By - Jim Vess

Ethanol production capacity rises in 2017 as Trump administration seeks a new policy

Energize Weekly, August 8, 2018

Ethanol fuel production capacity rose an estimated 5 percent in 2017 to 16 billion barrels a year as the Trump administration continues to try to strike a comprise between the refiners and agricultural interests on ethanol-treated gasoline.

Between the beginning of 2018 and the start of 2017, recorded ethanol production capacity increased by more than 700 million gallons a year, according to the federal Energy Information Administration’s (EIA) “U.S. Fuel Ethanol Plant Production Capacity” report.

The Trump administration has been trying to craft a compromise between gasoline refiners—who do not like the federal Environmental Protection Agency’s (EPA) Renewable Fuel Standard (RFS), which mandates that ethanol be blended into motor fuels—and ethanol makers and corn farmers.

In May, it looked like a compromise had been struck with an agreement that gasoline with 15 percent ethanol could be sold in the summer months. The EPA currently prohibits its use in these warm months to curb air pollution.

In return, the credits refiners have to pay if they can’t blend ethanol into their fuel would be reduced and ethanol exports would count as part of the RFS quotas. Ethanol industry and farm representatives opposed the export provision, and the plan was shelved in June.

At the end of July, President Donald Trump said that the administration is once again close to a deal.

A portion of the additional recorded capacity comes from an EIA effort to update the records on existing facilities and revisions in capacity to meet EIA definitions. “The remaining increase in production capacity was a result of plant improvements and process modifications such as equipment upgrades, plant expansions, improved maintenance routines, and installation of new equipment at some facilities,” the EIA said.

The agency found that in some cases, plants were “operating at levels higher than their listed production capacities,” resulting in utilization rates higher than 100 percent.

The bulk of the production capacity is in the Midwest—14.8 billion barrels a day at the start of 2018. That was an increase of 5 percent, or 650 million gallons a year, over 2017. The top three states—Iowa, Nebraska and Illinois—contain more than half the nation’s total ethanol production capacity.

U.S. ethanol production was 15.8 billion gallons in 2017, and the EIA projects it to be 15.9 billion barrels in 2018, which would reflect a 98 percent utilization rate for the nameplate capacity at the start of the year.

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