For immediate release: August 29, 2001
Media Contact: Percy Della - 916-654-4989

Ethanol Industry Undergoing
Major Expansion, Survey Reports

Sacramento - A recently completed survey by the California Energy Commission shows that a major expansion of the ethanol industry in the United States is underway - ostensibly in anticipation of California's huge need for the gasoline-blending fuel beginning in 2003.

The survey of 84 ethanol companies, mostly located in the Midwest, said that the industry's present production capacity of 2.2 billion gallons will double in four years. Capacity is planned to grow to 3.0 billion gallons by the end of 2002; 4.0 billion gallons by the end of 2003; 4.2 billions gallons by the end of 2004; and 4.4 billion gallons by the end of 2005.

Of the 84 companies surveyed, 44 are currently producing ethanol at 57 facilities responsible for the current annual production capacity of 2.2 billion gallons.

The increase in ethanol production is due to the expansion of existing plants and new plants that will begin coming on line this year. Right now, 13 new plants are under construction and 33 additional new plants are in the planning stages, the survey said.

Plant expansions, when completed as scheduled, will add 633 million gallons of additional ethanol production capacity by 2005. The 13 new plants under construction will add 387 million gallons of capacity. Projects still being planned, if completed as scheduled, will add up to 1,198 million more gallons of new capacity in 2005.

The survey does not look at the availability of feedstocks for ethanol production, ethanol costs, logistical challenges, facility permitting issues (i.e., land use, water and air quality impacts) or the demand for ethanol in other states that have announced plans to phase-out the use of MTBE and replace it with ethanol.

Currently, California is using between 100 and 150 million gallons of ethanol each year, nearly all of which is imported from the Midwest. For 2003, Energy Commission estimates show that California will need between 660 to 950 million gallons annually.

California's monumental demand for ethanol was made imminent when the state's request to fight smog without adding oxygenates to its reformulated gasoline was rejected by the federal government recently.

Ethanol is the only practical choice to replace MTBE (methyl tertiary-butyl ether), which has fouled water supplies, prompting Governor Gray Davis to order it phased out by December 31, 2002.

The Energy Commission also found that:

  • Nearly all of the companies surveyed have a capacity to ship ethanol by truck; 77 percent can ship by rail, and 17 percent can move their product by barge. About 90 percent of the prospective new producers said they could move ethanol by rail, 70 percent by truck, and 30 percent by barge.
  • U.S. ethanol production will continue to employ conventional production processes, with corn as the main feedstock. Most existing plants use corn, with only two plants using milo (a grain sorghum resembling millet) and a handful using feedstocks such as cheese whey, beverage industry wastes and potato waste.
  • All existing plants under expansion and new plants will use corn, with a few exceptions. Two planned projects will use barley and wheat. Six will use other resources including beverage waste, sugar cane bagasse, forestry and wood wastes, rice straw and municipal wastes.
  • The U.S. ethanol industry will remain centered in the Midwest corn-growing states through 2005. Illinois, Nebraska, Iowa and Minnesota are the top ethanol-producing states.

  • The document, U.S. Ethanol Industry Production Capacity Outlook, is available from the Commission's website at:

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