CHAMPAIGN, ILLINOIS, US – Ethanol production in the United States will likely decline between now and 2050 as more Americans purchase electric vehicles, resulting in a decrease in gasoline use and a potential decline in corn prices, according to a University of Illinois study.
The research paper, authored by student Shahadat Hossain and edited by Joe Janzen, a professor in the university’s Department of Agricultural and Consumer Economics, found that projected declines in ethanol production would decrease corn prices by about 4%. The researchers noted that the price forecast assumes corn production and other uses continue current trends and does not factor in the potential development of new uses for corn that could offset the price decrease.
The US Energy Information Administration (EIA) projects the share of new vehicle sales captured by battery electric and hydroelectric vehicles will grow from 8% in 2021 to 21% in 2050. The study found that US gasoline use is expected to decline by 4.5% between 2023 and 2037.
“By 2037, gasoline use will be lower than 2021 levels despite population growth that increases the demand for transportation,” the report said. “Only after 2037 is US gasoline expected to grow as population increases offset the declines in per-capita gasoline use.”
The study noted that ethanol currently makes up about 10% of the US gasoline supply. More than one-third of US corn production is used to produce ethanol, the second largest corn use category after feed and residual use.
The possibility of increased ethanol exports and recent investments in precision fermentation technologies to make corn dextrose to produce textiles, polymers, pigments, cosmetics and other goods could help offset the decline in domestic ethanol production, the study said.
“Changes in these kinds of corn uses could more than absorb the long-run negative corn demand shock related to lower gasoline use,” the report said.