# Climate of Opportunity

2011 Ethanol Industry Outlook

# RFA bo ar d o f D i r ecto r s

Chuck Woodside, Chairman KAAPA E thanol, LL C www.kaapaethanol.com Neill McKinstray, Vice Chairman T he Andersons I nc. www.andersonsinc.com Walter Wendland, Secretary Golden Grain E nergy, LL C www.goldengrainenergy.com Randall Doyal, Treasurer Al- C orn C lean Fuel www.al-corn.com
Bob Dinneen, President Renewable Fuels Association www.ethanolrfa.org Abengoa B ioenergy C orp. C hris S tandlee www.abengoabioenergy.com
Absolute E nergy Rick S chwarck www.absenergy.org

Ace E thanol, LL C B ob S ather www.aceethanol.com
Adkins E nergy, LL C S cott T rainum www.adkinsenergy.com
Archer D aniels Midland C o. Matt B runs www.admworld.com
Aventine Renewable E nergy Holdings, LL C T om Manuel www.aventinerei.com

B ig River Resources West B urlington, LL C Raymond D efenbaugh www.bigriverresources.com

B lue Flint E thanol Jeff Zueger www.blueflintethanol.com

C entral I ndiana E thanol, LL C Gary D rook www.cie.us

C entral MN E thanol C oop Kerry Nixon www.centralmnethanol.com

C hippewa Valley E thanol C o. Mike Jerke
www.cvec.com C ommonwealth Agri- E nergy, LL C Mick Henderson www.commonwealthagrienergy.com

C oskata, I nc. Wes B olsen www.coskata.com

D akota E thanol, LL C S cott Mundt www.dakotaethanol.com

D idion E thanol, LL C John D idion www.didionmilling.com

E ast Kansas Agri- E nergy, LL C S teven Gardner www.ekaellc.com

Gevo Jack Huttner www.gevo.com
Glacial Lakes E nergy, LL C Jim S eurer www.glaciallakesenergy.com
Granite Falls E nergy, LL C T racey O lson www.granitefallsenergy.com

G T L Resources, U S A Richard Ruebe www.gtlresources.com
Guardian E nergy D on Gales www.guardiannrg.com
Heartland C orn Products B en B rown
Homeland E nergy S olutions, LL C Jim B oeding www.homelandenergysolutions.com

I roquois B io- E nergy C ompany, LL C Keith Gibson Lincolnland Agri- E nergy, LL C E ric Mosbey www.lincolnlandagrienergy.com
Little S ioux C orn Processors, LP S teve Roe www.littlesiouxcornprocessors.com

Louis D reyfus C ommodities S ean Martin www.ldcommodities.com Merrick & C ompany S teven Wagner www.merrick.com
Mid America B io E nergy and C ommodities, LL C Robert Lundeen www.standard-ethanol.com
Mid-Missouri E nergy, I nc. Ryland Utlaut www.midmissourienergy.com

New E nergy C orp. T odd Allsop
Pacific E thanol I nc. Neil Koehler www.pacificethanol.net
Parallel Products Jim Rottman www.parallelproducts.com
Patriot Renewable Fuels LL C Gene Griffith www.patriotrenewablefuels.com Plymouth E nergy D ave Hoffman www.plymouth-energy.com
Quad C ounty C orn Processors Jeff Nelson www.quad-county.com Reeve Agri E nergy, I nc. Lee Reeve

S iouxland E thanol LL C C huck Hofland www.siouxlandethanol.com

T ate & Lyle T im Meinhold www.tateandlyle.com

T renton Agri Products, LL C C harles Wilson www.trentonagriproducts.com

Western New York E nergy, LL C Michael S awyer www.wnyenergy.com

Western Wisconsin E nergy, LL C S teve C hristensen www.westernwisconsinenergy.com 2010 Ethanol Industry OUTLOOK 

## F EB RUARY 2011

America’s ethanol industry is many things, but one thing it is not is stale. E thanol producers continue to innovate, expand, and improve the process by which they now provide the nation with 10 percent of its gasoline demand. New technologies are on the cusp of com

mercialization, promising to dramatically expand this industry’s ability to meet the nation’s growing need for energy with a renewable alternative. The m o m e nt u m i s o n ou r s i d e.

I ndeed, 2010 witnessed American ethanol production soar to 13 billion gallons, replacing the gasoline produced from some 445 million barrels of imported oil. D omestic ethanol production aided a struggling economy, especially in rural areas, by helping support more than 400,000 jobs across the country which cannot be outsourced.

E ven in the face of manufactured angst over ethanol’s growing role in the market, this industry came together to advocate for the exten

sion of key tax policies that help ensure developing technologies like ethanol can compete with entrenched interests for America’s energy future.

B ut, then again, this industry has never stood still. I n 2011, t he Re n e w a b le Fuel s Ass o c ia t io n c ele br a tE S 30 yea rs o f a dv o c a c y on behalf of American ethanol producers, farmers, and consumers eager to embrace a domestic, cost-effective alternative to imported oil. I n these 30 years, the RFA and its members have seen the industry grow from just 215 million gallons of annual production – today the equivalent of three average ethanol biofineries – to become the world’s largest ethanol producer.
We have seen the industry battle back its critics time and again with the facts about ethanol’s importance to the nation’s economic, environmental and energy future. All of this institutional knowledge and understanding of how markets and C apitol Hill work will be invaluable in the year to come.

Ma n y o f t he b a tt le s w ageD i n 20 1 0 a r e p oi s e d t o r e p ea t

agai n i n 20 11

. T he industry must come together once more to pres

ent a unified vision for what ethanol policy should be in the 21st century. We must partner with our customers to install more ethanol blending infrastructure and incentivize the production of flex-fuel vehicles that allow us to fully realize the goals of the Renewable Fuel S tandard. We must recognize the importance of emerging advanced and cellulosic ethanol technologies and work to ensure they are given every opportunity to succeed.

T here is no shortage of work to be done. T he decision to allow the use of E 15 in 2001 and newer vehicles is a positive development, but does create regulatory and market hurdles as well. S tates like C alifornia continue to pursue policies that could limit ethanol access to that market, just as E PA has granted the use of more ethanol.

I have every confidence 2011 will be a success, just as every year before it, because this industry understands what it takes to be successful.
We will build bridges to those opponents of our industry willing to hear our side. We will reach out to those critics of our industry with the facts. We will support our champions in C ongress and state capitals who share ou r v i s io n o f Am e r i c a’ s e n e r gy f u t u r e.

T ogether, this industry will span the divide between success and failure. T he future of this industry is very bright indeed.

T hanks for 30 years of support. The b e st yea rs a r e st ill ahea d o f u s !

S incerely,

B ob D inneen, President & CEO

# 2010 S ets Another Record From 1.6 billion gallons of production at the start of the decade, American ethanol producers provided an estimated 13 billion gallons of domestic renewable fuel in 2010 – an 800 percent increase and another annual production record. Year over year, ethanol production increased more than 20 percent. This increase was achieved through improvements in ethanol production technologies, increased awareness of the need for renewable alternatives to oil, and thoughtful public policy that seeks to level the playing field for renewable fuels in a market nearly monopolized by petroleum. Mirroring the rise in production, America’s use of ethanol also soared, driven by both the demands of the Renewable Fuel Standard (RFS) and the economic value of ethanol as a blending component in gasoline. Today, well over 90 percent of all gasoline sold in the U.S. is blended with ethanol. According to data estimated and calculated by the RFA, ethanol demand averaged 860,000 barrels per day in 2010, for a total of 13.1 billion gallons. In addition to domestic demands, the U.S. was also on pace for record exports of ethanol as well. Based upon RFA projections using U.S. federal government trade data, the ethanol industry exported a record 350 million gallons of ethanol in 2010. 

## U.S. Ethanol Prod u ction CA P ACIT Y BY S TAT E In Millions of Gallons

N ameplate O perating Under C on struction/ Expansion T otal

Iowa 3,595.0 3,595.0 0 3,595.0 Nebraska 1,864.0 1,839.0 113 1,977.0 Illinois 1,480.0 1,480.0 5 1,485.0 Minnesota 1,136.6 1,118.6 0 1,136.6 Indiana 998.0 906.0 113 1,111.0 South Dakota 1,016.0 1,016.0 33 1,049.0 Ohio 538.0 424.0 0 538.0 Kansas 491.5 436.5 20 511.5 Wisconsin 498.0 498.0 3 501.0 Texas 250.0 250.0 115 365.0 North Dakota 353.0 343.0 0 353.0 Michigan 265.0 265.0 0 265.0 Missouri 261.0 261.0 0 261.0 California 199.5 123.0 50 249.5 Tennessee 177.0 177.0 38 215.0 New York 164.0 164.0 0 164.0 Oregon 148.0 40.0 0 148.0 Colorado 125.0 125.0 0 125.0 Georgia 100.4 100.4 10 110.4 Pennsylvania 110.0 110.0 0 110.0 Virginia 65.0 0 0 65.0 North Carolina 0 0 60 60.0 Arizona 55.0 55.0 0 55.0 Idaho 54.0 54.0 0 54.0 Mississippi 54.0 54.0 0 54.0 Kentucky 35.4 35.4 0 35.4 New Mexico 30.0 30.0 0 30.0 Wyoming 6.5 6.5 0 6.5 Louisiana 1.5 1.5 0 1.5 T otal 14,071.4 13,507.9 560 14,631.4 

# B uilding a B roader I ndustry

Domestic ethanol production is truly an A merican success story. Built with the help of A merican farmers, ethanol production and use in the U .S. has gone from a mere blip on the national energy radar to nearly 1 0 percent of the nation’s gasoline supply. With the growth of the industry and evolution in ethanol production technologies, 20 1 0 has set the stage for incredible innovation and expansion in the years to come.



## U.S. Ethanol B IO r e fin e r y location s

RI VT

NJ
DE

DC CT NH
MA

MD ID

NM AZ CA OR

NV

WA MT ND

WI

LA TX CO UT WY SD

NE

KS

OK AR MO IA

FL MI NY

PA

WV VA
NC
SC
GA AL MS IL IN OH

TN ME 

# S S

Source: Renewable Fuels Association, January 2011

Biorefineries (204) Biorefineries under construction (9) Source: Renewable Fuels Association, January 20112011 E thanol I ndustry O U T L OO K Source: Renewable Fuels Association, January 2011 *Estimated 

# B uilding a B roader I ndustry

R E C E NT Ethanol IND US TR Y EXP AN S ION S

* This figure represents operating ethanol biorefineries as of January 2011. For a complete list visit www.EthanolRFA.org. 

# S

0 2,000 4,000 6,000 8,000 10,00020102009200820072006200520042003200220012000199919981997199619951994199319921991199019891988198719861985198419831982198119801752153503754306107108308458709009501,1001,2001,3501,4001,1001,3001,4001,4701,6301,7702,1302,8103,4103,9054,8556,4859,23510,93513,000*

12,00 0

, 

# B ridging the Present with the Future

The future of American ethanol is diverse. Corn will continue to be the basis upon which the industry grows. 2011 predictions for starch-based ethanol production approach and very possibly surpass 13.5 billion gallons as processes to convert grain into fuel and feed improve. New demand from higher level ethanol blends like E15, E20, and E85 as well as the potential for continued export opportunities show promise for starch-based ethanol use to exceed the 2011 RFS “renewable biofuel” requirement of 12.6 billion gallons. Additionally, efforts to accelerate the commercialization of cellulosic and advanced ethanol are seeing greater support than ever before. Specifically, the newly minted Renewable Fuels Association’s Advanced and Cellulosic Ethanol Council is dedicated to establishing advanced and cellulosic ethanol production and ensuring the goals of the RFS are met.



# S HIs toric U.S. f ue l Ethanol p rod u ction 

# SMillions of gallons Jan 2000 Jan 2001 Jan 2002 Jan 2003 Jan 2004 Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Biorefineries O nline 54 56 61 68 72 81 95 110 139 170 189 204 C apacity (mgy) 1,748.7 1,921.9 2,347.3 2,706.8 3,100.8 3,643.7 4,336.4 5,493.4 7,888.4 10,569.4 11,877.4 13,507.9



# I ndustry S napshot At year’s end, America’s ethanol industry comprised 204 ethanol biorefineries in 29 states. Continuing a trend, ethanol production expanded beyond the Corn Belt with new biorefineries beginning production or finalizing construction in states like Virginia and North Carolina. Importantly, ethanol production resumed at many of the plants that were forced to suspend operations in the aftermath of the economic collapse in the fall of 2008. Plants in Minnesota, Ohio, Nebraska, and the Dakotas, to name a few, were all purchased and are once again providing fuel and feed derived in part from corn grown and delivered by local farmers. The industry has also seen new companies join traditional ethanol producers in expanding American ethanol production. Major oil refiners such as Valero, Flint Hills, Murphy Oil, and Sunoco have made large investments in ethanol production, joining Marathon Oil Company, which currently operates ethanol facilities with The Andersons, Inc. Traditional ethanol producers like Abengoa Bioenergy, Archer Daniels Midland and Aventine Renewable Energy, Inc. brought new facilities online in 2010, while a group of farmer-owned plants purchased previously idled ethanol plants and brought them back into production. Likewise, new companies and technologies utilizing grasses, woody biomass, garbage, algae and other feedstocks continue to make strides toward commercialization. Though hampered by a lack of available capital and federal loan guarantee programs wrapped in the proverbial red tape, these companies continue to refine their processes and are poised for rapid deployment when capital challenges are resolved.

# I t’s All About Jobs The political focus of 2010 was squarely on job creation. America’s ethanol industry certainly did its part. According to an economic analysis by respected renewable fuel economist John Urbanchuk, the production and use of an estimated 13 billion gallons of fuel ethanol in 2010 helped employ 400,677 Americans. Of these, nearly 70,400 jobs were directly involved in the production of ethanol and the delivery of goods and services to ethanol producers. The remaining jobs were indirect and induced, encompassing jobs on Main Streets that support those who directly supply goods and services to ethanol producers. All of these jobs are good paying jobs. For example, a 2010 Ethanol Producer Magazine survey of the industry found that 83 percent of employees earned wages in excess of $40,000 and 99 percent reported receiving health care and other benefits. In addition to jobs, the ethanol industry added $36 billion to household income and contributed $53.6 billion to the Gross Domestic Product (GDP), a measure of U.S. economic activity in 2010.

 

# B ridging the E conomic Abyss

20 1 0 was not the economic calamity of 2008 and 2009, but it still proved challenging for the nation as a whole. U nemployment remained near 1 0 percent while underemployment numbers were higher still. O ne bright spot, particularly for hundreds of often overlooked rural communities, was the continued growth of domestic ethanol production.

Making A merica’s ethanol industry go takes the coop

erative work of a variety of professionals. From PhDs and MB A graduates to hard-working blue collar men and women, the more than 200 A merican ethanol bio

refineries and the companies that service them employ a broad section of A mericans, paying a good wage and providing desirable benefits. 

# Who works at an A merican ethanol plant?

All ethanol industry economic data from “Contributions of the Ethanol Industry to the Economy of the United States,” Cardno ENTRIX. January 2011.

### I would tell someone who knows very little about our industry that we are an essential answer to high priced petroleum from foreign sources that are too often hostile to the U.S. We are better for the U.S. economy, better for the environment, better for the rural economy, and when all costs are on the table, the lowest cost for the consumer.
Mick Henderson, General Manager, C ommonwealth Agri- E nergy and RFA B oard Member



# Paying As You Go The past year was also defined by the debate over tax incentives for ethanol use. In 2010, the ethanol industry contributed $7 billion in tax revenue to the federal Treasury and an additional $4 billion to the coffers of state and local governments. The $11 billion in tax revenue contributions far outpace the cost of federal tax incentives for ethanol in 2010, estimated at $6 billion.


# T

aking on O P EC Harder to fully appreciate but no less important, the growth of ethanol production and use in the U.S. directly translates to reductions in the amount of oil the nation needs to import. The 13 billion gallons of estimated ethanol production in 2010 displaced the gasoline refined from 445 million barrels of crude oil – 55 million barrels more than the total estimated crude oil imports from Saudi Arabia last year. This reduction in oil imports saved the U.S. economy $34 billion dollars.

 201 0 E t hanol Industry OUTLOOK 

### H ere are some of the key facts from the 20 1 0 U .S. E thanol I ndustry Salary Survey:
n 73 percent of ethanol industry employees have either a 2 or 4 year college degree.
n 83 percent of respondents report earning an average salary of at least $ 4 0,000 per year. n O n top of better than average pay, 99 percent report receiving benefits from their employer, including health care and retirement plans. That is well above the national average of 7 1 percent. 

## HI S TORIC OIL I MP ORT DI SP LAC EME NT BY E THANOL 

# S

0 100 200 300 400 5002010200920082007200620052004143170206228321364445*

Source: Cardno ENTRIX *EstimatedMillions of barrels annually

 2011 E thanol I ndustry O U T L OO K I n T heir W O R DS

# Fuel and Feed to Meet Growing World D emand The ethanol industry’s role as a major producer of fuel and feed was on display again in 2010, as producers converted 4.65 billion bushels of corn into 13 billion gallons of fuel and nearly 32.5 million metric tons of high-value feed. The distillers grains, corn gluten feed and corn gluten meal that U.S. ethanol plants produced in 2010 nourished everything from the cattle at the feedlot next door to poultry in Southeast Asia and hogs in Canada. In fact, distillers grains were exported to more than 50 countries in 2010, demonstrating the global appeal of this nutrient-dense feed ingredient. Distillers grains exports were worth an estimated $1.6 billion in 2010, highlighting the importance of co-products to the ethanol producer’s bottom line. International markets became particularly important to the U.S. industry in 2010, as domestic co-product markets inched closer to saturation. While the industry fought to break through the “blend wall” for ethanol in 2010, it avoided hitting a “feed wall” by exporting record quantities of feed co-products and opening new international markets. Distillers grains exports topped 8 million metric tons in 2010, up more than 40 percent from 2009 and nearly double the amount exported in 2008. Thanks to a voracious appetite for protein and energy feeds, China emerged as the top destination of U.S. distillers grains in 2010. One out of every four tons of distillers grains exports was bound for China in 2010, with Mexico and Canada following as other top destinations. Fostering new export relationships and broadening co-product utilization rates will continue to be critical to the future of the ethanol industry. Despite rapid growth in co-product use both domestically and internationally, there is still room to grow. RFA is working diligently to open new markets and expand existing opportunities. In 2010, the RFA joined with the U.S. Grains Council to co-sponsor the Export Exchange, a forum attended by more than 500 producers, exporters, and buyers of ethanol co-products and coarse grains from 25 countries. 

# B uilding Value in Rural Markets

Demand for corn and other grains has helped add value to the commodities produced by A merican farmers and provides them a better return from the market and not the government. I n addition to fuel, A merican ethanol producers are increasingly feeding domestic livestock flocks and herds while opening up new markets overseas.



# A Partnership with American Farmers Continuing to produce record amounts of ethanol and livestock feed would not be possible without the increasing productivity of American farmers. In 2010, despite truly challenging growing and harvesting conditions, farmers produced the third-largest corn crop in history. Farmers battled unfavorable weather conditions to produce 12.45 billion bushels based on 152.8 bushels per acre, the fourth-highest average yield on the books. The 2010 crop was the fourth in a row and the fourth in history larger than 12 billion bushels. Further, the 2010 crop was produced on virtually the same amount of acres used in the mid-1970s to produce crops half the size, attesting to the tremendous growth in productivity being harnessed on American farms.

Thousand Metric Tons

10-11* 09-10 08-09 07-08 06-07 05-06 04-05 03-04 02-03 01-02 00-01 99-00 98-99 97-98 96-97 95-96 94-95 93-94 92-93 91-92 90-91 35,000

30,000

25,000

20,000

15,000

10,000

5,000

0

Distillers Grains Cor n Gluten Feed Cor n Gluten Meal 

## P ROD U CTION OF U. s . Ethanol Fee d co- p rod u ct s 

# S

Source: RFA *Estimated

# B uilding Value in Rural Markets

170
160
150
140
130
120
110
100
90
80
70
60
502010*200820062004200220001998199619941992199019881986198419821980 

## U.S. A VE RA GE CORN Y I E LD , 1980-2010 

# S

Source: USDA *Estimated 

## DI S TILL E R S G RAIN S EXP ORT S 

# S

2010* 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 1996 1995 9,000,000 8,500,000 8,000,000 7,500,000 7,000,000 6,500,000 6,000,000 5,500,000 5,000,000 4,500,000 4,000,000 3,500,000 3,000,000 2,500,000 2,000,000 1,500,000 1,000,000

500,000Metric Tons

Source: USDA-FAS *Estimated

2011 E thanol I ndustry O U T L OO K 

## DI S TILL E R S G RAIN S CON SUMP TION BY T YPE, 2010* 

# S

Dried 61% Wet or Modified

39% 

## DI S TILL E R S G RAIN S CON SUMP TION BY SPE CI ES, 2010* 

# S

Source: CHS and RFA *Estimated 

### Dairy 39%

Beef 41%

Swine 10% Poultry

9% Other 1%

Source: RFA *EstimatedBushels/Acre

# C ommercializing the Next Generation

The A merican ethanol industry is one of the most dynamic energy industries anywhere in the world. Breakthroughs in process technologies are harnessing the potential of a wide variety of feedstocks from which ethanol can be made. L ikewise, advancements in the cultivation of energy-specific feedstocks, such as fast growing trees, perennial grasses, and algae will ensure adequate volumes of feedstocks are available to meet A merica’s growing need for renewable, biodegradable fuel sources.



# Proving New T echnologies Today, more than 20 demonstration and pilot-scale operations utilize a wide array of technologies to turn woody biomass, algae, grasses, corn cobs, sugar waste, and even garbage into ethanol. Operating in at least 17 states, these facilities are the proving ground for advanced and cellulosic ethanol technologies. They will provide the necessary data, feedback, and experience for companies to take these technologies from demonstration scale to the commercial level. Despite having proven technologies, many companies are facing a lack of availability in investment capital to begin construction on commercial-scale, multi-million gallon per year biorefineries. 

# Why Advanced and C ellulosic E thanol Must B e S uccessful The success of new ethanol technologies is not simply important to the future of the domestic ethanol industry. It is a key component of the nation’s long term strategy to reduce our dependence on foreign oil. The largest component of the Renewable Fuel Standard (RFS) is the advanced and cellulosic biofuels requirement, which by 2022 mandates that 21 billion gallons of the required 36 billion gallons of renewable fuel use be from non-corn starch feedstocks. Analyses have suggested that if America could harness the waste streams from American agriculture such as corn stalks, cobs and wheat straw, the nation could produce enough ethanol to eliminate the need for oil imports from the Persian Gulf. Additionally, because many of the feedstocks being developed for ethanol production require little or no cultivation because they are waste products, the initial fossil fuel requirements to produce the feedstocks are dramatically reduced. The U.S. Department of Energy’s Argonne National Laboratory suggests that production of cellulosic ethanol could reduce fossil fuel input needs compared to gasoline by 70 percent.



# Renewable Fuels A ssociation’s A dvanced and Cellulosic E thanol Council The Renewable Fuels A ssociation’s A dvanced and Cellulosic E thanol Council is the leading voice promoting and advo

cating policies that will accelerate the commercialization of advanced and cellulosic ethanol technologies. Technologies exist today to effectively and efficiently convert a wide range of biomass feedstocks – including woody biomass, corn cobs, grasses, algae, municipal solid waste, and agri

culture waste – into renewable fuels like ethanol.

# C ommercializing the Next Generation

2011 E thanol I ndustry O U T L OO K 

### The Council will work to foster commercialization of advanced technologies, develop proactive federal and state policies, ensure proper accounting of greenhouse gas emissions and other environmental concerns, and expand the market for all ethanol
sources. 

## What is advanced and cellulosic ethanol?

C ellulose refers to the material comprising the cell walls of any green plant and is the most common organic compound found on E arth. C ellulosic ethanol is ethanol produced by turning the sugars in cellulose into alcohol fuel. Advanced ethanol, by comparison, is sourced from feedstocks that are not cellulose and are not starch found in grains such as corn. All sources for ethanol will be required to provide the nation with the kind of energy choices we need. 

### The future of American ethanol production will also include non-conventional feedstocks like algae. The Department of Energy estimates that biofuel production from algae could yield between 4,000 – 6,000 gallons per acre. In the very near future, estimates suggest production could reach 10,000 gallons per acre, substantially increasing America’s ability to provide a steady and abundant supply of renewable, biodegradable, cleaner burning ethanol. 

# Reaching Full Potential

Like countless other industries that are successful commercial enterprises today, the development of cellulosic and advanced ethanol production will require a partnership with the federal government. Current policies, such as the RFS, are designed to ensure a market exists for these fuels. However, due to economic challenges that have hamstrung early efforts to develop commercial-scale biorefineries, the requirements for cellulosic ethanol use have been repeatedly reduced by the U.S. Environmental Protection Agency (EPA). While EPA has rightfully recognized production is well below required demands and subsequently lowered the RFS requirements, EPA must also be careful not to be overly pessimistic about the chances for these technologies and ensure the advanced and cellulosic mandates remain ambitious. Equally important are federal government efforts to assist ethanol producers in building the first generation of advanced and cellulosic ethanol biorefineries. The U.S. Department of Agriculture (USDA) has awarded three loan guarantees to advanced and cellulosic ethanol producers to begin construction on commercial facilities in Florida, Alabama, and Mississippi. Unfortunately, far too few producers have been able to successfully navigate the federal bureaucracy and obtain grants and loan guarantees, especially from the Department of Energy (DOE). Access to these programs has been limited due to discriminatory requirements that skew more toward electric generation than liquid transportation fuel production. The continued work of USDA to provide these important guarantees and reform of similar programs at DOE is vital to help build the first commercial-scale facilities and commercialize these very promising technologies.

### Solutions to these demand pressures are numerous – but none are simple. One solution is the use of ethanol blends higher than 10 percent. Blends such as E15 (15 percent ethanol/85 percent gasoline) hold promise to help expand the market. Ultimately, we will need a variety of blend levels – 20 percent, 30 percent, 50 percent, 85 percent, and so on – to not only achieve the goals laid forth in the RFS but to ensure markets for ethanol production from cellulose and other feedstocks. 

# Finding E very Gallon Currently, the standard blend for ethanol is E10, which is a safe and effective fuel for all engine platforms. As the maps on the following page demonstrate, market saturation of E10 has progressed significantly as ethanol producers provide greater volumes of fuel and state regulations are adjusted to incorporate the unique properties of ethanol fuel. In 2011, the RFS requirement of 12.6 billion gallons of “renewable biofuel” used together with continued favorable blending economics will likely see the market for E10 blends become saturated. The remaining markets likely to convert to E10 will see that conversion occur in 2011. 

# B uilding New Markets

The combination of thoughtful public policy and diligent attention to state regulation by the industry has helped open up every corner of the nation to ethanol use. Today, ethanol is blended in well over 90 percent of the nation’s gasoline supply. The success of tax incentives, the Renewable Fuel Standard (RFS), and efforts to adjust state fuel regulation has been so dramatic that the industry is finding it difficult to identify new domestic markets.



# B ridging T oday’s Markets with T

omorrow’s O pportunities Ethanol as a blending component in gasoline, such as E10 blends, is a safe and widely adopted use of the fuel. Technologies are rapidly becoming available that allow ethanol to replace even larger volumes of oil in domestic gasoline. Ethanol blends, such as E20, E30, and even E50 (known as mid-level ethanol blends or MLEBs) are gaining in popularity as consumers seek affordable alternatives to imported oil. Blends such as E85, which have been the focus of infrastructure discussions for the past decade, offer an opportunity to provide ethanol as a truer replacement fuel to gasoline. Consumers have shown a willingness to migrate toward these blends, but the confines of vehicle technologies and fuel dispensing infrastructure have hampered sales of these blends. To use MLEBs and higher level ethanol blends, a vehicle must be fitted with flexible fuel vehicle (FFV) technology. Today, nearly 9 million FFVs are on the road, representing approximately 3 percent of the total light duty vehicle fleet. Likewise, fuel pumps must be equipped with the technology to offer higher concentrations of ethanol. Technologies such as blender pumps offer the ability to dispense a variety of ethanol blends from E10 for use in all vehicles up to E85 for use in FFVs. E85-specific pumps offer a choice for drivers of FFVs. Today, more than 2,600 stations offer E85-specific pumps and an additional 900 stations have installed blender pumps. Approximately 300 of those 900 stations offer MLEBs. Comparatively, there are approximately 160,000 gas stations in America. 

# 2011: T he Year of ML EB s? Given the size of the nation’s convenience store and gasoline station industry, deploying sufficient numbers of blender pumps will be a challenge that will not be met overnight. It will take a committed effort to educate, and in some cases incentivize, fuel retailers on the merits of these technologies. Efforts like the Blend Your Own (BYO) Ethanol campaign from the RFA, the American Coalition for Ethanol, the National Corn Growers Association, and state corn grower associations as well as pledges from the U.S. Department of Agriculture (USDA) to provide some funding for blender pumps are important first steps to establishing a MLEBs beachhead in today’s fuel market.

1 0 

# 50 852010 Ethanol Industry OUTLOOK 

# B uilding New Markets

Oregon Wa shington Montana

Idaho

Nevada Utah

Arizon a

Alaska New Mexico

Te xa s Oklahoma Kansas Missour i Illinoi s Indian a Ohio

We st Vi rgini a

Vi rgini a Kentucky

Arkansas T ennessee

Mississipp i

Alabama Georgia

Florid a North Carolina

South Carolina

Louisiana Pennsylvania New Yo rk Main e Ve rmon t

New Hampshire

Massachusetts
Rhode Islan d

Wa shington DC Maryland

Delaware

New Jersey

Connecticu t Nebraska

Colorado

California Wyoming North Dakota Minnesota

Wisconsin

Michigan

Iow a South Dakota

Hawaii 90% Oregon 90% Wa shington 70% Montana

60% Idaho

70% Nevada 60% Utah

80% Arizon a

65% Alaska 95% New Mexico

95% Te xa s 80%

Oklahoma 90% Kansas 90% Missour i 95% Illinoi s 95% Indian a 90% Ohio
80% We st Vi rgini a 90% Vi rgini a 95% Kentucky

80% Arkansas 85% T ennessee

95% Mississipp i 95% Alabama 85% Georgia

90% Florid a 85%

North Carolina
85% South Carolina

95% Louisiana 90% Pennsylvania 100% New Yo rk 80% Main e 90% Ve rmon t
95% New Hampshire 100% Massachusetts 100% Rhode Island

100% Wa shington DC 100% Marylan d

100% Delaware

100% New Jersey 100% Connecticu t 80% Nebraska

85% Colorado

100% California 65% Wyoming 95% North Dakota 100% Minnesota

95% Wisconsin 90% Michigan 70% Iow a 95% South Dakota

90% Hawaii 

## E10 m ark e t es ti m ation, 2010 

# S

FF V m ark e t conc e ntration 

# S Source: RFA 76-100%

51-75%

>300

225-300

150-225

75-150

0-75

11 2011 E thanol I ndustry O U T L OO K FFV Population ( T housands)

Source: R.L. Polk & Company Vehicles in Operation Database, July 1, 2009C ompany L ocation F eedstock N ameplate C apacity (mgy) O perating Production (mgy) Under C onstruction/ Expansion C apacity (mgy)

Abengoa Bioenergy Corp. (Total) 378 378 Colwich, KS corn/milo Mt. Vernon, IN corn Madison, IL corn Ravenna, NE corn York, NE corn Portales, NM corn Absolute Energy* St. Ansgar, IA corn 110 110 ACE Ethanol, LLC Stanley, WI corn 41 41 Adkins Energy, LLC* Lena, IL corn 40 40

Advanced BioEnergy, LLC (Total) 198 198 Fairmont, NE corn Aberdeen, SD corn Huron, SD corn AE Biofuels/Cilion Keyes, CA corn 50 Ag Energy Resources, Inc. Benton, IL corn 5 AGP* Hastings, NE corn 52 52 Al-Corn Clean Fuel* Claremont, MN corn 42 42 Alchem Ltd. LLP Grafton, ND corn 10 0 AltraBiofuels Coshocton Ethanol, LLC Coshocton, OH corn 60 0 AltraBiofuels Phoenix Bio Industries, LLC Goshen, CA corn 31.5 0 Amaizing Energy, LLC* Denison, IA corn 55 55 Appomattox Bio Energy Hopewell, VA corn 65 0

Archer Daniels Midland (Total) 1,750 1,750 Cedar Rapids, IA corn Clinton, IA corn Decatur, IL corn Peoria, IL corn Marshall, MN corn Wallhalla, ND corn/barley Columbus, NE corn Arkalon Energy, LLC Liberal, KS 110 110

Aventine Renewable Energy, LLC 244 244 226 Pekin, IL corn Canton, IL corn Aurora, NE corn Mt. Vernon, IN corn Badger State Ethanol, LLC* Monroe, WI corn 48 48 Big River Resources Galva, LLC Galva, IL corn 100 100 Big River Resources West Burlington, LLC* West Burlington, IA corn 100 100 Big River United Energy Dyersville, IA corn 110 110 BioFuel Energy - Buffalo Lake Energy, LLC Fairmont, MN corn 115 115 BioFuel Energy - Pioneer Trail Energy, LLC Wood River, NE corn 115 115 Bional Clearfield Clearfield, PA corn 110 110 Blue Flint Ethanol Underwood, ND corn 50 50 Bonanza Energy, LLC Garden City, KS corn/milo 55 55 BP Biofuels North America Jennings, LA sugar cane bagasse 1.5 1.5 Bridgeport Ethanol Bridgeport, NE corn 54 54 Bunge-Ergon Vicksburg Vicksburg, MS corn 54 54 Bushmills Ethanol, Inc.* Atwater, MN corn 50 50 Calgren Renewable Fuels, LLC Pixley, CA corn 60 60 Carbon Green Bioenergy Lake Odessa, MI corn 50 50 

# U. S . Fuel E thanol I ndustry B iorefineries and C apacityCardinal Ethanol Union City, IN corn 100 100 Cargill, Inc. Eddyville, IA corn 35 35 Cargill, Inc. Blair, NE corn 85 85 Cascade Grain Clatskanie, OR corn 108 0 Center Ethanol Company. LLC Sauget, IL corn 54 54 Central Indiana Ethanol, LLC Marion, IN corn 40 40 Central MN Ethanol Coop Little Falls, MN corn 21.5 21.5 Chief Ethanol Hastings, NE corn 62 62 Chippewa Valley Ethanol Co.* Benson, MN corn 45 45 Clean Burn Fuels, LLC Raeford, NC corn 60 Commonwealth Agri-Energy, LLC* Hopkinsville, KY corn 33 33 Corn Plus, LLP* Winnebago, MN corn 44 44 Corn, LP Goldfield, IA corn 60 60 Cornhusker Energy Lexington, LLC Lexington, NE corn 40 40 Dakota Ethanol, LLC* Wentworth, SD corn 50 50 DENCO, LLC Morris, MN corn 24 24 Didion Ethanol Cambria, WI corn 40 40 Dubay Biofuels Greenwood Greenwood, WI cheese whey 3 E Caruso (Goodland Energy Center) Goodland, KS corn 20 E Energy Adams, LLC Adams, NE corn 50 50 East Kansas Agri-Energy, LLC* Garnett, KS corn 35 35 ESE Alcohol Inc. Leoti, KS seed corn 1.5 1.5 Flint Hills Resources Menlo, IA corn 110 110 Flint Hills Resources Shell Rock, IA corn 110 110 Flint Hills Resources Fairbank, IA corn 110 110 Flint Hills Resources Iowa Falls, IA corn 90 90 Front Range Energy, LLC Windsor, CO corn 40 40 Gateway Ethanol Pratt, KS corn 55 0 Gevo Luverne, MN corn 21 21 Glacial Lakes Energy, LLC - Mina Mina, SD corn 107 107 Glacial Lakes Energy, LLC - Watertown* Watertown, SD corn 100 100 Golden Cheese Company of California* Corona, CA cheese whey 5 0 Golden Grain Energy, LLC* Mason City, IA corn 115 115 Golden Triangle Energy, LLC* Craig, MO corn 20 20 Grain Processing Corp. Muscatine, IA corn 20 20 Granite Falls Energy, LLC* Granite Falls, MN corn 52 52 Greater Ohio Ethanol, LLC Lima, OH corn 54 0 Green Plains Renewable Energy Lakota, IA corn 100 100 Green Plains Renewable Energy Riga, IA corn 57 57 Green Plains Renewable Energy Shenandoah, IA corn 65 65 Green Plains Renewable Energy Obion, TN corn 115 115 Green Plains Renewable Energy Bluffton, IN corn 115 115 Green Plains Renewable Energy Superior, IA corn 55 55 Green Plains Renewable Energy Central City, NE corn 100 100 Green Plains Renewable Energy Ord, NE corn 50 50 Guardian Energy Janesville, MN corn 110 110 Hankinson Renewable Energy, LLC Hankinson, ND corn 110 110 Heartland Corn Products* Winthrop, MN corn 100 100 Heron Lake BioEnergy, LLC Heron Lake, MN corn 50 50 Highwater Ethanol, LLC Lamberton, MN corn 55 55 Homeland Energy Solutions New Hampton, IA corn 100 100 Husker Ag, LLC* Plainview, NE corn 75 75 Idaho Ethanol Processing, LLC Caldwell, ID potato waste 4 4 Illinois River Energy, LLC Rochelle, IL corn 100 100 Iroquois Bio-Energy Company, LLC Rensselaer, IN corn 40 40 KAAPA Ethanol, LLC* Minden, NE corn 60 60Kansas Ethanol, LLC Lyons, KS corn 55 55 KL Process Design Group Upton, WY wood waste 1.5 1.5 Land O’ Lakes* Melrose, MN cheese whey 2.6 2.6 Levelland/Hockley County Ethanol, LLC Levelland, TX corn 40 40 Lifeline Foods, LLC St. Joseph, MO corn 40 40 Lincolnland Agri-Energy, LLC* Palestine, IL corn 48 48 Lincolnway Energy, LLC* Nevada, IA corn 55 55 Little Sioux Corn Processors, LLC* Marcus, IA corn 92 92 Louis Dreyfus Commodities Grand Junction, IA corn 100 100 Louis Dreyfus Commodities Norfolk, NE corn 45 45 Marquis Energy, LLC Hennepin, IL corn 100 100 Marquis Energy - Wisconsin, LLC Necedah, WI corn 50 50 Marysville Ethanol, LLC Marysville, MI corn 50 50 Merrick & Company Aurora, CO waste beer 3 3 Mid America BioEnergy & Commodities Madrid, NE corn 44 44 Mid-Missouri Energy, Inc.* Malta Bend, MO corn 50 50 Midwest Renewable Energy, LLC Sutherland, NE corn 25 25 Minnesota Energy* Buffalo Lake, MN corn 18 0 Nebraska Corn Processing, LLC Cambridge, NE corn 45 45 NEDAK Ethanol Atkinson, NE corn 44 44 Nesika Energy, LLC Scandia, KS corn 10 10 New Energy Corp. South Bend, IN corn 102 102 North Country Ethanol, LLC* Rosholt, SD corn 20 20 NuGen Energy Marion, SD corn 110 110 One Earth Energy Gibson City, IL corn 100 100 Otter Tail Ag Enterprises Fergus Falls, MN corn 57.5 57.5 Pacific Ethanol, Inc. Madera, CA corn 40 0 Pacific Ethanol, Inc. Stockton, CA corn 60 60 Pacific Ethanol, Inc. Burley, ID corn 50 50 Pacific Ethanol, Inc. Boardman, OR corn 40 40 Panda Ethanol Hereford, TX corn/milo 115 Parallel Products Rancho Cucamonga, CA beverage waste Parallel Products Louisville, KY beverage waste 5.4 5.4 Patriot Renewable Fuels, LLC Annawan, IL corn 100 100 Penford Products Cedar Rapids, IA corn 45 45 Pinal Energy, LLC Maricopa, AZ corn 55 55 Pine Lake Corn Processors, LLC Steamboat Rock, IA corn 31 31 Platinum Ethanol, LLC* Arthur, IA corn 110 110 Plymouth Ethanol, LLC* Merrill, IA corn 50 50 POET Biorefining - Alexandria Alexandria, IN corn 68 68 POET Biorefining - Ashton Ashton, IA corn 56 56 POET Biorefining - Big Stone Big Stone City, SD corn 79 79 POET Biorefining - Bingham Lake Bingham Lake, MN corn 35 35 POET Biorefining - Caro Caro, MI corn 53 53 POET Biorefining - Chancellor Chancellor, SD corn 110 110 POET Biorefining - Cloverdale Cloverdale, IN corn 92 0 POET Biorefining - Coon Rapids Coon Rapids, IA corn 54 54 POET Biorefining - Corning Corning, IA corn 65 65 POET Biorefining - Emmetsburg Emmetsburg, IA corn 55 55 POET Biorefining - Fostoria Fostoria, OH corn 68 68 POET Biorefining - Glenville Albert Lea, MN corn 42 42 POET Biorefining - Gowrie Gowrie, IA corn 69 69 POET Biorefining - Hanlontown Hanlontown, IA corn 56 56 POET Biorefining - Hudson Hudson, SD corn 56 56 POET Biorefining - Jewell Jewell, IA corn 69 69 POET Biorefining - Laddonia Laddonia, MO corn 50 50POET Biorefining - Lake Crystal Lake Crystal, MN corn 56 56 POET Biorefining - Leipsic Leipsic, OH corn 68 68 POET Biorefining - Macon Macon, MO corn 46 46 POET Biorefining - Marion Marion, OH corn 68 68 POET Biorefining - Mitchell Mitchell, SD corn 68 68 POET Biorefining - North Manchester North Manchester, IN corn 68 68 POET Biorefining - Portland Portland, IN corn 68 68 POET Biorefining - Preston Preston, MN corn 46 46 POET Biorefining - Scotland Scotland, SD corn 11 11 POET Biorefining - Groton Groton, SD corn 53 53 Prairie Horizon Agri-Energy, LLC Phillipsburg, KS corn 40 40 Quad-County Corn Processors* Galva, IA corn 30 30 Range Fuels Soperton, GA woody biomass 10 Red Trail Energy, LLC Richardton, ND corn 50 50 Redfield Energy, LLC* Redfield, SD corn 50 50 Reeve Agri-Energy Garden City, KS corn/milo 12 12 Renova Energy Torrington, WY corn 5 5 Show Me Ethanol Carrollton, MO corn 55 55 Siouxland Energy & Livestock Coop* Sioux Center, IA corn 60 60 Siouxland Ethanol, LLC Jackson, NE corn 50 50 Southwest Georgia Ethanol, LLC Camilla, GA corn 100 100 Southwest Iowa Renewable Energy, LLC* Council Bluffs, IA corn 110 110 Spectrum Business Ventures, Inc. Mead, NE corn 25 0 Sterling Ethanol, LLC Sterling, CO corn 42 42 Sunoco Volney, NY corn 114 114 Tate & Lyle Loudon, TN corn 67 67 38 Tharaldson Ethanol Casselton, ND corn/milo 110 110 The Andersons Albion Ethanol, LLC Albion, MI corn 55 55 The Andersons Clymers Ethanol, LLC Clymers, IN corn 110 110 The Andersons Marathon Ethanol, LLC Greenville, OH corn 110 110 Trenton Agri Products, LLC Trenton, NE corn 40 40 United Ethanol, LLC Milton, WI corn 52 52 United WI Grain Producers, LLC* Friesland, WI corn 49 49 Utica Energy, LLC Oshkosh, WI corn 48 48 Valero Renewable Fuels Albert City, IA corn 110 110 Valero Renewable Fuels Fort Dodge, IA corn 110 110 Valero Renewable Fuels Albion, NE corn 110 110 Valero Renewable Fuels Aurora, SD corn 120 120 Valero Renewable Fuels Charles City, IA corn 110 110 Valero Renewable Fuels Welcome, MN corn 110 110 Valero Renewable Fuels Hartley, IA corn 110 110 Valero Renewable Fuels North Linden, IN corn 110 110 Valero Renewable Fuels Bloomingburg, OH corn 110 110 Valero Renewable Fuels Jefferson Junction, WI corn 110 130 Western New York Energy, LLC Shelby, NY corn 50 50 Western Plains Energy, LLC* Campus, KS corn 45 45 Western Wisconsin Renewable Energy, LLC* Boyceville, WI corn 40 40 White Energy Russell, KS milo/wheat starch 48 48 White Energy Hereford, TX corn/milo 100 100 White Energy Plainview, TX corn 110 110 Wind Gap Farms Baconton, GA brewery waste 0.4 0.4
Yuma Ethanol Yuma, CO corn 40 40
U.S. C a p acit y TOTAL S 14,071.4 13,507.9 560 * locally owned Updated : January 2011

# New Faces in Places of Power
The results of the election have put Republicans in control of the House of Republicans and narrowed the majority of the Democrats in the Senate. The result of parties changing power in Congress is the minting of new chairmen of committees with jurisdiction over important ethanol policies. The most prominent change resulting from the power switch is the election of Representative John Boehner (R-OH) as Speaker of the House. Joining Speaker Boehner are Representative Fred Upton (R-MI) as the new chairman of the House Energy and Commerce Committee; Representative Dave Camp (R-MI) as the 

# O pening the D oor to the 112th C ongress

The results of the November election have brought more than 1 00 new members of both the H ouse and the Senate to Washington. These new members will bring with them new ideas and new priorities. Some will be intimately familiar with issues important to the ethanol industry. O thers will not be as familiar. Nevertheless, the RF

A

will do what it has done for the past 15 Congresses and work with our member companies to educate new and veteran lawmakers alike on the importance of a domestic ethanol industry and the potential of ethanol technologies to come.

new chairman of the House Ways and Means Committee; and Representative Frank Lucas (R-OK) as chairman of the House Agriculture Committee. While the Senate did not change hands, retirements and defeatshave led to a smaller Democratic majority and altered the makeup of key committees. Notably, Senator Debbie Stabenow (D-MI) is the new chair of the Senate Agriculture, Nutrition and Forestry Committee, which will begin work on a new farm bill in the 112th Congress.



# “ I t’s the E conomy, S tupid” As leaders of both political parties have stated, job creation and the economy will be a major focus for Congress. Such a focus provides American ethanol producers the opportunity to educate lawmakers and the public on the hundreds of thousands of jobs that are supported by ethanol production and to highlight the fact that these jobs cannot be sent to Arabian oil fields. A focus on jobs and the economy also presents a forum to enumerate the billions of dollars in new economic activities that come to communities with ethanol production facilities.

16 

### 20 11 will be a busy year for A merica’s ethanol industry. A

host of issues will be addressed, including:
n Tax policy n Commercialization of new technologies n E xpansion of infrastructure n A new farm bill n G reenhouse gas regulation
n Market expansion 

# 20 11 E thanol A genda2010 Ethanol Industry OUTLOOK 

# O pening the D oor to the 112th C ongress

CON G R ESS IONAL M AK EUP BY P ART Y 

# S

1 7 2011 E thanol I ndustry O U T L OO K 

# A Look into the O bama Administration Many are predicting that President Obama will make changes in his Cabinet as we begin the third year of his Administration. Even so, the consensus is this Administration’s support for domestic ethanol production and use will remain steadfast. The RFA and the entire ethanol industry must and will remain engaged with the White House, the Department of Energy, the Environmental Protection Agency, and the Department of Agriculture to help inform policy decisions and regulatory implementation. Issues such as the Renewable Fuel Standard, greenhouse gas emission regulation, loan guarantees for advanced and cellulosic ethanol technologies, and expanding the use of ethanol beyond current 10 percent limits will all be in play in the coming year.



# 2011 – E thanol’s E ye on Washington Both on Capitol Hill and off, in Washington and state capitals around the country, the upcoming year promises to be very active from the ethanol industry’s point of view. A bevy of issues will be debated and addressed. It will be incumbent upon the industry to invest the shoe leather needed to educate each and every member of Congress on important issues. The same holds true with regards to the Obama Administration where implementation of existing and new regulations will directly impact the bottom line for many ethanol producers. 

## GOP +64 Net Change 255 Democrats 178 Republicans

193 Democrats 242 Republicans 111th Congress

112th Congress 

# House

GOP +6 Net Change 59 Democrats 41 Republicans

53 Democrats 47 Republicans 111th Congress

112th Congress 

# Senate

# 21st C entury Policy for a 21st C entury I ndustry Ensuring that America’s ethanol industry – both current and developing technologies – remains the dynamic and innovative force it has been over the past decade is dependent upon responsible reforms of all energy tax policy. Every energy industry in the U.S. is supported in some part by preferential tax treatment and incentives from the federal government. True reform of ethanol tax policies can only come in the context of wide-ranging discussions of all forms of support for fossil fuel and renewable energies alike. 

# T ying T ogether Fiscal C oncerns with Progressive Policy

The defining issue in 20 1 0 was extension of the critical tax incentives that have helped level the playing field for ethanol in a market nearly monopolized by petroleum. Specifically, the Volumetric E thanol E xcise Tax Credit (V EE TC), which provides blenders of ethanol with a $0. 45 per gallon excise tax credit for each gallon of ethanol used, was extended for one more year. While this extension was critical, it sets the stage for yet another energy tax policy debate in 20 11 . The future success of both grain-based and cellulosic and advanced ethanol production will hinge in no small measure on whether thoughtful, responsible, and realistic policies that truly promote market access and technology commercialization – in good markets and bad – can be put into place.



# E thanol D ebate Requires C ontext Existing ethanol policies have been widely successful in building the world’s largest renewable fuels industry. The centerpiece of that policy framework has been the market-based tax incentive – VEETC. It has helped spur the use of ethanol beyond what’s needed to meet Clean Air Act and other requirements. It has encouraged the tens of thousands of small business owners that operate corner gas stations to invest in infrastructure to sell ethanol blends and allowed them to offer lower priced fuel to their customers. The challenge facing ethanol today is more than market access, it is still largely about market economics. Any reform of current policies must work for ethanol producers and consumers when the market is up as well as when it is down. If reform is to come to ethanol tax policy, it must do so as part of a much larger discussion shedding light on the hundreds of billions of dollars of federal support all forms of energy receive. Oil, natural gas, coal, nuclear – all have benefited from tax or other incentives. Many of these subsidies have lasted much longer than those for ethanol. All totaled, the incentives for ethanol pale in comparison

1 8 

### V EE TC is a $0. 45 per gallon tax credit available for each gallon of ethanol gasoline blenders and marketers use regardless of the ethanol’s origin. I t is applied against the federal excise tax on gasoline, thus reducing the price for consumers at the pump. A s a tax credit, it is not an ap

propriated sum of money that can be allocated for other 

# What is V EE TC?

# T ying T ogether Fiscal C oncerns with Progressive Policy

1 9 2011 E thanol I ndustry O U T L OO K 

### to the estimated $280 billion-a-year in federal subsidies for the highly lucrative petroleum industry that resulted in oil’s virtual monopoly over the U.S. transportation fuel market. 1 

### Advocates of reform must consider why current policies have been successful. VEETC has allowed gasoline marketers to reduce their tax burden and subsequently reduce the price for consumers at the pump. Those that would advocate simply shifting money from this program to another one must recognize that no pot of money exists to be shifted. Because it is a tax credit and not an earmark, VEETC has operated seamlessly from year to year and not required an appropriation from Congress. Any potentialreform should appreciate the practicality and efficacy of a marketbased policy to spur demand as well as drive investment in increased ethanol fueling infrastructure. Additionally, any reform must be careful to both provide for the continued expansion of the existing ethanol industry and the commercialization of advanced and cellulosic ethanol technologies. Incentives that are feedstock and technology neutral and that value reducing carbon emissions must be considered.


# A B ridge to the Future Those who have been critical of ethanol in the past should take a fresh and objective look at the industry today. Those within the industry should be willing to work with our critics to understand their concerns. Just as maintaining the status quo should not be an option, neither should simply allowing the ethanol industry to wither on the vine, leaving a void in the market that can only be filled by increased and significantly more costly oil imports. That of course is neither fiscally responsible nor environmentally sustainable. “With more research and incentives, we can break our dependence on oil with biofuels... We need to get behind this innovation. A nd to help pay for it, I ’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yester

day’s energy, let’s invest in tomorrow’s.”

President Barack O bama State of the Union Speech January 25, 2011 uses. I t is accompanied by an offsetting secondary tariff on imported ethanol to recover the value of V EE TC. A s foreign ethanol is treated equally under this tax provi

sion as domestic ethanol, the tariff protects A merican taxpayers from having to subsidize foreign ethanol production. 

### The most pressing issue is developing a roadmap for the future deployment of ethanol after 2011. The extensions have given the industry a year to create a plan, generate support, and implement it. We need to focus on higher ethanol blends and the infrastructure to deliver them.
Mike Jerke, General Manager, C hippewa Valley E thanol C ompany and RFA B oard Member I n T heir W O R DS

[1] Calculated by DTN/Progressive Farmer

.

# S panning the Range of E thanol B lends

To provide enough market capacity to allow for 3 6 billion gallons of renewable fuel in 2022, A merica needs to move beyond current artificial limits on ethanol blending. That means allowing for the use of blends above 1 0 percent ethanol ( E1 0) for all vehicles, expanding the fleet of flex-fuel vehicles (FFVs) able to use up to 8 5 percent ethanol ( E 8 5 ), and ensuring the infrastructure exists to dispense these fuels. To achieve the goals of the Renewable Fuel Standard (RFS), the nation will need more than 2 5 percent of the gasoline market to be comprised of renewable fuels.



# E 15 S plit D ecision In October 2010, the Environmental Protection Agency (EPA) approved the use of 15 percent ethanol (E15) in gasoline for cars and light duty trucks made in model year 2007 and later. In January 2011, EPA expanded upon that decision to include cars, pickups and SUVs made in model years 2001 through 2006. All told, that encompasses approximately 62 percent of all light duty vehicles on the road today. However, EPA has no immediate plans to review the efficacy of E15 for vehicles older than model year 2001, despite the fact most of these vehicles have outlived EPA’s definition of a useful life. An engineering analysis of vehicles from 1994-2000 done by automotive engineering firm Ricardo Inc. concluded “that the adoption and use of E15 in the motor vehicle fleet from the studied model years should not adversely affect these vehicles... or cause them to perform in a sub-optimal manner when compared with their performance using the E10 blend that is currently available.” EPA’s decisions have been met with muted enthusiasm from ethanol interests and outright hostility from automakers, oil companies, and engine makers to name a few. Currently, no fewer than three separate lawsuits have been filed to stop EPA’s partial waiver from moving forward. Despite the confusion caused by the split decision and pending litigation, work remains to ensure higher levels of ethanol, including E15, can be sold. Namely, concerns over proposed labeling language, health effects testing of E15 blends, state fuel regulations, and apprehension from gasoline retailers and automakers must all be addressed to see meaningful volumes of E15 available in the market.

202010 Ethanol Industry OUTLOOK 

# S panning the Range of E thanol B lends

2 1 2011 E thanol I ndustry O U T L OO K 

# B eyond the B lend Wall A wide variety of ethanol blends will be required to satisfy the demands of the RFS. E15 is just a start. Currently, testing is ongoing into the efficacy of 20 percent ethanol blends (E20) for use in conventional vehicles. Simultaneously, efforts to expand ethanol dispensing infrastructure are under way. To this end, the RFA is supporting efforts by the U.S. Department of Agriculture (USDA) to install 10,000 blender pumps over the next five years. Additionally, the RFA is working with lawmakers to craft responsible policy that properly incentivizes both blender pump infrastructure and the production of vehicles like FFVs capable of using high level ethanol blends. 

### E15 Label As part of the requirement of the partial waiver, E PA is creating a label to inform consumers which vehicles can

use E 15. T he RFA has vigorously participated in the process, working with industry partners and gasoline marketers to ensure E PA’s label is neither unnecessarily alarming nor misleading. T he RFA has summited comments to E PA and proposed the label seen on this page.



### EPA Fuel Registration

T he RFA is working with Growth E nergy to develop the necessary health effects data to register E 15 as a legal fuel.



### State Regulations
As with E 10 blends, the RFA is working with state regulators to properly adjust various fuel regulations to allow for the legal sale of E 15 blends.



### Point-of-Sale

B eyond working to develop an appropriate label, the RFA is working with retailers to address concerns over misfueling, E 15 storage and other issues. Namely, the RFA worked with the S ociety of I ndependent Gasoline Marketers of America ( SI GMA), the Petroleum Marketers Association of America (PMAA), and other fuel marketers to introduce the Renewable Fuels Marketing Act in the 111th C ongress. T he bill would provide a checklist for compliance to satisfy concerns of insurance companies covering gasoline retailers that all proper precautions and safety measures are in place. T he RFA will look to get the legislation reintroduced in the 112th C ongress. 

# T he E 15 C hecklist 

# 3

RFA Proposed Label EPA Proposed Label

# Unparalleled E nvironmental Gains The use of an increasing amount of ethanol in American gasoline supplies is making the air we all breathe much cleaner. Using the GREET model developed by the U.S. Department of Energy’s Argonne National Laboratory, 13 billion gallons of production and use last year helped reduce greenhouse gas (GHG) emissions from on-road vehicles by 21.9 million tons. That is equivalent to removing 3.5 million cars and pickups entirely from the road. Ethanol reduces greenhouse gas emissions through the uptake of carbon dioxide (CO 2 

### ) during the growth of ethanol feedstocks. Independent analyses comparing ethanol and gasoline show ethanol reduces GHG emissions from 30-50 percent, depending upon technologies and factors considered. A study published in Yale University’s Journal of Industrial Ecology found that GHG emissions from ethanol produced at modern dry-mill facilities are “...equivalent to a 48 percent to 59 percent reduction compared to gasoline, a twofold to threefold greater reduction than reported in previous studies.” Ethanol production is also becoming more efficient, requiring fewer energy inputs while yielding more ethanol. According to May 2010 research on ethanol production resource requirements in 2008 from the University of Illinois at Chicago, energy requirements for ethanol production have decreased 28 percent since 2001, electricity demands by 32 percent, and water use is down to 2.72 gallons per gallon of ethanol production. All of these improvements were achieved while improving ethanol yields by 5.3 percent. Naturally, ethanol also requires far less fossil fuel inputs than gasoline refining. According to the University of California at Berkeley, the production of 19 units of ethanol energy takes just one unit of petroleum energy. An analysis released by the U.S. Department of Agriculture in June 2010 concluded that one unit of fossil energy used in the corn ethanol production process results in 2.3 units of energy in the form of ethanol. In fact, it is gasoline and not ethanol that requires more energy to produce. Researchers at the Department of Energy’s Argonne National Laboratory found that it takes 1.23 units of fossil energy to produce one unit of energy in the form of gasoline. 

# T raversing the E nvironmental Landscape

There is no fuel available at scale today that can match ethanol’s ability to improve overall environmental quality compared to gasoline. From its biodegradable nature to reductions in greenhouse gas emissions and tailpipe pollution, ethanol provides a tool to address environmental concerns without requiring an entirely new way for goods and people to get from one place to another.



# Hot T opics for 2011

Environmental issues will continue to be front and center this year. Implementation of the RFS based upon its GHG emissions requirement needs additional monitoring as the science behind EPA’s determination of emissions continues to evolve while new regulations on the emissions from ethanol biorefineries seek to penalize ethanol production.


# I LU C T akes a Hit A common criticism of environmental activists opposed to ethanol is the notion of indirect land use change (ILUC). This idea states that land used to grow corn for ethanol production in the U.S. requires new acres elsewhere in the world to be brought into production. The resulting “carbon belch” of that land conversion must be attributed to ethanol’s lifecycle greenhouse gas accounting, as the theory goes. This theory originally took root in 2008 when environmental attorney Timothy Searchinger imagined that this carbon belch and the perceived emission of GHG through deforestation resulting from increased biofuel production was massive. Subsequently, carbon accounting policies both at thefederal and state level sought to penalize ethanol with this yet-tobe-proven theory. Now, with the benefit of time and improved scientific processes, those original doomsday predictions are being roundly disproven. New ILUC modeling results released by Purdue University in April 2010 reduced corn ethanol ILUC to about 15-18 grams of carbon dioxide (CO 2 

### ) per mega joule (g/MJ), compared to Searchinger’s original estimate of 104 g/MJ. Additionally, modeling done by Air Improvement Resource, Inc., the Department of Energy’s Oak Ridge National Laboratory, and others suggest little if any additional land was needed domestically or internationally to support the recent growth in U.S. ethanol production, thus eliminating the penalty for ILUC. As ILUC calculations are integral to ethanol’s lifecycle GHG emission profile as used by the RFS and in states such as California, these new findings demand a fresh look at ethanol’s environmental benefits.

22

# T raversing the E nvironmental Landscape

23 2011 E thanol I ndustry O U T L OO K 

## A mazonian Deforestation Rates Fall Analysis of satellite imagery by B razil’s National I nstitute for S pace Research ( I NP E ) demonstrates that deforestation rates in the B razilian Amazon have fallen to their lowest levels since the government began keeping data in 1988. T he destruction of rain forests is one of the chief criticisms of environmentalists opposed to ethanol production and use. Yet, as this data shows, deforestation rates are down 14 percent year over year while U. S . ethanol production rose more than 20 percent over the same period.



## corn e thanol indir e ct land use chan ge (il u c) pub li s h e d es ti m at es 

# S

110 100

90 80 70 60 50 40 30 20 10

0 Searchinger et al. (Science) Feb 08 U.S. EPA (RFS2 Proposal) May 09 CA Air Resources Board (ISOR)

Jan 09 U.S. EPA (RFS2 Final Rule) Feb 10 Hertel et al. (BioScience)

Mar 10 Purdue University Apr 10Grams CO2e/MJ (30 years/0% discount)104.063.330.028.427.013.9

Source: RFA

### A March 2010 report by the United Kingdom’s Department for Environment, Food and Rural Affairs found that, “available evidence suggests that biofuels had a relatively small contribution to the 2008 spike in agricultural commodity prices.” Even the World Bank, which in 2008 suggested biofuels was playing a large role in higher food prices, released an analysis in July 2010 that found “...the effect of biofuels on food prices has not been as large as originally thought...” and that “...the use of commodities by financial investors may have been partly responsible for the 2007-08 spike.” The U.K. and World Bank reports confirmed the findings of a 2009 Congressional Budget Office analysis that found “...from April 2007 to April 2008, the rise in the price of corn resulting from expanded production of ethanol contributed between 0.5 and 0.8 percentage points of the 5.1 percent increase in food prices measured by the Consumer Price Index (CPI). Over the same period, certain other factors—for example, higher energy costs—had a greater effect on food prices than did the use of ethanol as a motor fuel.” If any more evidence of ethanol’s trivial impact on food prices is needed, one needs only to consider that the CPI for food was projected to increase just 0.5-1.5 percent in 2010—the lowest annual food inflation rate since 1992. Even as ethanol production is set to reach record levels in 2011, USDA’s forecast for 2011 food inflation is 2 to 3 percent, compared to the more normal rate of 3 to 4 percent. 

# Food and Fuel

The ethanol industry continues to battle the “food vs. fuel” myth, although the debate is losing its intellectual foundation. Several new independent studies on the role of ethanol in the food price spike of 2008 confirmed the industry’s charge that ethanol production plays a marginal role in determining food prices.



# O ff to the Races in 2011 The food and fuel debate has plagued American ethanol production from the beginning. While the facts clearly demonstrate the marginal role of ethanol production in food prices, the recent rise in all commodity prices will undoubtedly refuel the inflammatory rhetoric that was rampant in the summer of 2008 as corn prices followed oil prices to record highs. According to some predictions, corn prices could approach the non-inflation adjusted highs seen in 2008. Like then, oil prices are also expected to rise to $100 or more per barrel. Such an environment is fertile ground for speculators, as the World Bank noted when it revisited the 2008 commodity bubble. Much of the speculation is being fueled by a perceived shortage in global grain supplies. Farmers base their planting decisions on price signals from the marketplace. Higher world prices for corn resulting in part from lower-than-expected 2010 production in the United States and elsewhere will lead farmers in other parts of the world to plant more corn instead of other less profitable crops. Further, U.S. farmers have a history of responding quickly to market signals by adjusting acreage and switching crops to best capitalize on current and expected prices. As an example, a short corn crop in 1995 caused prices to spike and left ending stocks at just 426 million bushels. Farmers responded the next year by increasing corn acres by 11 percent and boosting total production by 25 percent. More recently, farmers increased corn acreage by some 15 million acres in 2007 in response to demand and price signals. The 19 percent increase in corn acreage and 24 percent increase in production in 2007 clearly demonstrate the ability of farmers to react swiftly to changes in the marketplace. Hopefully, the lessons learned from the rush to judgment about the causes of the 2007/08 food price escalation will lead media and policymakers to take a more careful and measured approach to discussions of the current grain market situation and the role of biofuels.

2 4 2 4

# Food and Fuel

2 5 2011 E thanol I ndustry O U T L OO K 14,000
12,000
10,000
8,000
6,000
4,000
2,000

0Millions of Bushels

Feed & Residual DG/CG (fed) Production

Exports Ethanol (Net) Non-Ethanol Industrial

Source: USDA *Estimated 

## U.S. C orn use by segme nt 

# S

2 5 2011 E thanol I ndustry O U T L OO K 

## U.S. Ethanol’ s I nd us tr y Shar e of Glo b al Grain SUPP L Y * 

# S

Global Grain Supply for Other Uses 97% U.S. Ethanol

Industry

3%

Source: USDA and RFA *Estimated The impact of U .S. ethanol production on world grain supplies is minimal. U .S. ethanol production accounts for just 3 percent on a net basis of the second-largest global grain supply in history - 2. 6 billion metric tons. That means 97 percent of all the grain produced in the world is available for other uses. I n the U .S., where ethanol demand for corn has grown, so too has the production of livestock feed from ethanol biorefineries. A s the chart below points out, DD G S are becoming a growing source of feed for domestic use and for export. Global grain supply (corn, wheat, rice, etc) totaled more than 2.6 billion metric tons last year.

# C onnecting World Markets with E thanol

While domestic challenges consumed much of the debate around ethanol in 20 1 0, advancements in the global market for ethanol showed promise for establishing a true world trade in renewable fuels.



# S urging Global Production Matched by Growing D emand On the back of greater than anticipated ethanol production in the U.S., global production of ethanol grew nearly 15 percent in 2010 to 22.9 billion gallons. Leading ethanol producers in the U.S., Brazil, Canada, and Europe saw increases in ethanol production reflective of the growing appetite for renewable fuels. Perhaps even more representative is the growth seen in trade of ethanol, particularly in exports of ethanol from the U.S. Long a net importer of ethanol, the U.S. reversed course in 2010 by sending a record of more than 350 million gallons of denatured and undenatured ethanol to overseas markets. As previously noted, this surge in ethanol exports was mirrored by increases in exports of distillers grains. A record of nearly 9 million metric tons of this high value livestock feed were exported in 2010, with much of the product headed for markets in Asia and Europe. 

# B arriers to a Global Market

Expanding industries are bound to experience coinciding growing pains, and the global ethanol industry is no exception. While production and demand grow, so does the spotlight on trade policies in various regions.
One issue that has received repeated attention over the years is the charge by Brazil that the U.S. tariff on imported ethanol blocks the trade of ethanol between the two nations. Frustrated that they were unable to manipulate U.S. policy to meet their goals, the Brazilians are threatening action in the World Trade Organization. However, as has always been the case, Brazil or any other potential importer of ethanol to the U.S. are beneficiaries of the tax credit known as VEETC. Because VEETC is applied equally to all gallons of ethanol regardless of origin, Congress imposed a secondary tariff to recapture the value of VEETC and



## 2010 Glo b al e thanol p rod u ction (millions of gallons)* 

# S

Source: F.O. Lichts

2 6 

### C ontinent Africa Asia Australia E urope North and C entral America O ceania S outh America 2010 43.59 785.91 66.04 1,208.58 13,720.99 66.04 7,121.76

Nation B razil C anada C hina E uropean Union 2010 6,921.54 356.63 541.55 1,176.88
*Estimated

# C onnecting World Markets with E thanol

prevent American taxpayers from further subsidizing ethanol industries that already receive handsome government support in their own countries.
A new issue has also arisen in the European Union (EU). Because of EU tariff schedules, ethanol blended with just 10 percent gasoline can be imported into the economic zone at a lower rate than traditional denatured or undenatured ethanol. Following the recent rise in exports to Europe, EU officials have charged that American ethanol tax policy is encouraging further use of this tariff loophole through such trade. However, imports of ethanol with the additional gasoline blending have been entering EU markets and paying the lower Source: F.O. Lichts 

### tariff for years. While the complaints of the European ethanol industry are understandable, their angst is misguided. This issue is largely one of EU tariff policy and not U.S. tax policy.
Finally, and most recently, China announced that it would be conducting an investigation into an antidumping claim lodged by Chinese ethanol and dry distillers grains (DDGs) producers regarding the exports of U.S. dry distillers grains. China claims that alleged DDGs dumping into the country’s livestock markets is presenting unfair competition to China’s own ethanol producers who cannot produce DDGs as cheaply. The U.S. ethanol industry strongly disputes China’s antidumping claims and is confident that the results of the investigation will render the complaint moot.



## H i s toric U.S. Ethanol Imp ort s (millions of gallons) 

# S

2002 2003 2004 2005 2006 2007 2008 2009 2010 MGY 45.5 60.9 159.9 135.5 653.3 435.2 600.0 193.7 10.0*



## H i s toric U.S. Ethanol EX p ort s ( D enatured and Undenatured, N on-Beverage, in millions of gallons) 

# S

2002 2003 2004 2005 2006 2007 2008 2009 2010 MGY 46.8 63.4 47.3 62.7 36.8 150.2 157.7 113.3 350.0* Source: International Trade Commission, RFA

27 2011 E thanol I ndustry O U T L OO K 

### Nation B razil C anada C hina E uropean Union 2010 6,921.54 356.63 541.55 1,176.88 *Estimated

# T he D evil is in the D etails For the past 30 years, the RFA has been and remains the unchallenged expert on the critical technical issues that are the difference between the smooth integration of ethanol into the nation’s fuel mix and failure to access the marketplace. RFA’s Technical Committee, comprised of leading experts within the ethanol industry, actively engages international, national, and state level regulatory and standard-setting agencies to develop specifications that allow for the maximum amount of ethanol use in the marketplace. The work of the Technical Committee has been instrumental in opening new markets to ethanol blends and setting standards within ASTM and other bodies that allow for the seamless integration of ethanol into gasoline products coast to coast. In 2011, the expertise of Technical Committee members will be instrumental in addressing the ongoing decisions of EPA regarding the use of E15 and other higher level ethanol blends in motor vehicles. Additionally, committee members will be engaged with federal and state regulators to amend current fuel regulations to allow for the widespread availability of E15. The work of the Technical Committee with regard to fuel specifications and the proper use of ethanol blends can be found in the Changes In Gasoline Manual: Fourth Edition . This resource has become the definitive reference for auto technicians, engine repair shops, and fuel distributors. The full manual is available for free at www.EthanolRFA.org. In short, the ability of domestically-produced ethanol from all feedstocks to capture more market share and fulfill the goals set forth by the Renewable Fuel Standard is in no small measure dependent upon successful outcomes to the many technical issues regarding fuel ethanol. 

# RFA B ehind the S cenes

Much of the work that is needed to allow A merican ethanol production to grow and evolve is done out of the spotlight and without fanfare. Whether it is dealing with specifications for various substances in ethanol measured in parts per million, expanding markets for all products of ethanol production, or providing the necessary information for the safe operation and transport of ethanol, the success of the industry is as much a function of quality technical expertise as it is policy development.



# More than Fuel The importance of distillers grains and other feed co-products provided by American ethanol producers has never been more prominent. As domestic livestock and poultry producers research new and increased uses for DDGs and global trading partners discover the value of this product, the quality and reliability of the DDGs produced is paramount. The RFA’s Co-products Committee has stayed fully abreast of all the issues regarding the trade and use of DDGs. Members of the committee routinely interact with our trading partners and other groups, such as the U.S. Grains Council and the National Corn Growers Association, to appropriately address any issues that may arise as well as capitalize on new markets and opportunities for the use of DDGs.

282010 Ethanol Industry OUTLOOK 

# RFA B ehind the S cenes

29 2011 E thanol I ndustry O U T L OO K 

# S afety First The safety of employees within the ethanol industry and our neighbors in the communities in which the ethanol industry operates is priority number one. The Ethanol Emergency Response Coalition (EERC, www.ethanolresponse.com), a coalition of both industry and government representatives and led by the RFA Plant and Employee Safety Committee, provides detailed and up to date training materials to first responders to educate them about techniques and tools that are most effective in responding to ethanol-related incidents. The EERC’s flagship resource, the Complete Training Guide to Ethanol Emergency Response , has been distributed to more than 3,000 personnel all across the world and is continually updated to offer the most accurate information available. In addition to emergency response, the RFA Safety Committee also provides industry best practices focused squarely on the safety of employees and neighbors. The Safety Committee monitors new regulations from federal and state safety bodies such as the Occupational Safety and Health Administration (OSHA) and the U.S. Department of Transportation and provides ethanol biorefineries with recommended practices to ensure the safety of all employees. From combustible dust regulations to improved accident frequency rates, the RFA Plant and Employee Safety Committee’s mission is continuous improvement. 

# S taying in C ompliance The RFA Environmental Compliance Committee has put a priority on protecting the environment while providing a forum for navigating the complex environmental regulations imposed on ethanol production facilities. EPA’s Greenhouse Gas Tailoring Rule, Mandatory Greenhouse Gas Reporting requirements and Industrial Wastewater regulations are all topics leading the agenda of this committee.

29 2011 E thanol I ndustry O U T L OO K 

### The RFA’s value to the industry stretches far beyond Washington. Whether it’s fuel regulations, product quality improvements, implementation of federal regulations, or keeping employees and our communities safe, the technical information the RFA provides is invaluable to operating an ethanol plant and meeting the needs of our customers. The technical expertise of the RFA staff is second to none.

C huck Woodside, CEO of KAAPA E thanol and RFA C hairman of the B oard I n T heir W O R DS

# Pedal to the Metal in 2011 The RFA Market Development Team has partnered with the American Coalition for Ethanol (ACE), the National Corn Growers Association (NCGA), and 12 state corn grower associations toeducate gasoline marketers and retailers about the use of midlevel ethanol blends (MLEBs) and the blender pumps needed to dispense them. Begun in 2009, the Blend Your Own (BYO) Ethanol campaign has worked tirelessly to lay the groundwork for extensive installation of blender pumps. With certification from Underwriters Laboratories (UL) of several blender pump models, the marketplace now has access to both the technology and the information to install, offer, and market MLEBs to the American driver. To date, the BYO campaign has contacted tens of thousands of retailers, provided thousands of sales kits, and participated in dozens of leading petroleum industry meetings all across the country. More information about the campaign and access to blender pump information is available at www.BYOethanol.com. 

# B uilding Awareness, D riving D emand

E thanol is a high-octane, cleaner-burning, and cheaper alternative to imported oil for fueling A merica’s vehicle fleet. The production of ethanol is providing economic opportunity for tens of thousands of A mericans, particularly those living in rural areas. Telling consumers the benefits of ethanol, and more importantly where they can buy it, is vital to ensuring the policies enacted are successful.


# Giving C onsumers C hoice Outside the mission of the BYO Ethanol campaign, the RFA’s Market Development team is focused on identifying opportunities to assist gasoline retailers in offering MLEBs, up to E85. Seeking out markets with high concentrations of flex-fuel vehicles (FFVs) capable of using higher ethanol blends, the Market Development team has partnered with fuel providers like Protec and pump providers like Gilbarco to put blender pumps and E85 pumps in locations all across the country. One notable success of the RFA’s marketing efforts is the adoption of E85 by a growing number of military installations across the country. Government fleets, including military vehicles, must give preference to alternative fuels where available. The problem has been a lack of availability of E85 for the tens of thousands of military FFVs. An example of this expansion is the installation of an E85 pump at the front gate of the Norfolk Naval Air Station in Norfolk, Virginia. There are more than 10,000 FFVs near the Naval Station that previously had no access to E85.

302010 Ethanol Industry OUTLOOK 

# D ifferent S trokes for D ifferent Folks The American consuming public is not homogenous. Different approaches and creative thinking are required to bring ethanol’s message to a diverse consuming public. What works with lawmakers on Capitol Hill may not speak to mothers in suburban Atlanta. Ethanol’s economic benefits are of interest to farmers in Nebraska, but ethanol’s performance is what will move motorcycle enthusiasts in Sturgis, South Dakota. Recognizing these differences, the RFA has engaged in a wide variety of marketing initiatives to engage, inform, and ultimately motivate millions of Americans to choose ethanol.


# C hoose E thanol.com Driving RFA’s consumer marketing is the website www.ChooseEthanol.com. The site contains simple information about American ethanol, a listing of FFVs to help consumers identify if they are driving one, and tools to help drivers find ethanol fueling locations in their neighborhoods.



# T here’s an App for T hat On the cutting edge of technology, the RFA has launched several applications for mobile devices – smartphones, iPhones, iPads – to help consumers locate E85 fueling locations. These apps use GPS technology to alert drivers to gas stations near them offering ethanol blends. Directions to download and install these apps are available on www.ChooseEthanol.com. Additionally, programming for GPS devices such as the Garmin and TomTom is also available for download. 

# B uilding Awareness, D riving D emand

3 1 2011 E thanol I ndustry O U T L OO K 

# All About Alternatives The RFA recognizes that America will need a host of renewable energy choices to end our addiction to oil. After securing a two-year Department of Energy grant in 2009, the RFA is working with the biodiesel, natural gas, and propane industries on a national education effort. Partnering with Clean Cities coordinators in major metropolitan areas across the country, this effort seeks to educate those making fueling infrastructure decisions about the merits of these various alternative fuels. The program consists of in-person training and online webinars to provide up-to-date information on all fuel technologies. The program will continue in 2011.

### The expertise of the RFA and its members is not limited to Capitol Hill. For 30 years, the RFA has been the authoritative voice on the technical issues that determine the size of ethanol’s market share. The RFA has worked with regulators to implement amendments to the Clean Air Act (CAA) in the 1990s that expanded ethanol’s position in major markets seeking to come into compliance with CAA requirements. The RFA has also led efforts to amend state regulations to allow for the use of E10 and continues those efforts in advance of the introduction of E15. The ability of the RFA’s staff to be successful is derived from the commitment of its members to the mission of the association. The RFA has been able to advocate on behalf of American ethanol production because those who actually produced the fuel supported the RFA and the industry. As the industry moves forward, the RFA will continue to advocate on its behalf to enact policies and meaningfully expand the market for all ethanol producers regardless of feedstock. 

# T he RFA at 30

Since 1 98 1 , the Renewable Fuels A ssociation has been the unparalleled voice of A merican ethanol in Washington and around the world. The RF A

and its members have been at the center of every successful policy fight and market initiative that has meaningfully expanded ethanol production and use. No fewer than five times has the RF A

and its members successfully convinced Congress to extend key tax incentives for ethanol use, including the unlikely extension at the end of the year in 20 1 0. The RF A

and its members were a driving force helping to establish the first Renewable Fuel Standard (RFS) in 200 5

. A nd, it was the RF A

and its members that led the push to expand the RFS 5 00 percent just two years later.



# RFA S taff

Washington D

. C

. O ffice
Cara Barrett Administrative Assistant Bob Dinneen President & CEO Mary Giglio Director, Special Projects and Events Matt Hartwig Director of Public Affairs Edward S. Hubbard, Jr., Esq. Legislative Counsel Christina Martin Executive Vice President Taryn Morgan Communications Specialist Alex Obuchowski Chief Financial Officer Anne Rhine Office Manager Samantha Slater Vice President, Government Affairs Matt Stuckey IT Director

S t. Louis O ffice Geoff Cooper Vice President, Research and Analysis Ann Lewis Project Manager Kristy Moore Director, Technical Services

O maha O ffice Taylor Irish Marketing Coordinator Randy Klein Director of Membership Jen Kracher Administrative Assistant Missy Ruff Market Development Manager Robert White Director of Market Development

32

# T he RFA at 30

Membership RFA membership includes a broad cross-section of businesses and organizations dedicated to the expansion of the U.S. fuel ethanol industry.

S upporting Members enjoy: n Participation in Annual Membership meeting n Industry alerts and issue briefs n Access to Association publications and educational materials n Reduced registration fee for National Ethanol Conference
Prospective Producer and Associate Members enjoy all benefits of S upporting Members and additionally: n Weekly updates on regulatory, legislative, research and technical market development and communication issues. n Provide input on RFA policy, activities and priorities through attendance at Annual Membership meeting n Networking opportunities with producer members n Link on RFA web site n Access to Member Center section of RFA web site n Committee participation Producer Members receive all benefits of Prospective Producers, Associate and S upporting Members, while also enjoying unique benefits including: n Voting member of the RFA Board of Directors n Participation in Association meetings and the development of policies n Eligible to serve as a member of the Association’s Executive Committee n Timely and accurate legislative and regulatory updates, alerts and issue briefs n State legislative activity summary n Industry reports and studies 

# RFA C ommittees
Within the association, the RFA has a host of committees that address issues ranging from blending and performance standards to safety concerns to the development of cellulosic ethanol technology. The committees include:

T

echnical C ommittee E nvironmental C ompliance C ommittee C ellulose C ommittee C o-Products C ommittee Plant & E mployee S afety C ommittee

The Renewable Fuels Foundation (RFF) is dedicated to meeting the education, research and strategic planning needs of the U.S. fuel ethanol industry.
The goal of the RFF is to assure a growing and healthy renewable fuels industry well into the future. The focus of the RFF is toward academia, industry and public policy makers as we address issues related to new uses, new feedstocks and new technologies that will impact the future of ethanol. More information on the RFF is available at www.renewablefuels-foundation.org



### .

RFF O fficers Mike Jerke Chairman Chippewa Valley Ethanol Company

Bob Sather Vice Chairman Ace Ethanol, LLC

Mick Henderson Treasurer Commonwealth Agri-Energy, LLC

Steve Gardner Secretary East Kansas Agri-Energy, LLC

33 2011 E thanol I ndustry O U T L OO K

# Prospective Producer Members

BioEnergy International, LLC www.bioenergyllc.com BioFuel Energy, LLC www.bfenergy.com BlueFire Ethanol, Inc. www.bluefireethanol.com Bunge North America www.bungenorthamerica.com Corn, LP www.cornlp.com DuPont Danisco Cellulosic Ethanol www.ddce.com First United Ethanol, LLC www.firstunitedethanol.com Heron Lake BioEnergy, LLC www.heronlakebioenergy.com INEOS New Planet BioEnergy, LLC www.inpbioenergy.com Iogen Corp. www.iogen.ca Osage Bio Energy www.osagebioenergy.com Penford Products Company www.penfordproducts.com Permolex International, LP www.permolex.com Range Fuels, Inc. www.rangefuels.com Renewable Energy Technologies, LLC SWI Energy, LLC Taunton Regional Solid Waste Management Facility Verenium Corp . www.verenium.com ZeaChem, Inc . www.zeachem.com



# Associate Members

AgCountry Farm Credit Services www.agcountry.com AGRA Industries, Inc. www.agraind.com AgStar Financial Services www.agstar.com Alfa Laval, Inc. www.alfalaval.com Arisdyne Systems, Inc. www.arisdyne.com Barr Engineering Company www.barr.com BBI International www.bbibiofuels.com BetaTec Hop Products, A Division of John I Haas, Inc. www.betatechopproducts.com Biofields S.AP.I de C.V. www.biofields.com BrownWinick www.brownwinick.com Carl Marks Advisory Group www.carlmarks.com Ceres, Inc. www.ceres.net CF Industries www.cfindustries.com CH2M Hill www.ch2m.com Christianson & Associates, PLLP www.christiansoncpa.com CHS Inc . www.chsinc.com CME Group www.cmegroup.com CoBank www.cobank.com Codexis, Inc. www.codexis.com Cogent BioFuels, LLC www.cogentbiofuels.com Consolidated Grain & Barge Co. www.cgb.com CSX Transportation www.csx.com Dorsey & Whitney, LLP www.dorsey.com Eco-Energy, Inc. www.eco-energyinc.com Encore Business Solutions www.encorebusiness.com Fagen, Inc. www.fageninc.com Farm Credit Bank of Texas www.farmcreditbank.com FCStone, LLC www.intlfcstone.com Fermentis - S.I. Lesaffre www.fermentis.com Fremont Industries, Inc. www.fremontind.com Fulbright & Jaworski L.L.P. www.fulbright.com G Cube Insurance Services www.gcube-insurance.com GATX Rail www.gatx.com Gavilon, LLC www.gavilon.com Genencor, A Danisco Division www.genencor.com Gold Eagle Co. www.goldeagle.com Grace Davison www.grace.com Greenfield Ethanol Inc. www.greenfieldethanol.com Growmark, Inc. www.growmark.com Hydro-Klean, Inc. www.hydro-klean.com Innospec Fuel Specialties www.innospecinc.com Iowa Renewable Fuels Association www.iowarfa.org KATZEN International, Inc. www.katzen.com Kenan Advantage Group, Inc. www.thekag.com Kinder Morgan Inc. www.kne.com Lallemand Ethanol Technology www.ethanoltech.com Lansing Ethanol Services, LLC www.lansingtradegroup.com Leonard, Street and Deinard www.leonard.com Lignol Energy Corp. www.lignol.ca Lincoln Energy Solutions www.lincolnenergysolutions.com Mascoma Corporation www.mascoma.com Michael Best & Friedrich, LLP www.michaelbest.com Midwest Laboratories, Inc. www.midwestlabs.com
Monsanto www.monsanto.com

3 42010 Ethanol Industry OUTLOOK 

### Motiva Enterprises LLC www.motivaenterprises.com Murex, N.A., Ltd. www.murexltd.com Musket Corporation www.musketcorp.com Nalco Company www.nalco.com National Corn Growers Association www.ncga.com National Grain Sorghum Producers www.sorghumgrowers.com Noble Americas Corp. www.thisisnoble.com NorFalco Inc. www.norfalco.com North American Bioproducts Corp. www.na-bio.com North Dakota Corn Council www.ndcorn.org Novozymes North America, Inc. www.novozymes.com PhibroChem www.phibrochem.com Pinnacle Engineering Inc. www.pineng.com Pioneer, A DuPont Company www.pioneer.com PRX Geographic, Inc. www.prxgeo.com Qteros www.qteros.com Renewable Products Marketing Group www.rpmgllc.com RSM McGladrey www.mcgladrey.com SGS www.sgs.com Stoel Rives LLP www.stoel.com SunOpta BioProcess www.sunopta.com TMO Renewables LTD www.tmo-group.com TransMontaigne Product Services www.transmontaigne.com Transportation Fuels Consulting Inc. TranSystems www.transystems.com Tranter PHE, Inc. www.tranter.com Trinity Rail Group, LLC www.trinityrail.com U.S. Development Group www.us-dev.com U.S. Energy Services, Inc. www.usenergyservices.com U.S. Water Services www.uswaterservices.com Union Pacific Railroad www.up.com Union Tank Car Company www.utlx.com Victaulic www.victaulic.com
Weaver www.weaverllp.com Western Ethanol Company, LLC www.westernethanol.com 

# S upporting Members

Agricultural Retailers Association www.aradc.org Angelina College www.angelina.edu Bemidji (MN) State University www.bemidjistate.edu Bismarck State College www.bsc.nodak.edu Colorado Farm Bureau www.colofb.com Corn Marketing Program of Michigan www.micorn.org Distillers Grains Technology Council www.distillersgrains.org Downstream Alternatives Ethanol Producers and Consumers www.ethanolmt.org Illinois Corn Growers Association www.ilcorn.org Indiana BioFuels Alliance www.indianabiofuels.com Iowa State University www.iastate.edu Jamestown/Stutsman Development Corp. www.growingjamestown.com Kansas Association of Ethanol Processors www.ethanolkansas.com Maryland Grain Producers Utilization Board www.marylandgrain.com Michigan State University – Department of Agricultural Economics www.aec.msu.edu Milano the New School www.newschool.edu/milano Minnesota Corn Growers Association www.mncorn.org Minnesota Department of Agriculture www.mda.state.mn.us Mississippi State University – Department of Forestry www.cfr.msstate.edu/forestry Missouri Corn Growers Association www.mocorn.org Morton College www.morton.edu National Corn-to-Ethanol Research Center www.ethanolresearch.com Nebraska Corn Board www.nebraskacorn.org New Jersey Gasoline C-Store Automotive Association (NJGCA) www.njgca.org Ohio Corn Marketing Program www.ohiocorn.org
REDDI www.reddionline.org South Dakota Corn Growers Association www.sdcorn.org Steele-Waseca Cooperative Electric www.swce.coop Sugar Processing Research Institute www.spriinc.org Texas Renewable Energy Industries Association www.treia.org United Association www.ua.org Water Assurance Technology Energy Resources www.waterc3.com Western Iowa Tech Community College – The National Boiler Training and Renewable Fuels Institute www.boiler.witcc.edu Western Petroleum Co. www.westernpetro.com Wisconsin Pipe Trades Association www.wipipetrades.org

3 5 2011 E thanol I ndustry O U T L OO K

### Washington, DC O ffice 425 Third Street, SW, Suite 1150 Washington, DC 20024 TEL: 202-289-3835 FAX: 202-289-7519 email: info@ethanolrfa.org St. L ouis O ffice
16024 Manchester Rd. Suite 223 Ellisville, MO 63011 (636) 594-2284 O maha O ffice 17310 Wright Street Suite 104 Omaha, NE 68130 TEL: 402-391-1930 FAX: 402-939-0590 

## www. E thanolRFA.org