Wallaces Farmer

Ethanol industry fuels jobs and generates nearly $35B in GDP

COVID-19 had significant impact on the industry, forcing plants to idle or reduce capacity and reducing R&D.

National Hog Farmer Staff

February 16, 2021

2 Min Read
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The U.S. ethanol industry continues to fuel jobs and create income, according to an economic impact study released Feb. 16 by the Renewable Fuels Association

In 2020, more than 62,000 U.S. jobs were directly associated with the ethanol industry, which supported an additional 242,600 indirect and induced jobs across all sectors of the economy. The industry created $18.6 billion in household income and contributed $34.7 billion to the national gross domestic product. This was 19% below 2019’s GDP contribution, primarily as the result of lower output and lower prices.

“Despite the disruptive effects of the COVID pandemic, economic and regulatory challenges in 2020, the ethanol industry continued to make a significant contribution to the economy in terms of job creation, generation of tax revenue, and displacement of crude oil and petroleum products,” writes John M. Urbanchuk, managing partner of ABF Economics, who prepared the economic analysis for RFA.

Pandemic impact

The widespread shelter-at-home orders that went into effect in spring 2020 caused ethanol and gasoline demand to drop. The low point was reached in April 2020, when domestic ethanol demand fell by 42% from 2019.

As the economy reopened, ethanol demand picked up, but demand remained about 12% below year ago levels through October. Ethanol producers responded by reducing operating rates, shutting plants and idling capacity. According to the Renewable Fuels Association, 45% of industry capacity was idled in April and May 2020. By year end, roughly two dozen facilities were idle, and the industry was operating at about 85% capacity.

The pandemic also impacted biofuels research, with research and development activities curtained by COVID-related closures. In the report, the industry estimates that research and development outlays totaled less than $150 million in 2020.

“Even though the pandemic created enormous headwinds for our industry in 2020, the resilience of the men and women who work in the U.S. renewable fuels sector shined through,” said RFA President and CEO Geoff Cooper. “The ethanol industry certainly was not spared from the devastation that beset the entire U.S. economy in 2020, but the nation’s 200-plus ethanol biorefineries continued to provide good-paying jobs in scores of rural communities. And those essential workers did more than produce renewable fuel and livestock feed in 2020—they also made virus-killing sanitizers and the dry ice used to ship millions of doses of life-saving vaccines.”

Source: RFA, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset. 

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BiofuelsEthanol

About the Author

National Hog Farmer Staff

The source for hog production, management and market news.

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