Contribution of the Ethanol Industry to the U.S. Economy in 2020

The U.S. ethanol industry was slammed by the COVID-19 pandemic in 2020. The impact of the pandemic overshadowed most other issues facing the industry during the year. The widespread shelter-at-home orders in the Spring essentially shut the U.S. economy down, people stopped driving and both gasoline and ethanol demand fell sharply. As illustrated in Figure 1, the low point in demand was reached in April 2020 as motor gasoline and domestic ethanol demand fell by 38 and 42 percent from year earlier levels, respectively.

The two other major factors impacting the ethanol industry in 2020 were weak export demand and regulatory issues. Both were overshadowed by the pandemic but nonetheless acted as a drag on the ethanol industry.

Despite these challenges, the ethanol industry continues to make a substantial positive contribution to the American economy. This study estimates the contribution of the ethanol industry to the American economy in 2020 in terms of employment, income, and Gross Domestic Product (GDP) directly and indirectly supported by the industry.

Despite the disruptive effects of the COVID pandemic, economic and regulatory challenges in 2020, the ethanol industry continued to make a significant contribution to the economy in terms of job creation, generation of tax revenue, and displacement of crude oil and petroleum products. The importance of the ethanol industry to agriculture and rural economies is particularly notable. A return to growth and expansion of the ethanol industry through the application of new technologies and feedstocks will enhance the industry’s position as the original creator of green jobs and will enable America to make further strides toward reducing greenhouse gas emissions and positively dealing with climate change.