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US ethanol industry generated $43 billion in 2019, despite policy challenges

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A new study has found that policy challenges dampened the US ethanol industry’s economic contributions in 2019, with the biggest impacts from ongoing trade disputes and the US Environmental Protection Agency’s (EPA) granting of small refinery exemptions under the Renewable Fuel Standard.

However, in spite of these challenges, the ethanol industry supported almost 350,000 jobs and generated almost $43 billion (€39.6 billion) in gross domestic product last year, according to the analysis carried out by ABF Economics on behalf of the Renewable Fuels Association (RFA).

“The US 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 US-China trade war, and declining gasoline demand. Nevertheless, the ethanol industry continues to make a substantial positive contribution to the American economy.”

The production and subsequent use of 15.8 billion gallons of ethanol in 2019 supported more than 68,600 direct jobs and around 280,000 indirect and induced jobs across all sectors, adding more than $23 billion (€21.1 billion) in income for American households.

In addition, ethanol generated an estimated $4.1 billion (€3.8 billion) in tax revenue to the federal treasury and $3.8 billion (€3.5 billion) in revenue to state and local governments across the US. The cleaner burning fuel displaced a volume of gasoline refined from more than 500 million barrels of imported crude oil, keeping an estimated $32 billion (€29.5 billion) in the US economy.

“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.”