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History of Ethanol
The history of ethanol-blended fuels as a key element of public policy initiatives dates back to the early 1970s. The Arab Oil Embargo of 1973 contributed to a domestic economic crisis that made the effects of our dependence on imported oil abundantly clear. Americans waited in long lines at gas stations while the nation witnessed lost productivity, stock market declines and economic recession.
Congress responded to the petroleum shortage by passing the Energy Tax Act of 1978, which provided an exemption to the 4 cents/gallon federal fuel excise tax on gasoline for fuel blended with at least 10 percent ethanol. In 1980, Congress followed that up by passing two additional bills, the Crude Oil Windfall Profit Tax Act of 1980 and the Energy Security Act of 1980. Both measures promoted energy conservation and domestic fuel development.
In 1982, the Surface Transportation Assistance Act raised the gasoline excise tax from 4 cents/gallon to 9 cents/gallon and increased the exemption for 10-percent ethanol blended gas to 5 cents/gallon. In 1984, the Tax Reform Act increased the exemption again, to 6 cents/gallon. The Alternative Motor Fuels Act of 1988 created research, development and demonstration programs for both vehicles and fuels and provided fuel economy credits for automakers. In 1990, through the Omnibus Budget Reconciliation Act, Congress extended the ethanol tax incentive from 1992 to 2000 but decreased the incentive from 6 cents/gallon to 5.4 cents/gallon.
Through the Clean Air Amendments of 1990, Congress overtly acknowledged for the first time that changes in motor fuels and their composition contribute to reducing exhaust pollution. The Act created two new gasoline standards to reduce fuel emissions in highly polluted cities. It required gasoline to contain fuel oxygenates, cleaner-burning additives that include ethanol.
The Energy Policy Act of 1992 set a national goal of 30 percent penetration of alternative fuels in light-duty vehicles by 2010. It also requires the federal government, alternative fuel providers, state and local governments and private fleets to purchase vehicles that run on alternative fuels. In 1998, the Transportation Efficiency Act of the 21st Century extended the ethanol tax incentive through 2007.
The past 30 years of Congressional initiatives have resulted in more than 2 trillion miles driven on ethanol-blended fuel. Since 1978:
- The U.S. ethanol industry has built the capacity to produce more than 3 billion gallons per year of high-octane, clean-burning ethanol.
- Over $5 billion in capital investments have been made in fuel ethanol production facilities.
- 75 fuel ethanol plants in 20 states have been developed, with production capacities ranging from 500,000 to 310 million gallons per year.
- Today, ethanol is the only proven commercial-scale renewable transportation fuel available in the marketplace. It has the potential to replace at least 10 percent of the nation's gasoline supply.
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