The Coming Slow Fade of America’s Corn Ethanol Industry

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December 01, 2025

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by Michael Barnard (Clean Technica) The story of the United States corn ethanol industry is a story about a sector that grew rapidly under a very specific set of policy, technology and market conditions. It filled a gap when gasoline demand was rising, when climate policy focused on incremental change, and when EVs were still a niche. It became a major part of the Midwestern political economy. It shaped land use patterns. It supported thousands of farmers and dozens of rural communities built around steady demand for transport fuel. That world is shifting and the signals point toward a twenty year horizon that looks very different from the previous twenty, with very significant implications for the Midwest’s economies and likely politics.

Corn ethanol grew from a small program focused on oxygenates into a national industry producing over 16 billion gallons annually, about 48 million metric tons. The Renewable Fuel Standard created guaranteed demand by requiring refiners to blend increasing amounts of ethanol into gasoline. Direct subsidies through the Volumetric Ethanol Excise Tax Credit helped expand capacity. By the late 2000s the industry had become large enough to hold political weight in Iowa, Illinois, Minnesota and Nebraska. Ethanol plants became anchor employers. Farmers gained a new buyer that consumed nearly 40% of the national corn crop. The system became predictable and self reinforcing. All gasoline sold in the country now has about 10% ethanol added, with some higher blends available in some places. Once direct subsidies expired, the mandate and a large fleet of internal combustion vehicles kept the industry stable. That stability is now being tested by structural changes in transportation and energy.

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E15, a blend of 15% ethanol and 85% gasoline, creates a small lift for producers, but there is no serious national move toward E30 or higher mid level blends.

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California and New York are often treated as outliers in national conversations. They are not outliers. They are lead indicators in vehicle transition. California’s advanced clean cars policy will push new car sales toward 100% zero emission by 2035. New York has adopted the same path.

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Export markets, something that grew in recent years, see similar headwinds.

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The ethanol to jet pathway appeared to be the most promising new outlet, but it depends heavily on regulatory certainty.

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Developers now face a shorter policy horizon, more uncertainty and capital markets that are increasingly sensitive to policy volatility. Some high profile projects have already stalled or been rescoped.

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Electric flight will be cheaper, 1,000 km hybrid electric turboprop ranges mostly on batteries viable, while international flights with sustainable aviation fuels will be more expensive.

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I have also argued that personal transportation in the United States is uniquely hard to decarbonize compared to Europe or China because of structural choices made after World War II. Cheap oil, racialized planning and deliberate dispersion policies pushed people into very low density suburbs and weakened passenger rail so thoroughly that Americans now rely on very large cars and frequent domestic flights for basic mobility. Cars and light trucks account for well over half of US transport emissions and road vehicles of all sizes contribute more than 80% of the sector total, yet the country still lags peers on EV adoption and transit investment.

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Marine fuels are sometimes presented as a major opportunity, but here too the outlook is not for growth and ethanol is not the molecule of choice.

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Further, electrification is coming for shipping as well.

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Further, electrification is coming for shipping as well.

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Chemical feedstocks are a real but limited opportunity. Ethanol can serve as a platform for ethylene, acetic acid and other industrial chemicals.

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The regional economic effects of even a moderate contraction will be significant. Ethanol plants anchor many rural communities. They form part of the basis that supports grain handlers, trucking firms and equipment dealers. A reduction in ethanol demand reduces local corn prices and affects land values. Farmers will shift into other crops or adjust rotations but that takes time. Some ethanol plants will diversify into higher value co products like protein concentrates or biochemicals. Others will close or consolidate.

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Most of the communities built around corn-ethanol plants are not affluent today. They are generally stable, middle-income rural towns whose economies depend on agriculture, a few industrial anchors and a small service base.

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There is a credible, long-run possibility that declining corn ethanol demand could open the door to large scale rewilding in parts of the Midwest, but it would occur unevenly without strong federal and state guidance, and only under certain economic conditions.

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There are viable paths forward for many producers. Some will invest in carbon capture to lower their fuel’s measured carbon intensity. Some will pursue biorefinery strategies that treat ethanol as one output in a broader product mix. Others will explore partnerships in chemicals, specialty proteins or green ammonia. READ MORE; includes VIDEO

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Excerpt from Brownfield Ag News: Jim McCormick with AgMarket.Net says year-round E15 isn’t the long-term answer for corn demand. He tells Brownfield it’s sustainable aviation fuel.

“Over the next 10 to 20 years, I fear you’re going to find more and more people using these hybrid and all-electric cars,” he said. “As the battery life gets better, we have to find a different use for corn besides ethanol. Aviation fuel is the answer to our problem.” READ MORE

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