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Economic and environmental impacts of U.S. corn ethanol production and use

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  • Douglas G. Tiffany

Abstract

For many years, U.S. policy initiatives and incentives have favored the production of ethanol from corn. The goals have been to increase corn prices and farmer income, enhance rural employment through encouragement of value-added businesses, increase energy security, and produce additives and/or fuels capable of reducing tailpipe pollutants and greenhouse gases. The Energy Policy Act of 2005 established annual goals via a renewable fuels standard that would have increased production of ethanol and biodiesel to 7.5 billion gallons by 2012. That bill was superseded by the Energy Independence and Security of Act of 2007, which increased usage targets and specified performance standards for ethanol and other biofuels. The 2008 Farm Bill identified incentive payments for ethanol produced in various ways. The effects of these three laws have been magnified by rising crude oil prices, which helped maintain profits for corn dry-grind ethanol plants. This paper discusses environmental effects of corn ethanol production and use, energy balances of corn ethanol versus gasoline, subsidies for corn ethanol and gasoline, impacts of ethanol production on farmer decisionmaking, and effects of corn ethanol on food prices.

Suggested Citation

  • Douglas G. Tiffany, 2009. "Economic and environmental impacts of U.S. corn ethanol production and use," Regional Economic Development, Federal Reserve Bank of St. Louis, issue Apr, pages 42-58.
    • Handle: RePEc:fip:fedlrd:y:2009:i:apr:p:42-58:n:v.5no.1
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    References listed on IDEAS

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    1. Xiaodong Du & Dermot J. Hayes, 2008. "Impact of Ethanol Production on U.S. and Regional Gasoline Prices and on the Profitability of the U.S. Oil Refinery Industry, The," Center for Agricultural and Rural Development (CARD) Publications 08-wp467, Center for Agricultural and Rural Development (CARD) at Iowa State University.
    2. Du, Xiaodong & Hayes, Dermot J., 2009. "The impact of ethanol production on US and regional gasoline markets," Energy Policy, Elsevier, vol. 37(8), pages 3227-3234, August.
    3. Silvia Secchi & Bruce A. Babcock, 2007. "Impact of High Crop Prices on Environmental Quality: A Case of Iowa and the Conservation Reserve Program," Center for Agricultural and Rural Development (CARD) Publications 07-wp447, Center for Agricultural and Rural Development (CARD) at Iowa State University.
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    Cited by:

    1. Maura Allaire and Stephen P. A. Brown, 2015. "The Green Paradox of U.S. Biofuel Subsidies: Impact on Greenhouse Gas Emissions," Economics of Energy & Environmental Policy, International Association for Energy Economics, vol. 0(Number 2).
    2. Castro, Yessica A. & Ellis, Joshua T. & Miller, Charles D. & Sims, Ronald C., 2015. "Optimization of wastewater microalgae saccharification using dilute acid hydrolysis for acetone, butanol, and ethanol fermentation," Applied Energy, Elsevier, vol. 140(C), pages 14-19.
    3. Veljković, Vlada B. & Biberdžić, Milan O. & Banković-Ilić, Ivana B. & Djalović, Ivica G. & Tasić, Marija B. & Nježić, Zvonko B. & Stamenković, Olivera S., 2018. "Biodiesel production from corn oil: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 91(C), pages 531-548.

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