One of the most significant challenges and opportunities for the ethanol industry lies in expanding demand by increasing use of higher blend levels. Most of the motor gasoline used in the U.S. contains 10 percent ethanol (E10). In 2011 the U.S. EPA approved E15 for use in model year 2001 and newer cars, light-duty trucks, medium-duty passenger vehicles (SUVs), and all flex-fuel vehicles (FFVs). In May 2019 the EPA issued a final rule that allows the year-round sale of E15. Reflecting this the number of retail stations selling E15 increased 18 percent in 2020 to nearly 2,200 nationwide.
ABF Economics was asked by Growth Energy to examine the economic implications of expanding E15 use on a nationwide basis. The objective of this study is to estimate the impact for the U.S. economy and consumers of expanding E15 use to the nation’s entire motor gasoline supply.
Increasing the blend level of ethanol from E10 to E15 nationwide will increase ethanol use by nearly 6.2 billion gallons over baseline 2016-2020 average levels and will generate substantial economic benefits for the U.S. economy. Implementing nationwide E15 use will require an increase in production that will be reflected in higher demand for feedstocks (mostly corn) and other inputs and will necessitate an expansion of industry capacity.