The United States is the largest producer and consumer of ethanol in the world. Corn ethanol has been produced in the U.S. for more than 30 years and has blossomed into a thriving industry. U.S. farms and refineries generate nearly half of all ethanol produced around the globe, or 45 million liters (12 billion gallons) in 2010. Ethanol policy in the U.S. is based mainly on three instruments:
- Renewable Fuels Standard – The U.S. Environmental Protection Agency (EPA) oversees the world’s most ambitious program to promote ethanol. The Renewable Fuels Standard (RFS2), created by the 2007 Energy Independence and Security Act (EISA), requires adding continually increasing volumes of renewable sources into the country’s fuel supply – growing from nearly 49 billion liters (13 billion gallons) in 2011 up to 136 billion liters (36 billion gallons) by 2022.
As the agency implemented RFS2, EPA determined that sugarcane ethanol cuts carbon dioxide emissions by more than 60 percent and designated it an Advanced Renewable Fuel. This designation puts sugarcane ethanol in an important category of superior biofuels that will make up 79.5 billion liters (21 billion gallons) of the fuel supply in the United States by 2022 – an amount equal to about 15 percent of today’s gasoline market. Sugarcane ethanol is the only fuel currently produced at commercial scale available to fulfill the advanced non-cellulosic volume of the RFS2.
On January 1, 2012 the U.S. eliminated the 54-cents- per-gallon import tariff it used to impose on ethanol imports. The 45-cents-per-gallon tax credit to blenders has also been removed. The two top world producers and exporters of ethanol, the U.S. and Brazil, now provide free access to their markets.
Other U.S. Policies
On a state level, California enacted the first low-carbon fuel standard (LCFS) in the world in 2007 with the objective of lowering by 10 percent the carbon intensity of its transportation fuels when compared to gasoline by the year 2020. The California Air Resources Board (CARB) oversees this program and is responsible for conducting the life-cycle analysis for all fuels used for transportation in California. Under CARB’s most recent analysis, Brazilian sugarcane ethanol is considered the low-carbon fuel with the best performance today and the only fuel available at commercial scale to contribute to the program.