IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v14y2010i1p394-403.html
   My bibliography  Save this article

Market penetration of ethanol

Author

Listed:
  • Szulczyk, Kenneth R.
  • McCarl, Bruce A.
  • Cornforth, Gerald

Abstract

This research examines in detail the technology and economics of substituting ethanol for gasoline. This endeavor examines three issues. First, the benefits of ethanol/gasoline blends are examined, and then the technical problems of large-scale implementation of ethanol. Second, ethanol production possibilities are examined in detail from a variety of feedstocks and technologies. The feedstocks are the starch/sugar crops and crop residues, while the technologies are corn wet mill, dry grind, and lignocellulosic fermentation. Examining in detail the production possibilities allows the researchers to identity the extent of technological change, production costs, byproducts, and GHG emissions. Finally, a U.S. agricultural model, FASOMGHG, is updated which predicts the market penetration of ethanol given technological progress, variety of technologies and feedstocks, market interactions, energy prices, and GHG prices. FASOMGHG has several interesting results. First, gasoline prices have a small expansionary impact on the U.S. ethanol industry. Both agricultural producers' income and cost both increase with higher energy prices. If wholesale gasoline is $4 per gallon, the predicted ethanol market penetration attains 53% of U.S. gasoline consumption in 2030. Second, the corn wet mill remains an important industry for ethanol production, because this industry also produces corn oil, which could be converted to biodiesel. Third, GHG prices expand the ethanol industry. However, the GHG price expands the corn wet mill, but has an ambiguous impact on lignocellulosic ethanol. Feedstocks for lignocellulosic fermentation can also be burned with coal to generate electricity. Both industries are quite GHG efficient. Finally, U.S. government subsidies on biofuels have an expansionary impact on ethanol production, but may only increase market penetration by an additional 1% in 2030, which is approximately 6 billion gallons.

Suggested Citation

  • Szulczyk, Kenneth R. & McCarl, Bruce A. & Cornforth, Gerald, 2010. "Market penetration of ethanol," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(1), pages 394-403, January.
    • Handle: RePEc:eee:rensus:v:14:y:2010:i:1:p:394-403
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364-0321(09)00141-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Paul Gallagher & Donald Johnson, 1999. "Some New Ethanol Technology: Cost Competition and Adoption Effects in the Petroleum Market," The Energy Journal, International Association for Energy Economics, vol. 0(Number 2), pages 89-120.
    2. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some Long-Run Effects of Growing Markets and Renewable Fuel Standards on Additives Markets and the U.S. Ethanol Industry," Staff General Research Papers Archive 10648, Iowa State University, Department of Economics.
    3. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some long-run effects of growing markets and renewable fuel standards on additives markets and the US ethanol industry," Journal of Policy Modeling, Elsevier, vol. 25(6-7), pages 585-608, September.
    4. Gallagher, Paul W. & Brubaker, Heather & Shapouri, Hosein, 2005. "Plant size: Capital cost relationships in the dry mill ethanol industry," ISU General Staff Papers 200506010700001442, Iowa State University, Department of Economics.
    5. Rask, Kevin N., 1998. "Clean air and renewable fuels: the market for fuel ethanol in the US from 1984 to 1993," Energy Economics, Elsevier, vol. 20(3), pages 325-345, June.
    6. Heng‐Chi Lee & Bruce A. McCarl & Dhazn Gillig, 2005. "The Dynamic Competitiveness of U.S. Agricultural and Forest Carbon Sequestration," Canadian Journal of Agricultural Economics/Revue canadienne d'agroeconomie, Canadian Agricultural Economics Society/Societe canadienne d'agroeconomie, vol. 53(4), pages 343-357, December.
    7. Gallagher, Paul & Johnson, Donald, 1999. "Some New Ethanol Technology: Cost Competition and Adoption Effects in the Petroleum Market," ISU General Staff Papers 199901010800001274, Iowa State University, Department of Economics.
    8. Schneider, Uwe A. & McCarl, Bruce A., 2005. "Implications of a Carbon-Based Energy Tax for U.S. Agriculture," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, vol. 34(2), pages 1-15, October.
    9. Uwe Schneider & Bruce McCarl, 2003. "Economic Potential of Biomass Based Fuels for Greenhouse Gas Emission Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 291-312, April.
    10. Konyar, Kazim & Howitt, Richard E., 2000. "The Cost Of The Kyoto Protocol To U.S. Crop Production: Measuring Crop Price, Regional Acreage, Welfare, And Input Substitution Effects," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 25(2), pages 1-21, December.
    11. Brian C. Murray & Bruce A. McCarl & Heng-Chi Lee, 2004. "Estimating Leakage from Forest Carbon Sequestration Programs," Land Economics, University of Wisconsin Press, vol. 80(1), pages 109-124.
    12. RICHARD M. Adams & DARIUS M. Adams & JOHN M. Callaway & CHING‐CHENG Chang & BRUCE A. Mccarl, 1993. "Sequestering Carbon On Agricultural Land: Social Cost And Impacts On Timber Markets," Contemporary Economic Policy, Western Economic Association International, vol. 11(1), pages 76-87, January.
    13. Gallagher, Paul W. & Johnson, Donald, 1999. "Some New Ethanol Technology: Cost Competition and Adoption Effects in the Petroleum Market," Staff General Research Papers Archive 5265, Iowa State University, Department of Economics.
    14. Searchinger, Timothy & Heimlich, Ralph & Houghton, R. A. & Dong, Fengxia & Elobeid, Amani & Fabiosa, Jacinto F. & Tokgoz, Simla & Hayes, Dermot J. & Yu, Hun-Hsiang, 2008. "Use of U.S. Croplands for Biofuels Increases Greenhouse Gases Through Emissions from Land-Use Change," Staff General Research Papers Archive 12881, Iowa State University, Department of Economics.
    15. Gallagher, Paul W. & Shapouri, Hosein & Price, Jeffrey & Schamel, Guenter & Brubaker, Heather, 2003. "Some long-run effects of growing markets and renewable fuel standards on additives markets and the US ethanol industry," ISU General Staff Papers 200309010700001445, Iowa State University, Department of Economics.
    16. Shapouri, Hosein & Duffield, James A. & Graboski, Michael S., 1995. "Estimating the Net Energy Balance of Corn Ethanol," Agricultural Economic Reports 34005, United States Department of Agriculture, Economic Research Service.
    17. Srivastava, Anjana & Prasad, Ram, 2000. "Triglycerides-based diesel fuels," Renewable and Sustainable Energy Reviews, Elsevier, vol. 4(2), pages 111-133, June.
    18. Gallagher, Paul W. & Brubaker, Heather & Shapouri, Hosein, 2005. "Plant Size: Capital Cost Relationships in the Dry Mill Ethanol Industry," Staff General Research Papers Archive 12306, Iowa State University, Department of Economics.
    19. Ben C. French, 1960. "Some Considerations in Estimating Assembly Cost Functions for Agricultural Processing Operations," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 42(4), pages 767-778.
    20. Bruce McCarl & Darius Adams & Ralph Alig & John Chmelik, 2000. "Competitiveness of biomass‐fueled electrical power plants," Annals of Operations Research, Springer, vol. 94(1), pages 37-55, January.
    21. J. Callaway & Bruce McCarl, 1996. "The economic consequences of substituting carbon payments for crop subsidies in U.S. agriculture," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 7(1), pages 15-43, January.
    22. Antle, John M. & Capalbo, Susan Marie & Mooney, Sian & Elliott, Edward T. & Paustian, Keith H., 2001. "Economic Analysis Of Agricultural Soil Carbon Sequestration: An Integrated Assessment Approach," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 26(2), pages 1-24, December.
    23. Antle, John M. & Capalbo, Susan M. & Johnson, James B. & Miljkovic, Dragan, 1999. "The Kyoto Protocol: Economic Effects of Energy Prices on Northern Plains Dryland Grain Production," Agricultural and Resource Economics Review, Cambridge University Press, vol. 28(1), pages 96-105, April.
    24. Duffield, James A. & Shapouri, Hosein & Graboski, Michael S. & McCormick, Robert & Wilson, Richard, 1998. "U.S. Biodiesel Development: New Markets for Conventional and Genetically Modified Agricultural Products," Agricultural Economic Reports 34029, United States Department of Agriculture, Economic Research Service.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Perdiguero, Jordi & Jiménez, Juan Luis, 2011. "Sell or not sell biodiesel: Local competition and government measures," Renewable and Sustainable Energy Reviews, Elsevier, vol. 15(3), pages 1525-1532, April.
    2. Lei Meng & Chunnian Zeng & Yuqiang Li & Karthik Nithyanandan & Timothy H. Lee & Chia-fon Lee, 2016. "An Experimental Study on the Potential Usage of Acetone as an Oxygenate Additive in PFI SI Engines," Energies, MDPI, vol. 9(4), pages 1-20, March.
    3. Mofijur, M. & Masjuki, H.H. & Kalam, M.A. & Ashrafur Rahman, S.M. & Mahmudul, H.M., 2015. "Energy scenario and biofuel policies and targets in ASEAN countries," Renewable and Sustainable Energy Reviews, Elsevier, vol. 46(C), pages 51-61.
    4. Chen, Hongzhang & Fu, Xiaoguo, 2016. "Industrial technologies for bioethanol production from lignocellulosic biomass," Renewable and Sustainable Energy Reviews, Elsevier, vol. 57(C), pages 468-478.
    5. Shafiei, Ehsan & Davidsdottir, Brynhildur & Leaver, Jonathan & Stefansson, Hlynur & Asgeirsson, Eyjolfur Ingi & Keith, David R., 2016. "Analysis of supply-push strategies governing the transition to biofuel vehicles in a market-oriented renewable energy system," Energy, Elsevier, vol. 94(C), pages 409-421.
    6. Laurini, Márcio Poletti, 2017. "The spatio-temporal dynamics of ethanol/gasoline price ratio in Brazil," Renewable and Sustainable Energy Reviews, Elsevier, vol. 70(C), pages 1-12.
    7. Paolo Iodice & Massimo Cardone, 2021. "Ethanol/Gasoline Blends as Alternative Fuel in Last Generation Spark-Ignition Engines: A Review on CO and HC Engine Out Emissions," Energies, MDPI, vol. 14(13), pages 1-18, July.
    8. Masum, B.M. & Masjuki, H.H. & Kalam, M.A. & Rizwanul Fattah, I.M. & Palash, S.M. & Abedin, M.J., 2013. "Effect of ethanol–gasoline blend on NOx emission in SI engine," Renewable and Sustainable Energy Reviews, Elsevier, vol. 24(C), pages 209-222.
    9. Szulczyk, Kenneth R. & Ziaei, Sayyed Mahdi & Zhang, Changyong, 2021. "Environmental ramifications and economic viability of bioethanol production in Malaysia," Renewable Energy, Elsevier, vol. 172(C), pages 780-788.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Szulczyk, Kenneth R. & McCarl, Bruce A., 2010. "Market penetration of biodiesel," Renewable and Sustainable Energy Reviews, Elsevier, vol. 14(8), pages 2426-2433, October.
    2. Paul W. Gallagher, 2009. "Roles for evolving markets, policies, and technology improvements in U.S. corn ethanol industry development," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Apr, pages 12-33.
    3. Gallagher, Paul & Shapouri, Hosein & Brubaker, Heather, 2007. "Scale, Organization, and Profitability of Ethanol Processing," ISU General Staff Papers 200703010800001439, Iowa State University, Department of Economics.
    4. Gallagher, Paul W., 2009. "Roles for Evolving Markets, Policies, and Technology Improvements in U.S. Corn Ethanol Industry Development," ISU General Staff Papers 200901010800001495, Iowa State University, Department of Economics.
    5. Gallagher, Paul W. & Shapouri, Hosein, 2008. "Biomass Crop and Ethanol Supply from Agricultural Lands in the United States with Methodology, Estimation Results, and State-by-State Simulations," Agricultural Economic Reports 308485, United States Department of Agriculture, Economic Research Service.
    6. Jacinto F. Fabiosa & John C. Beghin & Fengxia Dong & JAmani Elobeid & Simla Tokgoz & Tun-Hsiang Yu, 2010. "Land Allocation Effects of the Global Ethanol Surge: Predictions from the International FAPRI Model," Land Economics, University of Wisconsin Press, vol. 86(4), pages 687-706.
    7. Luchansky, Matthew S. & Monks, James, 2009. "Supply and demand elasticities in the U.S. ethanol fuel market," Energy Economics, Elsevier, vol. 31(3), pages 403-410, May.
    8. Povellato, Andrea & Bosello, Francesco & Giupponi, Carlo, 2007. "A Review of Recent Studies on Cost Effectiveness of GHG Mitigation Measures in the European Agro-Forestry Sector," Natural Resources Management Working Papers 10268, Fondazione Eni Enrico Mattei (FEEM).
    9. Dumortier, Jerome & Elobeid, Amani, 2021. "Effects of a carbon tax in the United States on agricultural markets and carbon emissions from land-use change," Land Use Policy, Elsevier, vol. 103(C).
    10. Heng-Chi Lee & Bruce McCarl & Uwe Schneider & Chi-Chung Chen, 2007. "Leakage and Comparative Advantage Implications of Agricultural Participation in Greenhouse Gas Emission Mitigation," Mitigation and Adaptation Strategies for Global Change, Springer, vol. 12(4), pages 471-494, May.
    11. Frederic L. Pryor, 2009. "The Economics Of Gasohol," Contemporary Economic Policy, Western Economic Association International, vol. 27(4), pages 523-537, October.
    12. Tembo, Gelson & Epplin, Francis M. & Huhnke, Raymond L., 2003. "Integrative Investment Appraisal of a Lignocellulosic Biomass-to-Ethanol Industry," Journal of Agricultural and Resource Economics, Western Agricultural Economics Association, vol. 28(3), pages 1-23, December.
    13. Madhu Khanna & Amy W. Ando & Farzad Taheripour, 2008. "Welfare Effects and Unintended Consequences of Ethanol Subsidies," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 411-421.
    14. Stephen P. Holland & Jonathan E. Hughes & Christopher R. Knittel & Nathan C. Parker, 2013. "Unintended Consequences of Transportation Carbon Policies: Land-Use, Emissions, and Innovation," NBER Working Papers 19636, National Bureau of Economic Research, Inc.
    15. van Kooten, G. Cornelis & Sohngen, Brent, 2007. "Economics of Forest Ecosystem Carbon Sinks: A Review," International Review of Environmental and Resource Economics, now publishers, vol. 1(3), pages 237-269, September.
    16. Uwe A. Schneider & Michael Obersteiner & Erwin Schmid & Bruce A. McCarl, 2007. "Agricultural adaptation to climate policies under technical change," Working Papers FNU-133, Research unit Sustainability and Global Change, Hamburg University, revised Jan 2008.
    17. Uwe Schneider & Bruce McCarl, 2003. "Economic Potential of Biomass Based Fuels for Greenhouse Gas Emission Mitigation," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 24(4), pages 291-312, April.
    18. Schneider, Uwe A. & McCarl, Bruce A., 2005. "Implications of a Carbon-Based Energy Tax for U.S. Agriculture," Agricultural and Resource Economics Review, Cambridge University Press, vol. 34(2), pages 265-279, October.
    19. Rendleman, C. Matthew & Shapouri, Hosein, 2007. "New Technologies in Ethanol Production," Agricultural Economic Reports 308483, United States Department of Agriculture, Economic Research Service.
    20. Kocoloski, Matt & Michael Griffin, W. & Scott Matthews, H., 2011. "Impacts of facility size and location decisions on ethanol production cost," Energy Policy, Elsevier, vol. 39(1), pages 47-56, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:14:y:2010:i:1:p:394-403. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.