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Ethanol remains major factor in Nebraska economy

Ethanol remains major factor in Nebraska economy

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ethanol pump

Federal and state programs have installed blender pumps, giving motorists access to higher blends of ethanol at select retailers.

Before the COVID-19 panic, 25 ethanol plants in Nebraska were making about 2.1 billion gallons of ethanol each year, using about 700 million bushels of Nebraska corn.

In a few months, production slipped from 1,079 barrels per day in mid-February to a low of 537 barrels in May. Eleven Nebraska plants were idled at the lowest point, and seven remained offline as of mid-June.

Still, Nebraska ethanol fared better than the national average, according to Roger Berry, an administrator with the Nebraska Ethanol Board. He is optimistic about the future, he said, offering ways things can improve during a webinar June 6.

First, he hopes the federal government will go back to forcing more refineries to blend ethanol.

“I hope the EPA comes to its senses,” he said. “They should stop granting so many waivers.”

Second, he thinks people need to be better informed about the use of ethanol in their vehicles. He said many still believe that ethanol hurts engines and that it’s more expensive.

Third, Berry said that government-imposed low carbon fuel standards would help boost the ethanol industry. California uses such rules, and it reportedly reduces greenhouse gasses. High-efficiency auto engines – ones that need a higher octane fuel – could also increase the need for ethanol, since it includes higher octane.

Other opportunities include bio-campuses. Research into how other things can be made from ethanol – such as personal care products, household products and food additives.

“Anything made from petroleum can be made using ethanol,” Berry said.

Nationally, the Higher-Blend Infrastructure Incentive Program by the USDA is poised to boost ethanol production. According to the U.S. Department of Agriculture, the program gives up to $100 million in competitive grants or sales incentives for programs that expand the sale and use of ethanol and biodiesel fuels.

Tax dollars could go to transportation fueling and biodiesel distribution facilities, helping them convert fuel pumps, related equipment and infrastructure to handle higher ethanol and biodiesel blends.

In Nebraska, LB585 was signed into law in May of last year creating the Renewable Fuel Infrastructure Program.

The Nebraska Environmental Trust has been asked to fund the program to the tune of $1 million per year for the next three years. The funds would go to help install more blender pumps and underground storage.

With these efforts underway, Berry believes that Nebraska will continue to be a major ethanol producing state. Studies conducted in 2015 and 2017 showed that the ethanol industry in Nebraska is about a $5 billion value to the economy.

About 35.3% of the total corn grown in Nebraska in 2019 went to produce ethanol.

“Ethanol is important to the bottom line of Nebraska farmers,” Berry said.

But the industry has suffered from certain federal regulations and trade issues, he pointed out.

The federal government’s Renewable Fuel Standards mandates refineries to blend ethanol with their petroleum products. The individual requirements for producers are called Renewable Volume Obligations or ROVs.

According to the EPA, smaller refineries are able to get temporary exemptions if they can demonstrate that compliance with the RVOs would cause them to suffer “disproportionate economic hardship” in the year for which the exemption is requested. That is part of the Renewable Fuel Standards law.

“We’ve seen a lot more applications and a lot more approvals,” Berry said.

Since the government isn’t forcing refineries to use ethanol, the refineries aren’t using as much as they have in the past, he said. This has introduced uncertainty in the ethanol market and depressed prices in an industry that was over built.

Another factor impacting the domestic ethanol market has been the trade dispute with China. China stopped importing U.S. ethanol while renegotiating trade practices. Now Brazil, Canada and India are the top three importers of U.S. ethanol.


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