Campus Units

Economics

Document Type

Article

Publication Version

Published Version

Publication Date

2009

Journal or Book Title

Regional Economic Development

Volume

5

Issue

1

First Page or Article ID Number

12

Last Page

33

Abstract

This article reviews changes in markets, technologies, and policies that affect corn ethanol profit - ability and industry expansion. Historically, the corn ethanol industry was stimulated by high petrofuel prices, successful corn and processing technology improvements, and government incentives, such as a blenders’ tax credit and mandated markets defined by the leaded fuel ban and reformulated fuel. Presently, the corn ethanol industry has expanded slightly beyond the point of a normal capital return, which is defined by limits on corn resource availability and ethanol marketing infrastructure. A renewable fuel standard, included in a recent energy law, may eventually define minimum consumption levels for ethanol and, implicitly, production levels for corn ethanol. Poten - tially impending marketing changes, such as voluntary E20 (20 percent ethanol) sales or expanded sales of E85-equipped automobiles, may expand ethanol markets. Potential technology advances include growth of corn yields, corn-processing improvements for lower costs or higher revenue, and development of a corn-stover (leaves and stalks)–based biomass industry. Government policies to induce biomass-fuel capacity investment are economically justified and probably necessary if biofuel industry development remains a public priority. Still, more efficient policy approaches could be developed.

JEL Classification

Q11, Q42, Q48

Comments

This article is from Regional Economic Development 5 (2009): 12. Posted with permission.

Rights

© 2009, The Federal Reserve Bank of St. Louis. The views expressed in this article are those of the author(s) and do not necessarily reflect the views of the Federal Reserve System, the Board of Governors, or the regional Federal Reserve Banks. Articles may be reprinted, reproduced, published, distributed, displayed, and transmitted in their entirety if copyright notice, author name(s), and full citation are included. Abstracts, synopses, and other derivative works may be made only with prior written permission of the Federal Reserve Bank of St. Louis.

Copyright Owner

The Federal Reserve Bank of St. Louis

Language

en

File Format

application/pdf