POET Biorefining, Valero Renewable Fuels, Archer Daniels Midland and Green Plains Renewable Energy are the main ethanol producers in the United States.
According to Highwater Ethanol, after significant growth in 2005 and 2006, the ethanol industry has grown at a much slower pace.
The ethanol industry was affected by the Covid-19 pandemic in 2020, which caused a decrease in demand. Then, the ethanol industry recovered in 2021.
As of December 5, 2022, the Renewable Fuels Association estimated that there are approximately 204 ethanol production facilities in the United States with the capacity to produce approximately 17.5 billion gallons of ethanol.
Since ethanol is a commodity, competition in the industry is predominantly based on price.
Companies are also experiencing competition from oil companies that have acquired ethanol production facilities and are required to blend a certain amount of ethanol each year.
Ethanol Producers
So far, the ethanol industry continues to consolidate and a few large ethanol producers are increasing their production capacity and controlling a larger share of U.S. ethanol production.
In addition, some ethanol producers own multiple ethanol plants, which may allow them to compete more effectively by giving them the flexibility to operate certain production facilities while shutting down others.
Highwater Ethanol reports that this added flexibility may allow these ethanol producers to compete more effectively, especially during periods when operating margins are unfavorable in the ethanol industry.
Companies in the United States also face competition from ethanol produced outside the United States, particularly from Brazil.
Ethanol imports have been lower in recent years due to Brazil’s increase in 2013 of its domestic ethanol use requirement from 20% to 25% and the institution in 2017 of a quota and tariff on ethanol produced in the U.S. and exported to Brazil that have likely decreased the amount of ethanol Brazil has available for export.
The effect of this has recently been mitigated by the suspension of the tariff in March 2022 until the end of the year following a 10% reduction in the tariff in November 2021.
