1

2021 Report on Ethanol Market Concentration

I. Introduction

This Report presents the Federal Trade Commission’s (“Commission” or “FTC”) 

concentration analysis of the ethanol production industry for 2021.

1

 The report includes certain 

data and information from the U.S. Energy Information Administration (“EIA”), industry 

participants, and other sources.2 Section 1501(a)(2) of the Energy Policy Act of 2005 requires 

that the FTC annually “perform a market concentration analysis of the ethanol production 

industry . . . to determine whether there is sufficient competition among industry participants to 

avoid price-setting and other anticompetitive behavior.”3

 Pursuant to the statute, the FTC must 

measure concentration using the Herfindahl-Hirschman Index (“HHI”) and consider all 

marketing arrangements among industry participants in preparing its analysis.4 Also pursuant to 

the statute, the FTC delivers its report to Congress and the Administrator of the Environmental 

Protection Agency (“EPA”) by December 1 of each year.

The HHI is a measure of market concentration. A given market’s HHI is the sum of the 

squares of the individual market shares of all market participants.5 As in previous reports, FTC 

staff (“staff”) analyzed concentration based on U.S. ethanol production capacity and actual 

production of ethanol. Staff’s analysis does not address whether ethanol production in any 

geographic area constitutes a relevant antitrust market; instead, it calculates concentration on a 

1 This Report builds upon Commission reports from previous years. Prior reports contain background information 

not included in this Report. See FTC, Oil and Gas Industry Initiatives, Competition Policy: Reports, 

https://www.ftc.gov/tips-advice/competition-guidance/industry-guidance/oil-and-gas.

2 Certain data and information relied upon in this Report may be revised or updated between annual reports. 3 Energy Policy Act of 2005, Pub. L. No. 109-58, § 1501, 119 Stat. 1067, 1074, amended by Energy Independence 

and Security Act of 2007, Pub. L. No. 110-140, 121 Stat. 1492. For purposes of this Report, we presume that 

Congress used the term “price-setting” to mean “illegal price fixing.”

4 Id.

5 For example, a four-firm market with market shares of 30 percent, 30 percent, 20 percent, and 20 percent has an 

HHI of 2600 [(30*30) + (30*30) + (20*20) + (20*20) = 2600]. HHIs range from 10,000 in a one-firm (pure 

monopoly) market to a number close to zero in a highly unconcentrated market.
2

nationwide basis, based on ethanol production capacity and actual ethanol production. For both 

measures, HHIs are calculated for producers and marketers. For both production capacity and 

actual production, concentration for producer shares is lower than concentration for marketer 

shares. Based on production capacity, the HHIs are 561 for producer-based shares and 809 for 

marketer-based shares. Based on actual production, the HHIs are 526 for producer-based shares 

and 847 for marketer-based shares. There has been an increase in concentration since last year 

for each of the four categories.

The low level of concentration and large number of market participants in the U.S. 

ethanol production industry continue to suggest that the exercise of market power to set prices, or 

coordinate on price or output levels, is unlikely on a nationwide basis. As has been the case each 

year since the Commission began reporting, the current HHIs indicate that the industry is 

unconcentrated nationwide.6

 At this level of concentration, a single ethanol producer or 

marketer likely lacks market power. Successful anticompetitive coordination would require 

agreement among a very large number of competitors and thus is similarly unlikely. Moreover, 

imports and the possibility of entry would likely impede the exercise of market power by any 

group of domestic firms.

II. Industry Updates

A. Renewable Fuel Standard

Since 2005, Congress has required that the national transportation fuel supply contain 

a minimum annual volume of renewable fuels, including fuel ethanol.7 This mandate, known 

6 The Commission and the U.S. Department of Justice characterize markets in which the HHI is below 1500 as 

unconcentrated. U.S. Department of Justice and Federal Trade Commission Horizontal Merger Guidelines § 5.3 

(2010), https://www.ftc.gov/sites/default/ files/attachments/merger-.review/100819hmg.pdf (“Horizontal Merger 

Guidelines”).

7 See Energy Policy Act of 2005 § 1501, supra note 3.
3

as the Renewable Fuel Standard (“RFS”), increases every year. In 2007, Congress revised the 

RFS, significantly increasing the minimum volumes of ethanol and adding requirements for 

advanced biofuels.8

 The annual use of renewable fuels did not keep pace with the statutory 

RFS requirements, however.

9

 This situation has prompted the EPA for several years to use its

rulemaking authority to decrease the annual requirements below the statutory volumes.

10 For 

2021, the RFS mandates 33.0 billion gallons of renewable fuel, 15.0 billion gallons of which 

can be conventional corn ethanol.11 The 2021 advanced biofuels target is 18.0 billion gallons, 

at least 13.5 billion gallons of which must be cellulosic biofuel.12 The final renewable fuel 

standards for 2021 are forthcoming.13

B. Supply and Demand

Most market participants that staff interviewed characterize the ethanol industry as 

having excess capacity. Some market participants, however, describe the industry as having 

sufficient capacity. Most market participants interviewed stated that demand for ethanol 

substantially recovered to a more normal level this year, along with demand for gasoline, after 

8 “Advanced biofuel” refers to a renewable fuel, other than ethanol derived from corn starch, that has lifecycle 

greenhouse gas emissions that are at least 50 percent less than the average greenhouse gas emissions of the baseline 

fossil fuel. 42 U.S.C. § 7545(o)(1)(B)(i). Advanced biofuels include, but are not limited to, cellulosic biofuel and 

biomass-based diesel. Id. § 7545(o)(1)(B)(ii)(I)-(VII).

9 See 2013 Ethanol Report, supra note 1, at 4; 2014 Ethanol Report, supra note 1, at 3; 2015 Ethanol Report, supra

note 1, at 3.

10 See 2016 Ethanol Report, supra note 1, at 3 (discussing revised volume requirements), and subsequent reports. 

The Clean Air Act provides EPA authority to adjust cellulosic, advanced, and total volumes set by Congress as part 

of the annual rulemaking process. See EPA, Overview for Renewable Fuel Standard, 

https://www.epa.gov/renewable-fuel-standard-program/overview-renewable-fuel-standard (last visited Oct. 28, 

2021).

11 42 U.S.C. § 7545(o)(2)(B)(i)(I). 

12 Id. § 7545(o)(2)(B)(i)(II)-(III).

13 EPA, Renewable Fuel Annual Standards, https://www.epa.gov/renewable-fuel-standard-program/renewable-fuelannual-standards (last visited Nov. 8, 2021). The EPA’s volume requirements, like the statutory RFS mandate, set a 

target for total renewable fuels and include a nested requirement for advanced biofuels. Thus, each gallon of fuel 

that meets the advanced biofuels requirement also counts toward the total renewable fuels requirements. Once 

obligated parties meet the minimum requirement for advanced biofuels, they may meet any remaining obligation 

under the total renewable fuels requirement with conventional corn ethanol.
4

previously declining due to the COVID pandemic. Some market participants reported idling 

plants during the last year due to the pandemic, and subsequently restarting some of those 

plants. Market participants noted that although some ethanol producers shifted some

production to ethanol for hand sanitizer during the pandemic, interest in supplying hand 

sanitizer is now less or uncertain.

Most market participants interviewed stated that the vacatur of the EPA’s 2019 

regulatory changes to allow E15 gasoline to be sold year-round, rather than limited to eight

months of the year, would have little immediate impact of demand for ethanol.14 Some 

market participants, however, allowed that the decision may create uncertainty for some gas 

stations considering future options for E15. The EPA had previously finalized regulatory 

changes in 2019 to allow E15 to be sold year-round, rather than limited to eight months of the 

year.15 A reason for this rule change was to remove barriers that limited potential growth in 

biofuel consumption.16 On appeal, the reviewing court found the EPA’s logic justifying 

extending its waiver authority for E10 to also cover E15 gasoline to be unpersuasive, and 

therefore vacated the rule.17 In addition, most market participants interviewed stated that a 

Supreme Court decision holding that small refiners and others can receive extensions of their 

exemptions to the RFS, even if their earlier exemptions had lapsed, would have little impact 

on demand for ethanol.18

14 E15 is gasoline blended with 15 percent ethanol.

15 Historically, EPA regulated the use and required volumes of biofuels on an E10 standard with 10 percent ethanol, 

as contemplated by the 2005 and 2007 laws. See supra note 3. The EPA’s 2019 final E15 rule interpreted E10 and 

E15 to be substantially similar for the purpose of expanding the use of biofuels in the gasoline supply. EPA, Final 

Rule, Modifications to Fuel Regulations To Provide Flexibility for E15; Modifications to RFS RIN Market 

Regulations, 84 Fed. Reg. 26980 (June 10, 2019).

16 Id. at 26981. 17 Am. Fuel & Petrochem. Manuf. v. EPA, 3 F.4th 373, 382-84 (D.C. Cir. 2021) (vacating rule), petition for cert. 

docketed, Growth Energy v. Am. Fuel & Petrochem. Manuf. v. EPA (Oct. 7, 2021). 18 HollyFrontier Cheyenne Refining, LLC v. Renewable Fuels Ass’n, 141 S. Ct. 2172 (2021).
5

C. Prices and Margins

Prices were volatile this year. Margins were low or negative at the beginning of the 

pandemic and ended significantly higher by the end of the period. Figure 1 shows daily net 

cost of corn,

19 ethanol prices, and margins from the beginning of 2014 to October 15, 2021, 

expressed on a per-gallon basis.

20 Margins are measured by a return over operating costs

estimated for a hypothetical dry mill in Iowa, as reported by the Iowa State University Center 

for Agricultural and Rural Development.21

19 Net cost of corn is the daily nearby futures price in Chicago plus Iowa corn basis. Weekly corn basis is calculated 

as the price that Iowa ethanol plants pay, as reported by the U.S. Department of Agriculture’s Livestock and Grain 

Market News, minus the Chicago Board of Trade nearby futures price.

20 October 15, 2021 is the last date for which data from Iowa State University were reviewed for purposes of this 

Report.

21 See Iowa State University, Center for Agricultural and Rural Development, Historical Ethanol Operating Margins, 

http://www.card.iastate.edu/research/biorenewables/tools/hist_eth_gm.aspx (last visited Oct. 18, 2021). “Return 

over operating costs” is specifically defined as the difference between the revenue from ethanol (including revenue 

from ethanol and dried distillers grains with solubles) and variable production costs (including corn, natural gas, and 

labor). As of November 2016, revenue includes sales of corn oil, a byproduct of ethanol, which could make margins 

not comparable before that date.
6

Figure 1: Ethanol Price, Corn Cost, and Margin

Jan. 2014 to Oct. 2021

The average estimated margin from the beginning of 2021 through mid-October 2021 

was $0.25 per gallon, which is higher than the $0.12 per gallon margin for the same period in 

2020 and higher than the margin in 2019.

22 During this period, the estimated margin was 

initially low or negative, continuing the COVID-19-influenced conditions in 2020. The

estimated margin increased to a peak in mid-May as both the ethanol price and net cost of 

corn increased, then decreased to negative levels in mid-July, and reversed course and 

surpassed the May peak toward the end of the period.

23

22 Id. (margins calculated to October 15 for each of the years).

23 Id.

-0.5

0

0.5

1

1.5

2

2.5

3

3.5

4

Jan 2014 Jan 2015 Jan 2016 Jan 2017 Jan 2018 Jan 2019 Jan 2020 Jan 2021

Ethanol Price ($/gallon)

Return Over Operating Costs ($/gallon)

Net Cost of Corn ($/gallon)

Data from Iowa State University, Center for Agricultural and Rural 

Development, Historical Ethanol Operating Margins
7

Some market participants stated that prices and margins are more normal this year, 

following an unusual previous year. Some market participants variously cited regional corn 

crop scarcity in some areas due to drought conditions, increased U.S domestic corn exports to 

China, and higher prices for certain inputs into the ethanol production process, such as natural 

gas, as factors negatively affecting margins.

D. Market Trends

Domestic ethanol production capacity remained almost unchanged, while actual 

production decreased since last year’s Report. Production capacity (including capacity under 

construction) was 17.8 billion gallons per year.24 Actual production from July 2020 through 

June 2021 decreased slightly from the prior 12 months, from 14.6 billion to 14.5 billion gallons

per year.

25

Ethanol exports have also decreased. From July 2020 through June 2021, the United 

States exported approximately 1.27 billion gallons of ethanol.

26 This marked the third 

24 Production capacity decreased slightly from 17.835 billion gallons per year in 2020 to 17.770 billion gallons per 

year in 2021. Staff’s total capacity estimate takes into account information obtained through interviews with market 

participants and publicly available information, including information published online by the Renewable Fuels 

Association (“RFA”) as of September 7, 2021, regarding Ethanol Biorefinery Locations. RFA, Ethanol Biorefinery 

Locations, https://ethanolrfa.org/resources/ethanol-biorefinery-locations. Staff’s capacity total is greater than the

EIA annual published estimate of 17.5 billion gallons. EIA, U.S. Fuel Ethanol Plant Production Capacity (Sept. 3, 

2021), http://www.eia.gov/petroleum/ethanolcapacity/. EIA’s capacity data are a snapshot of capacity as of January 

1 of each year and exclude plants that were idle, shut down, or still under construction as of that month. See EIA, 

EIA Releases U.S. Fuel Ethanol Production Capacity Data (Nov. 30, 2011), 

http://www.eia.gov/todayinenergy/detail.cfm?id=4110 (describing EIA’s method for calculating total capacity for its 

first annual reports).

25 EIA, Monthly Energy Review, Table 10.3 Fuel Ethanol Overview (release date: Sept. 27, 2021),

https://www.eia.gov/totalenergy/data/browser/?tbl=T10.03#/?f=M&start=201903&end=202106&charted=7-18.

26 Calculations based on July 2020-June 2021 monthly exports reported in EIA, U.S. Exports of Fuel Ethanol, 

http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=M_EPOOXE_EEX_NUS-Z00_MBBL&f=M

(calculating a monthly sum of barrels converted to U.S. gallons (1 barrel = 42 U.S. gallons)). Monthly exports 

reported by EIA for July 2019-June 2020 have been revised since last year’s report to total 1.34 billion gallons of 

ethanol.
8

consecutive annual decline during a July-to-June period after five consecutive years of 

increased ethanol exports.27

Over 100 firms produced ethanol in 2021. The largest ethanol producer’s share of 

domestic capacity is approximately 17 percent, increased from 12 percent in 2020. This is 

primarily due to a merger between two industry firms.

28

Most market participants interviewed cited transportation challenges in trucking due to a 

shortage of drivers, and similar challenges in rail due to staffing issues. Some market 

participants stated that varying local crop and transportation conditions have required moving 

more corn by rail this year. Some market participants also noted interest in the ethanol industry 

in producing higher-grade ethanol for various applications and adapting existing ethanol plants 

to produce certain co-products.

III. Analysis 

Section 1501(a)(2) of the Energy Policy Act of 2005 instructs the Commission to use 

HHIs to measure concentration in the U.S. ethanol production industry.29 HHIs can provide a 

snapshot of market concentration based upon the number of market participants and their 

respective sales, production, or capacity.30 An analysis of competition among market 

participants using these HHIs assumes that the U.S. ethanol production industry is an appropriate 

(or “relevant”) antitrust market, a question that this Report does not address.31 Such an 

27 Id.

28 See 2020 Ethanol Report, supra note 1, at 6 (largest producer’s share 12 percent).

29 Energy Policy Act of 2005 § 1501(a)(2), supra note 3. 

30 The Commission and the U.S. Department of Justice regularly use HHIs to measure concentration in a relevant 

antitrust market as part of their analysis of the likely effects of a merger or acquisition on competition in that market. 

See Horizontal Merger Guidelines, supra note 6, § 5.3.

31 A relevant antitrust market has both product and geographic aspects. A relevant product market is a product or 

group of products such that a hypothetical profit-maximizing firm that was the only seller of those products likely 

could profitably impose at least a small but significant and nontransitory increase in price (“SSNIP”). If such a price 

increase would not be profitable because of the loss of sales to other products, the product or group of products 
9

assumption precludes consideration of a broader product market that includes other gasoline 

blending components that might be viable substitutes for ethanol. In the event that ethanol 

competes with other blending components, HHIs based on fuel ethanol production and marketing 

would likely misstate concentration in the industry. This assumption also precludes 

consideration of whether broader or narrower geographic markets than the United States could 

provide further insight about competition in ethanol production and marketing.

This Report presents four HHIs for the ethanol industry, based on two different measures 

of market share (production capacity and actual production) and two different methods of 

attributing those market shares to various market participants (producers and marketers). In 

regard to measuring market share, for purposes of this Report “production capacity” is defined to 

mean a plant’s maximum annual output of ethanol minus any required downtime for 

maintenance.

32 “Actual production” is defined to mean a plant’s actual annual output of 

ethanol.

33 In regard to attributing market shares to market participants, “producer” is defined to 

mean a firm that in fact manufactures the ethanol. As discussed below, “marketer” is defined to 

mean the firm, whether the producer itself or a third-party firm, that sells and transports a 

producer’s ethanol output.

FTC staff calculated market shares based on domestic ethanol production capacity for

producers and marketers. FTC staff relied on publicly available information and interviews with 

would not be a relevant product market. Similarly, a relevant geographic market is a region such that a hypothetical 

profit-maximizing firm that was the only seller of the relevant product in that region likely could impose at least a 

SSNIP above the competitive level. If such a price increase would not be profitable because of the loss of sales to 

sellers outside the region, the region would be too narrow to be a relevant geographic market. See id. §§ 4.1-4.2. 

32 Production capacity is also sometimes referred to as “operating capacity.” For purposes of this Report, production 

capacity is distinct from “nameplate capacity,” a common industry term that may refer to the intended full-load 

sustained output of a facility. Nameplate capacity may also be variously known as “rated capacity,” “nominal 

capacity,” “installed capacity,” or “stated design capacity.”

33 Actual production is also sometimes referred to as “operating production.”
10

producers and marketers to determine the production capacity of each ethanol plant and 

marketing activities of marketers. FTC staff then calculated capacity-based HHIs for producers 

and marketers.

EIA staff calculated market shares based on actual production for producers and 

marketers. Due to the confidential nature of the ethanol production data the EIA collects, FTC 

staff provided to EIA staff the information necessary to attribute market shares to market 

participants.

34 EIA staff then separately calculated production-based HHIs for producers and 

marketers.

35

A. Concentration with Market Shares Based on Production Capacity

FTC staff calculated market shares based on fuel ethanol production capacity.36 

Production capacity provides a useful and easily confirmable indicator of a producer’s 

competitive significance.37 In determining each producer’s aggregate capacity, staff included the 

capacity of existing plants, as well as the projected capacity of plants currently under 

construction and plants currently undergoing expansion.38 Incorporating capacity from such 

34 For producers for which EIA maintains production data, FTC staff provided EIA with the identities of those 

producers’ marketers. EIA staff used this information, in conjunction with its own data on ethanol production, to 

calculate the HHIs that attribute market share to marketers.

35 Because the production data are confidential, EIA staff did not disclose the volumes of ethanol attributable to any 

individual producer or the market shares based on those volumes.

36 The RFA website provides frequently updated data on ethanol plant capacity and capacity expansion plans. 

Capacity information is also available on many individual producers’ websites, some of which also provide details 

of construction and expansion plans. Staff obtained the production capacity for some producers directly from firm

officials.

37 See Horizontal Merger Guidelines, supra note 6, § 5.2. In markets for homogeneous products (such as ethanol), a

firm may derive its competitive significance primarily from its available capacity – i.e., its ability and incentive to 

increase production in the event of a competitor’s price increase or output reduction. Id.

38 Staff included the capacity of these construction and expansion projects only where the producer had finalized 

construction plans, received the necessary financing for construction, and begun physical construction. Ethanol 

producers frequently announce capacity additions, new plants, plant sales, and cancellations of plans to build new 

capacity. These HHI calculations represent staff’s best estimate of the industry’s concentration as of September 

2021. This approach therefore excludes any more recent publicly available information that might be relevant to 

industry HHI calculations. These HHI calculations also might not capture the full complexity of industry ownership 

structures, especially the degree of control by minority interests held by marketers or third-party management 
11

projects into current market share calculations is consistent with the approach set forth in the 

Horizontal Merger Guidelines.39

1. Attributing Market Shares to Producers

Under the first approach to market concentration, FTC staff attributed market share to 

each producer based on the producer’s percentage of total production capacity. This method of 

calculation yielded an HHI of 561, a level regarded as unconcentrated under the Horizontal 

Merger Guidelines.40 This HHI is higher than the corresponding HHI of 447 in 2020.

41

2. Attributing Market Shares to Marketers

Under the second approach, FTC staff attributed the market share of each producer to the 

firm that markets for that producer. Some producers sell the ethanol they produce directly to 

blenders and end users. Many producers, however, enter into marketing agreements with third 

parties to sell their output. An ethanol marketer may represent and make limited decisions for 

multiple individual producers, essentially aggregating those producers’ capacities under a single 

entity. For purposes of competitive analysis, attributing production capacity to marketers rather 

than to the actual producers provides a measure of industry concentration that captures this 

aggregation. For a producer that engages in direct sales, staff attributed the market shares to the 

service firms. However, the HHI resulting from attributing production to the marketer should capture any such 

complexity not reflected in the producer HHI.

39 See Horizontal Merger Guidelines, supra note 6, § 5.1. Firms that are not currently producing but likely would 

respond rapidly in the event of a SSNIP have competitive significance even though they do not currently supply the 

relevant market. Id.

40 See id. § 5.3.

41 See 2020 Ethanol Report, supra note 1, at 9. The industry continued to experience shifts in plant capacity through 

plant expansions, conversions, openings, and closures over the past 12 months. Because the HHI captures these 

adjustments in the aggregate, it ignores the individual activity of industry participants. For example, the HHI may 

include a producer’s acquisition of another producer’s facilities that coincided with the restart or reconstruction of 

an idled facility. Alternatively, the HHI may exclude a plant that was converted to other uses, formally closed, or 

judged unlikely to reopen in the near future.
12

producer itself.

42 For a producer that does not engage in direct sales, staff attributed the market 

shares to the third-party firm that marketed the producer’s ethanol output. This approach yields 

an HHI of 809, unconcentrated under the Horizontal Merger Guidelines. This HHI is higher than 

the corresponding HHI of 685 in 2020.

43

B. Concentration with Market Shares Based on Actual Production

EIA staff calculated market shares based on actual production. Firms that produce more 

than eight million gallons of oxygenates (such as ethanol) per year must report to EIA their 

monthly production volumes by product. Using production data is instructive because capacity 

data have certain limitations, particularly insofar as stated capacity does not necessarily represent 

actual production capabilities. Ethanol plants can sometimes produce more than their stated 

design capacity (i.e., nameplate capacity) and sometimes operate at increasing rates as their 

owners and operators improve the production process and gain expertise in operating their 

plants.44 Thus, actual production may reflect a market participant’s competitive significance 

more accurately than would the sum of its plants’ stated design capacities.

There are some limitations on the accuracy of HHIs based on actual production, just as 

there are limitations on capacity-based HHIs. HHIs based on production over a given period 

may overstate or understate actual concentration due to entry and exit of firms, expansion of 

existing capacity, and variations in capacity utilization rates during the relevant period. 

Specifically, the production-based HHIs provided below do not fully reflect the impact of new 

facilities that began production during the last 12 months, nor do they fully reflect the impact of 

42 Some marketers publicly announce new agreements with producers. Where staff could not determine whether a 

producer marketed for itself or used an outside marketing firm, staff attributed market share to the producer.

43 See 2020 Ethanol Report, supra note 1, at 10. 

44 Similarly, some ethanol producers may not be in a position to utilize their full plant capacity. Actual production 

may be a better indicator of their competitive significance in such cases.
13

plant closures and idling during the period. In both cases, these facilities produced only a 

fraction of what they otherwise could produce in a full year, leading to an understatement (in the 

case of new facilities) or an overstatement (in the case of idled facilities) of their competitive 

significance in the market. Similarly, the HHIs below do not account for the effects on 

concentration of plant expansions that have been in effect for less than 12 months and capacityenhancing improvement projects that are not yet in operation. These production-based HHIs 

reflect actual production volumes from July 2020 through June 2021.

1. Attributing Market Shares to Producers

Where EIA attributed the actual production market share directly to individual producers, 

the resulting HHI is 526, higher than the 2020 HHI of 420.

45

2. Attributing Market Shares to Marketers

Calculating production-based concentration by attributing the market share of each 

producer to the firm that markets for that producer results in an HHI of 847, higher than the 2020

HHI of 695.

46

C. Entry and Imports

The U.S. ethanol industry remains unconcentrated today. This implies that any unilateral 

or coordinated attempt to exercise market power is unlikely. Should the industry become more 

concentrated, the possibility of new firms entering the domestic market and the responsiveness of 

ethanol imports to relative changes in domestic ethanol prices would likely provide additional 

constraints on anticompetitive behavior by domestic firms. Potential entrants can purchase and 

45 See 2020 Ethanol Report, supra note 1, at 11.

46 Id. at 12.
14

restart existing production facilities that were idled due to recent economic conditions or can 

design and build new plants to enter the market.

Ethanol import levels historically have responded to fluctuations in the price of U.S. 

ethanol relative to foreign ethanol prices, particularly prices for sugarcane-based ethanol from 

Brazil.47 This responsiveness would likely constrain any potential exercise of market power by a 

domestic firm. Additionally, to the extent U.S. prices increase because of the exercise of market 

power among a subset of U.S. producers or marketers, it is likely that other producers would 

react by exporting less to take advantage of more favorable U.S. ethanol prices (thereby 

increasing U.S. supply).

IV. Conclusion 

Regardless of the particular measure of market share or the market share attribution

method used to calculate concentration, the ethanol industry remains unconcentrated. 

Furthermore, the possibility of entry and the availability of ethanol imports provide additional 

constraints on the exercise of market power by current industry participants. The low level of 

concentration and large number of market participants in the U.S. ethanol production industry 

continue to suggest that the exercise of market power to set prices, or coordination on price and 

output levels, is unlikely.

47 Brazil has been the largest exporter of ethanol to the United States every year since 2011. See EIA, U.S. Imports 

by Country of Origin (release date: Sept. 30, 2021),

https://www.eia.gov/dnav/pet/pet_move_impcus_a2_nus_epooxe_im0_mbbl_a.htm, and prior FTC reports on 

ethanol market concentration, supra note 1. Although the United States is a net exporter of ethanol, demand exists 

for imported ethanol with low greenhouse gas emissions, such as sugarcane-based ethanol. See EIA, U.S. ethanol 

exports fell for the first time in four years in 2019 (May 1, 2020), 

https://www.eia.gov/todayinenergy/detail.php?id=43575.
15

Figure 2: Domestic Fuel Ethanol Concentration

Concentration Based on Production Capacity 2020 HHI48 2021 HHI

Shares attributed to each producer 447 561

Shares attributed to marketers for all marketing agreements 685 809

Concentration Based on Actual Production 2020 HHI49 2021 HHI

Shares attributed to each producer 420 526

Shares attributed to marketers for all marketing agreements 695 847

Note: Production capacity for 2021 includes the annual production capacity as of September 

2021 and the capacity additions under construction and expected completions within 12 to 18 

months thereafter. Production data for 2021 are from the annual period of July 2020 through 

June 2021.

48 See 2020 Ethanol Report, supra note 1, at 14.

49 Id.
16 

Figure 3: Historical Fuel Ethanol Capacity and HHIs

0

500

1000

1500

2000

2500

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

19982000200120022003200420052006200720082009201020112012201320142015201620172018201920202021

Capacity (left axis, million gallons per year)

HHI (right axis)

Million

Gallons 

per Year

HHI

' \ 

~ 

\ 

\ 

~ I .. -iiii ;;iii - ~ \ ~ i-,. .... ... --- """ I I I