Regulation of Fuels and Fuel Additives: Renewable Fuel Standard ...

Leading the Midwest in ethanol production are Iowa, Illinois, Nebraska,
Minnesota, and South Dakota with a combined capacity of 3.9 billion gallons per year.
Together, these five states’ 69 ethanol plants account for 80 percent of the total domestic
product. Although the majority of ethanol production comes from the Midwest, there is a
sprinkling of plants situated outside the corn belt ranging from California to Tennessee
all the way down to Georgia.
The U.S. ethanol industry is currently comprised of a mixture of corporations and
farmer-owned cooperatives (co-ops). More than half (55) of today’s plants are owned by
corporations and, on average, these plants are larger in size than farmer-owned co-ops.
Accordingly, company-owned plants account for nearly 65 percent of the total U.S.
ethanol production capacity. Additionally, 45 percent of the total capacity comes from
22 plants owned by just 8 different companies.
2. Expected Growth in Ethanol Production
Over the past 25 years, domestic fuel ethanol production has steadily increased
due to technological advances, environmental regulation (e.g., oxygenate requirements in
ozone and carbon monoxide non-attainment areas), and the rising cost of crude oil. More
recently, ethanol production has soared due to state MTBE bans, steep increases in crude
oil prices, and producer tax incentives. As shown below in Figure VI.A.2-1, over the
past three years, domestic ethanol production has nearly doubled from 2.1 billion gallons
in 2002 to 4.0 billion gallons in 2005.
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