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Ethanol is made from feedstock crops such as corn, barley and sugarcane that contain significant amounts of sugar or materials that can be converted into sugar, such as starch. About 90 percent of ethanol in the U.S. is made from corn.143 Ethanol is blended with gasoline to fuel vehicles. E10 is 10 percent ethanol and 90 percent gasoline and can run in all gasoline engine vehicles sold in the U.S.; E85 is 85 percent ethanol and 15 percent gasoline and can be used only by special “flex-fuel” vehicles. Ethanol also is used as an additive, replacing natural gas-derived MTBE, a fuel oxygenate.

Cellulosic ethanol, by contrast, can be produced from a variety of plant matter, including wheat straw, corn stalks, energy cane, sawdust, rice hulls, paper pulp, wood chips, miscanthus grass and switchgrass. Cellulosic biomass crops require less energy, fertilizer, pesticides and herbicides to grow.144 Scientists are working to make the cellulosic process more economical for commercial production.

Federal subsidies and mandates have resulted in the expansion of ethanol production. As a result, an increasing percentage of the U.S. corn crop goes to ethanol, contributing to increased feed costs for poultry and livestock feeders.


Per Million Btu Data comparable to other fuel sources not available.
Per Gallon $2.51 (E85, January 2008)145
Per Gallon of Gasoline Equivalent $3.55 (E85, January 2008)146
Direct Subsidy Share of Total Consumer Spending Federal: 26.5 percent; State and Local: none.147
Notes The use of ethanol entails costs for transportation by truck, rail or water.

Economic Impact and Viability

Wages and Jobs Texas has two operational ethanol plants at this writing, and another two are under construction. The largest of the operational facilities employs 40 people and expects to have an annual local economic impact of $100 million. There are also jobs associated with the construction of new plants and the research and development of cellulosic ethanol.
Regulatory Climate Ethanol plants must obtain air and wastewater permits from TCEQ, a process that requires an average of about one year.148
Texas Competitive Advantage Technological advances in cellulosic ethanol could confer an economic advantage to Texas, as the state’s climate is amenable to growing many potential sources of cellulosic ethanol, such as sorghum, energy cane and switchgrass.
Notes Since Texas has an ample supply of plant matter that could be used to produce cellulosic ethanol, emerging technologies could result in significant economic impact for Texas if they prove viable.

Availability and Current Infrastructure

Estimated Resources in Texas Texas is a “grain deficit” state, in that it is a net importer of grain. Therefore, ethanol production in sufficient quantities could prove impractical and could negatively affect animal agriculture.149
Current Fuel Production Currently there are 140 million gallons per year of installed capacity in Texas; 6.5 billion gallons were produced in the U.S. in 2007.150
Consumption in Texas In 2005, Texans used 29 million gallons, or 2.4 trillion Btu, of ethanol as a transportation fuel.151
Number of Fueling Stations in Texas Texas has 26 E85 public fueling stations.152
Vehicle Availability 415,207 flex-fuel vehicles in Texas can run on E85.153
Notes The two operating ethanol plants and the two under construction are expected to have a combined refining capacity of 355 million gallons per year.154

Environment, Health and Safety

Greenhouse Gas Emissions Although ethanol releases carbon dioxide when combusted, these emissions are considered part of the earth’s natural carbon cycle and represent no net increase in CO2.
Air Pollution (Non-Greenhouse Gas) Ethanol combustion emits nitrogen oxides, although the use of ethanol reduces NOX emissions when used with gasoline. Volatile organic compounds (VOCs) also may be emitted from ethanol plants.
Solid Waste No significant issues.
Land Use Land is needed to grow ethanol crops and for refinery sites.
Water Withdrawal Beyond the water consumed by ethanol production (see below), no additional water withdrawals are required.
Water Consumption Depending upon climate conditions, corn-based ethanol requires between 2,500 and 29,000 gallons of water per million Btu of energy produced, primarily for crop irrigation. On average, 784.6 gallons of water are needed to irrigate enough corn to produce one gallon of ethanol.155 In 2002, water use at ethanol plants averaged 4.7 gallons per gallon of ethanol produced.156
Water Quality Depending on production practices, uncontrolled crop runoff may contain pollution from pesticides and fertilizers. Appropriate conservation practices can significantly reduce these effects.
Notes According to two 2008 studies in the journal Science, some biofuels may contribute more to greenhouse gas emissions than conventional fuels if the full consequences of the conversion of existing rainforests and other lands to cropland is taken into account. These studies suggest that a shift to biofuels derived from agricultural waste, sugar cane or other feedstocks may be necessary to prevent the increase in carbon that occurs during the conversion of natural ecosystems to cropland.157

Fuel Characteristics

Energy Content E85 has an energy content of 81,800 Btu per gallon.158
Renewability Ethanol is a renewable resource.

Other Issues

Dependence on Foreign Suppliers Use of ethanol can reduce gasoline use and thus, may reduce dependence on foreign oil. In 2007, 6 percent of U.S. ethanol demand was met by foreign imports, mostly from Brazil.
Price and Supply Risks The price of ethanol is highly dependent on the price of corn, which has been volatile in recent years. The increased demand for corn for ethanol has affected the livestock industry, by increasing feed prices and reducing livestock feed supplies. Demand for ethanol and biodiesel crops has contributed to rising prices for food commodities.
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