Rail Positioned to Support the Next Phase of Ethanol Growth

(The Greenbriar Companies/Ethanol Producer Magazine) Ethanol has long been an anchor commodity for the U.S. freight rail network, connecting production facilities in the Midwest with fuel markets across the country. Today, new federal incentives and emerging technologies are creating additional opportunities for rail to support the next phase of growth in the biofuels sector.

The Inflation Reduction Act introduced the Section 45Z Clean Fuel Production Credit, a policy designed to accelerate the production of low-carbon fuels. As producers adapt operations to qualify for the credit, the broader ecosystem around ethanol production including feedstocks, renewable fuels and carbon management may drive new transportation demand.

Ethanol’s Role in the Rail Network
Ethanol has become one of the most important renewable energy commodities transported by rail. According to the Association of American Railroads (AAR), railroads account for roughly 60% to 70% of ethanol transportation in the U.S.

The growth of ethanol rail shipments accelerated after methyl tert-butyl ether (MTBE) was phased out two decades ago. Ethanol quickly replaced MTBE in fuel blending. Because of ethanol’s alcohol content, it cannot be transported through conventional petroleum pipelines. As a result, railroads became the primary transportation mode capable of moving large volumes.

For ethanol producers evaluating rail transportation, equipment specifications and tank car design play an important role in operational planning. Manufacturers such as The Greenbrier Companies offer tank car guides and technical resources that help producers better understand equipment options and capacities.

These resources also explain commodity applications, supporting the safe and efficient movement of ethanol and other liquid energy products across the rail network.

Tank car design plays a central role in safely transporting ethanol from production facilities to fuel markets.

Ethanol production is concentrated across the Midwest. However, many of the largest consumption markets are located along the East Coast, California and Texas. Rail provides the long-distance connectivity needed. Short lines and regional railroads also play an important role. The AAR estimates that 15% to 20% of ethanol rail movements originate on short-line networks.

Rail’s Efficiency Advantage
Freight rail remains one of the most fuel-efficient transportation options available for moving bulk commodities. The Federal Railroad Administration reports that railroads can move one ton of freight nearly 500 miles on a single gallon of fuel.

The 45Z Clean Fuel Production Credit
The Section 45Z Clean Fuel Production Credit was established to encourage the domestic production of fuels that produce fewer greenhouse gas emissions than conventional petroleum-based fuels. Unlike previous incentives, the credit focuses on carbon intensity.

Carbon Capture and New Rail Demand
While ethanol itself remains a critical commodity, the next phase of rail growth tied to ethanol production may come from the broader infrastructure surrounding biofuel facilities.

As producers work to lower their CI scores under the 45Z framework, carbon capture and sequestration (CCS) is emerging as a key strategy.

Ethanol plants produce high-purity carbon dioxide during fermentation, making them attractive candidates for carbon capture projects. Captured CO2 can then be transported to sequestration hubs where it is permanently stored underground.

While pipelines are one option for moving captured CO2, rail provides a flexible and deployable solution, particularly in regions where pipeline infrastructure does not yet exist.

Rail Equipment Solutions for a Changing Energy Market
The evolving biofuels landscape is expected to generate transportation demand across multiple commodities beyond ethanol itself.

Renewable diesel (RD), sustainable aviation fuel (SAF) and feedstocks used in biofuel production all require reliable transportation networks capable of moving liquids and bulk materials efficiently.

Rail equipment manufacturers are developing specialized tank car solutions designed to safely transport a range of energy products, including ethanol, renewable fuels and captured carbon dioxide.

The Greenbrier Companies manufactures tank cars designed to transport commodities such as ethanol, renewable fuels and pressurized carbon dioxide, including a 22,000-gallon CO2 tank car developed for carbon capture and sequestration supply chains.

By supporting the transportation of ethanol, renewable fuels and captured carbon, rail equipment manufacturers can help enable the broader infrastructure needed to support low-carbon fuel production.

Rail’s Expanding Role in the Energy Transition
Ethanol will likely remain a foundational commodity for the freight rail industry. However, new policies such as the 45Z Clean Fuel Production Credit are reshaping the broader ecosystem around ethanol production.

As producers pursue lower carbon intensity fuels, demand for transportation of feedstocks, renewable fuels and captured carbon dioxide is expected to grow. Rail provides an infrastructure capable of supporting both today’s fuel supply chains and the emerging low-carbon fuel economy. READ MORE