Report Shows Benefits to Raising Ethanol Blend Limit

E15 could provide billions of dollars of economic stimulus.

Published on: Mar 9, 2009

A new study released last week concludes that increasing the blend of ethanol in the U.S. gasoline supply from 10% to 15% could boost job creation and economic growth. The study was commissioned by Growth Energy and conducted by researchers from North Dakota State University. Nancy Hodur, NDSU researcher with the Department of Agribusiness and Applied Economics, says there would be substantial economic and employment impacts associated with the expansion of the ethanol industry if the blend rate were increased.

"We estimated that annual direct economic impacts would be $9.6 billion and the total direct and secondary impacts would be $24.4 billion and that level of economic activity would support 136,000 jobs," said Hodur. Those impacts were based on the multiplier effect of adding another 60 ethanol plants nationwide.

Growth Energy co-chairman General Wesley Clark called the figures dramatic and said this proves a relatively simple step can create desperately needed jobs in the midst of difficult economic times.

"These are jobs that cannot be outsourced," Clark said. "And will support rural communities and farmers, reduce greenhouse gas emissions, and ensure the market for cellulosic ethanol."

Dr. Larry Leistritz, professor of agricultural economics at North Dakota State University and lead researcher on this report, points out there have been many media reports about the struggling ethanol sector, but there has been little discussion about the cause – the regulatory cap of 10%. He says lifting the cap could provide serious benefits by putting the industry on a path for growth and generating billions of dollars in revenue for many struggling communities.

Former Congressman and Growth Energy board member Jim Nussle says the study supports the economic need to increase the ethanol blend level, which was arbitrarily set 30 years ago at 10%.

"The federal government can act right now to increase the amount of ethanol blends in the nation's fuel supply without having to dip into another stimulus package or create another bill," Nussle said.

The Environmental Protection Agency has the authority to increase the blend level through the rule-making process and while it could theoretically be done quickly the former congressman refused to speculate on how long it might take EPA to take such an action.