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  • Samuel Morey developed an engine that ran on ethanol and turpentine.
  • German engine inventor Nicholas Otto used ethanol as the fuel in one of his engines. Otto is best known for his development in 1876 of a modern internal combustion engine (referred to as the Otto Cycle).

  • The Union Congress put a $2 per gallon excise tax on ethanol to help pay for the Civil War. Before the Civil War, ethanol was a major illuminating oil in the United States. After the tax was imposed, the cost of ethanol increased too much to be used this way.
  • Henry Ford built his first automobile, the quadricycle, to run on pure ethanol.
  • Over 50 years after imposing the tax on ethanol, Congress removed it, making ethanol an alternative to gasoline as a motor fuel.
  • Henry Ford produced the Model T. As a flexible fuel vehicle, it could run on ethanol, gasoline, or a combination of the two.
  • During World War I, the need for fuel drove up ethanol demand to 50—60 million gallons per year.
  • Gasoline became the motor fuel of choice. Standard Oil began adding ethanol to gasoline to increase octane and to reduce engine knocking.
  • Fuel ethanol gained a market in the Midwest. Over 2,000 gasoline stations in the Midwest sold gasohol, which was gasoline blended with 6% to 12% ethanol.
  • Ethanol production for fuel use increased, owing` to a massive wartime increase in demand for fuel, but most of the increased demand for ethanol was for non-fuel wartime uses.
  • Once World War II ended, with reduced need for war materials and with the low price of fuel, ethanol use as a fuel was drastically reduced. From the late 1940s until the late 1970s, virtually no commercial fuel ethanol was available anywhere in the United States.
  • The first of many legislative actions to promote ethanol as a fuel, the Solar Energy Research, Development, and Demonstration Act of 1974 led to research and development of the conversion of cellulose and other organic materials (including wastes) into useful energy or fuels.
  • The United States begins to phase out lead in gasoline. Ethanol becomes more attractive as a possible octane booster for gasoline. The Environmental Protection Agency (EPA) issued the initial regulations, requiring reduced levels of lead in gasoline in early 1973. By 1986 no lead was allowed in motor gasoline.
  • The term gasohol was defined, for the first time, in the Energy Tax Act of 1978. Gasohol was defined as a blend of gasoline with at least 10 percent alcohol by volume, excluding alcohol made from petroleum, natural gas, or coal. For this reason, all ethanol to be blended into gasoline is produced from renewable biomass feedstocks. The Federal excise tax on gasoline at the time was 4 cents per gallon. This law amounted to a 40-cents-per-gallon subsidy for every gallon of ethanol blended into gasoline.
  • The marketing of commercial alcohol-blended fuels began by the Amoco Oil Company, followed by Ashland, Chevron, Beacon, and Texaco.
  • About $1 billion eventually went to biomass-related projects from the Department of the Interior and Related Agencies Appropriation Act.
  • The first U.S. survey of ethanol production was conducted. The survey found fewer than 10 ethanol facilities existed, producing about 50 million gallons of ethanol per year. This was a major increase from the late 1950s until the late 1970s, when virtually no fuel ethanol was commercially available.
  • Congress enacted a series of tax benefits to ethanol producers and blenders. These benefits encouraged the growth of ethanol production.
  • The Energy Security Act of 1980 offered insured loans for small ethanol producers (less than 1 million gallons per year), up to $1 million in loan guarantees for each project that could cover up to 90% of construction costs on an ethanol plant; price guarantees for biomass energy projects; and purchase agreements for biomass energy used by Federal agencies.
  • Congress placed an import fee (tariff) on foreign-produced ethanol. Previously, foreign producers, such as Brazil, were able to ship less expensive ethanol into the United States.
  • The Gasohol Competition Act of 1980 banned retaliation against ethanol resellers.
  • The Crude Windfall Tax Act of 1980 extended the ethanol—gasoline blend tax credit.
  • The Surface Transportation Assistance Act of 1982 (signed in early 1983) increased the ethanol subsidy to 50 cents per gallon.
  • The number of ethanol plants in the United States peaked at 163.
  • The Tax Reform Act of 1984 increased the ethanol subsidy to 60 cents per gallon.
  • Many ethanol producers went out of business, despite the subsidies.
  • Only 74 of the 163 commercial ethanol plants (45%) remained operating by the end of 1985, producing 595 million gallons of ethanol for the year.
  • Ethanol was first used as an oxygenate in gasoline. Denver, Colorado, mandated oxygenated fuels (i.e., fuels containing oxygen) for winter use to control carbon monoxide emissions.
  • Other oxygenates added to gasoline included MTBE (Methyl Tertiary Butyl Ether, made from natural gas and petroleum) and ETBE (Ethyl Tertiary Butyl Ether, from ethanol and petroleum).
  • MTBE dominated the market for oxygenates.
  • The Omnibus Budget Reconciliation Act of 1990 decreased the ethanol subsidy to 54 cents per gallon of ethanol.
  • Ethanol plants began switching from coal to natural gas for power generation and adopting other cost-reducing technologies.
  • An expanding market and the high cost of fructose corn syrup encouraged expansion of wet mill plants that produce the syrup as a by-product of the ethanol production process.
  • The Energy Policy Act of 1992 provided for two additional gasoline blends (7.7% and 5.7% ethanol). The Act defined ethanol blends with at least 85% ethanol as alternative transportation fuels. It also required specified car fleets to begin purchasing alternative fuel vehicles, such as vehicles capable of operating on E-85 (a blend of 85% ethanol and 15% gasoline). The Act also provided tax deductions for purchasing (or converting) a vehicle capable of running on alternative fuel, such as E-85, and for installing equipment to dispense alternative fuels.
  • The Clean Air Act Amendments mandated the wintertime use of oxygenated fuels in 39 major carbon monoxide nonattainment areas (areas where EPA emissions standards for carbon mioxide had not been met) and required year-round use of oxygenates in 9 severe ozone nonattainment areas in 1995.
  • MTBE was still the primary oxygenate used in the United States.
  • The excise tax exemption and income tax credits were extended to ethanol blenders that produced ETBE.
  • The EPA began requiring the use of reformulated gasoline, year round, in metropolitan areas with the most smog.
  • With a poor corn crop and the doubling of corn prices in the mid—1990s to $5 a bushel, some States passed subsidies to help the ethanol industry.
  • Major U.S. auto manufacturers began mass production of flexible-fueled vehicle models capable of operating on E-85, gasoline, or both. Despite their ability to use E-85, most of these vehicles used gasoline as their only fuel because of the scarcity of E-85 stations.
  • The ethanol subsidy was extended through 2007 with a gradual reduction from 54 cents per gallon to 51 cents per gallon in 2005.
  • Some States began to pass bans on MTBE use in motor gasoline because traces of it were showing up in drinking water sources, presumably from leaking gasoline storage tanks. Because ethanol and ETBE are the main alternatives to MTBE as an oxygenate in gasoline, these bans increased the need for ethanol as they went into effect.
  • The EPA recommended that MTBE should be phased out nationally.
  • A 1998 law reduced the ethanol subsidy to 53 cents per gallon, starting January 1, 2001.
  • U.S. automakers continued to produce large numbers of E-85-capable vehicles to meet Federal regulations that required a certain percentage of fleet vehicles capable of running on alternative fuels. Over 3 million of these vehicles were in use.
  • At the same time, several States were encouraging fueling stations to sell E-85.
  • With only 169 stations in the United States selling E-85, most E-85 capable vehicles are still operating on gasoline instead of on E-85.
    • A 1998 law reduced the ethanol subsidy to 52 cents per gallon, starting January 1, 2003.
    • As of October 2003, a total of 18 States had passed legislation that would eventually ban MTBE.
    • California began switching from MTBE to ethanol to make reformulated gasoline, resulting in a significant increase in ethanol demand by mid-year, even though the California MTBE ban did not officially go into effect until 2004.
  • The Energy Policy Act of 2005 was responsible for regulations that ensured gasoline sold in the United States contained a minimum volume of renewable fuel, called the Renewable Fuels Standard. The regulations aimed to double, by 2012, the use of renewable fuel, mainly ethanol made from corn.

  • The Energy Independence and Security Act of 2007 expanded the Renewable Fuels Standard to require that 36 billion gallons of ethanol and other fuels be blended into gasoline, diesel, and jet fuel by 2022. In 2007, the United States consumed 6.8 billion gallons of ethanol and 0.5 billions gallons of biodiesel.
  • An Argonne National Laboratory study compared data on water, electricity, and total energy usage from 2001 and 2006. During this period, America's ethanol industry achieved improvements in efficiency and resource use while it increased production nearly 300%.
  • As of March 2008, U.S. ethanol production capacity was at 7.2 billion gallons, with an additional 6.2 billion gallons of capacity under construction.

Last revised: June 2008
Sources: Energy Information Administration, Policies to Promote Non-hydro Renewable Energy in the United States and Selected Countries, February 2005
Energy Information Administration, Renewable Energy Annual 1995, December 2005
Fuel, Ethanol Fuel History (, May 2008