark, Laura Vimmerstedt, Steve Peterson, Dallas Burkholder, David Korotney, Daniel Inman

Research output: Contribution to journalArticlepeer-review

5 Scopus Citations


Assessments of the impact of the U.S. renewable fuel standard (RFS) should inform consideration of future biofuels policy. Conventional wisdom suggests the RFS played a major role in stimulating the ten-fold expansion in ethanol production and consumption in the United States from 2002 to 2019, but evidence increasingly suggests the RFS may have had a smaller effect than previously assumed. Price competitiveness, federal and state policies such as reformulated gasoline requirements, and octane content in ethanol also affect ethanol market attractiveness. This study explores the roles of policy and economic factors by comparing historical data with results from scenarios simulated in a system dynamics model. Results suggest price competitiveness may explain much of the growth in the ethanol industry from 2002 to 2019. The Volumetric Ethanol Excise Tax Credit and phaseout of the oxygenate methyl tert-butyl ether contributed to earlier growth relative to expected timing of growth based on fuel price alone. The RFS (modeled through observed Renewable Identification Numbers) contributed to increased ethanol production in later years and may have increased production in the earlier years if risk of investment was decreased by the RFS Program.

Original languageAmerican English
Article number112713
Number of pages10
JournalEnergy Policy
StatePublished - 2022

Bibliographical note

Publisher Copyright:
© 2021 The Authors

NREL Publication Number

  • NREL/JA-6A20-78748


  • Biomass scenario model
  • Hindcasting
  • Policy analysis
  • Renewable fuel standard (RFS)
  • System dynamics
  • Volumetric ethanol excise tax credit (VEETC)


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