Fuel ethanol is generally produced by fermenting sugar, corn or other agricultural products into alcohol. The U.S. currently produces over 4 billion gallons of ethanol every year, in plants ranging from smaller farmer cooperative owned facilities to private plants that can produce 100 million gallons per year or more.
Ethanol was originally used as a gasoline extender and an octane enhancer. Ten percent volume ethanol blends, in addition to displacing gasoline often derived from imported crude oil, increase octane by two to three points, providing a valuable additive to mid-to-low-octane gasolines.
In the 1980s, as the U.S. Environmental Protection Agency and Congress began to fully appreciate the value of oxygen content in gasoline, interest in ethanol production continued to grow. The addition of ethanol to gasoline has been found to reduce many dangerous air pollutants, including carbon monoxide, ozone and air toxins. Now ethanol plays a valuable role in the nation's clean air programs. It is the primary component in the wintertime carbon monoxide program and is a key element in the Federal Reformulated Gasoline program (RFG), which is designed to reduce ozone (smog) pollution in several major cities across the U.S. (see Clean Fuel Program section for more information).
Ethanol can also be used as a "neat" form - blends of 85 - 100 percent - in special vehicles. Virtually every major automaker now produces cars that can run on E85 (a blend of 85% ethanol and 15% gasoline), regular gasoline or any combination of the two.
With crude oil prices at historical levels, and imports representing the majority of that crude oil, homegrown energy keeps U.S. dollars at home.
Ethanol provides significant benefits to the local, state and national economies. Recent studies show that ethanol production added $14 billion to the US gross domestic product in 2004. The full impact of annual ethanol plant operations and spending for new construction of plants will add more than $1.3 billion in tax revenue to the federal government, and $1.2 billion to state and local governments.
The U.S. ethanol industry is an important value added outlet for grain, providing both feed and fuel. Ethanol production in the U.S. utilizes more than 12% of the U.S. corn crop and increases farm income by billions of dollars.
One of the great possibilities for ethanol is its ability to be produced from agricultural and other waste products. While no commercial waste-to-ethanol plants are currently in operation, the opportunity exists to produce fuel from a wide variety of sources.
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