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| 1876-1908 | Ethanol fuel used in automobiles |
Otto Cycle (1876) was the first combustion engine designed to use alcohol and gasoline, followed by Henry Ford's Model T (1908), which was designed to use ethanol, gasoline, or any combination of the two fuels. | |
| 1940s | First U.S. fuel ethanol plant built |
The U.S. Army built and operated an ethanol plant in Omaha, Nebraska, to produce fuel for the army and to provide ethanol for regional fuel blending. | |
| 1973 | Yom Kippur war, OPEC oil embargo |
OPEC raised crude oil prices by 70 percent, embargoed the United States for its support of Israel, and threatened to reduce production by 5 percent per month until Israel withdrew from Palestine. | |
| 1974 | Oil embargo ends |
The embargo and gasoline lines shocked the world, and Project Independence was initiated to review strategic energy options. | |
| 1974 | Solar Energy Research, Development, and Demonstration Act | The Act (Public Law 93-473) provided legislative support for research and development for the conversion of cellulose and other organic materials (including wastes) into useful energy or fuels. | |
| 1977 | Food and Agricultural Act | The Act (Public Law 95-113) authorized U.S. Department of Agriculture (USDA) loan guarantees for the first four biomass pilot plants (none actually built) and expanded USDA research for renewable fuels or fossil substitutes. | |
| 1978 | Energy Tax Act | The Energy Tax Act of 1978 (H.R. 5263) gave a 4-cents-per-gallon exemption from Federal excise taxes to motor fuels blended with ethanol (minimum 10 percent ethanol) and granted a 10-percent energy investment tax credit for biomass-ethanol conversion equipment (in addition to the 10-percent investment tax credit available). | |
| 1979 | Fuel ethanol blends marketed |
Amoco Oil Company began marketing commercial alcohol-blended fuels, followed by Ashland, Chevron, Beacon, and Texaco, which also owned ethanol production facilities. | |
| 1979 | Interior and Related Agencies Appropriation Act |
The Act (Public Law 96-126) appropriated $19 billion for an Energy Security Reserve to stimulate production of alternative fuels, $100 million for product development feasibility studies, and $100 million for cooperative agreements to support commercial development of alternative fuel plants. | |
| 1980 | First U.S. ethanol survey | The survey found that fewer than 10 facilities existed, producing approximately 50 million gallons of ethanol per year. | |
| 1980 | Supplemental Appropriation and Rescission Act | The Act (Public Law 96-304) earmarked another $100 million for further feasibility studies and another $200 million for cooperative agreements. The U.S. Department of Energy (DOE) made 47 feasibility study grants during 1980 and 1981, as well as cooperative agreements with ethanol producers. | |
| 1980 | Crude Oil Windfall Tax Act |
The Act (Public Law 96-223) extended the 4-cents-per-gallon Federal excise tax exemption to December 31, 1992, and extended the energy investment tax credit to December 31, 1985. An income tax credit was also provided to alcohol fuel blenders--40 cents per gallon for 190 proof alcohol and 30 cents per gallon for 150- 190 proof. The excise tax exemption and the income tax credit were either/or alternatives: both could not be used. | |
| 1980 | Energy Security Act | The Act (Public Law 96-294) offered insured loans for small ethanol producers (less than 1 million gallons per year), loan guarantees that covered up to 90 percent of construction costs on ethanol plants, price guarantees for biomass energy projects, and purchase agreements for biomass energy used by Federal agencies. It also established the DOE Office of Alcohol Fuels and authorized $600 million for both USDA and DOE for biomass research. Subsequent rescissions altered this allocation to $20 million for USDA and $800 million for DOE to use for alcohol fuel loans. The Consolidated Farm and Rural Development Act of 1980, which rescinded the $505 million allocated to USDA, appropriated $250 million for alcohol loan guarantees that were used to support 12 firms. | |
| 1982 | Surface Transportation Assistance Act | The Act (Public Law 97-424) raised the gasoline excise tax to 9 cents per gallon and increased the tax exemption for gasohol to 5 cents per gallon (9 cents for fuels containing 85 percent alcohol or more). The blender's income tax credit was increased to 50 cents per gallon for 190-proof alcohol and 37.5 cents for 150-190 proof. | |
| 1984 | Tax Reform Act | The Act (Public Law 99-198) raised the gasohol exemption from 5 to 6 cents per gallon, with the overall tax unchanged at 9 cents per gallon of retail fuel. The blender's income tax credit was increased to 60 cents per gallon for 190-proof alcohol and 45 cents for 150-190 proof. | |
| 1985 | Industry shakeout | Of the 163 commercial ethanol plants existing in 1985, only 74 (45 percent) were operating, producing 595 million gallons per year. The high failure rate was partially the result of poor business judgment and bad engineering. | |
| 1988 | First use of ethanol as an oxygenate | Denver, Colorado, mandated oxygenated fuels for winter use to control carbon monoxide emissions. Other cities followed. | |
| 1990 | Omnibus Budget Reconciliation Act | The Act (Public Law 101-508) decreased the gasohol tax exemption from 6 to 5.4 cents per gallon. Tax credits for neat ethanol sales remained unchanged at 6 cents per gallon. The expiration date was extended to 2002. | |
| 1990 | Clean Air Act Amendments | The Amendments (Public Law 101-549) mandated the winter use of oxygenated fuels in 39 major carbon monoxide nonattainment areas (areas where EPA emissions standards for carbon dioxide had not been met) and required year-round use of oxygenates in 9 severe ozone nonattainment areas in 1995. | |
| 1990 | Ethanol industry changes | Ethanol plants began switching from coal to natural gas and adopting other cost-reducing technologies, estimated to reduce costs as by much as 10 cents per gallon. High-fructose corn syrup prices and markets increased, also encouraging expansion of wet mills and ethanol capacity. | |
| 1992 | Energy Policy Act | The Act (Public Law 102-486) modified the excise tax exemption to accommodate blends of less than 10 percent ethanol resulting from more sophisticated blending strategies for pollution control. The tax exemption was set at 4.16 cents per gallon for mixtures containing 7.7 percent ethanol and 3.08 cents per gallon for mixtures containing 5.5 percent ethanol. | |
| 1994 | Favorable Internal Revenue Service ruling | The IRS ruling extended the excise tax exemption and income tax credits to ethanol blenders producing ETBE. Previously, the blended ethanol product had to be sold to final consumers for the credits to be received. | |
| 1994 | EPA Renewable Oxygen Standard (ROS) | The ROS required that 30 percent of the oxygenates contained in fuels be produced from renewable sources--a provision generally considered a boon for the corn-ethanol industry. | |
| 1994 | Conversion of corn fiber to ethanol achieved in a commercial facility |
New Energy Ethanol Company of Indiana, in cooperation with the National Renewable Energy Laboratory, successfully achieved ethanol production from cellulose. Several other cellulosic ethanol conversion facilities have been proposed, using a wide variety of technologies, but none is commercial yet. | |
| 1995 | American Petroleum Institute and National Petroleum Refining Association vs. EPA | A U.S. court ruled that the EPA's ROS was an unconstitutional constraint on commerce. | |
| 1995 | Highest U.S. ethanol production capacity ever |
U.S. ethanol production capacity has risen to 1.5 billion gallons per year, primarily through expansions in wet milling capacity. Of the existing capacity, 70 percent is wet milling (low cost with high-value coproducts), and 30 percent is from dry mills (higher cost, limited coproducts). |