Impacts on the Nations Economy

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As shown in Table 18, in the USDA baseline, 7.02 billion gallons is produced in the year 2010 and expands to 8.75 billion gallons in the years 2020 and 2030. The baseline assumes no growth in feedstock quantities past 2015. The growth in baseline biofuels quantities is a result of improved conversion of these feedstocks.

By 2030, a total of $110 billion annually is directly generated in the economy via purchasing inputs, adding value to those inputs, and supplying biofuels to the nation. In addition, these expenditures create additional impacts. The total impact to the nation's economy is estimated at $368 billion per year creating an estimated 2.4 million jobs (Table 19). These impacts do not account for the potential of reduced economic activity that might occur in the current energy industry. However, if biofuels are used to meet new energy demands, the gasoline refining industry might experience minimal or no downsizing.

The impacts projected in this study are divided into two areas: 1) those caused by changes in the agricultural sector, and 2) those caused by the development of a renewable energy industrial sector. The agricultural sector impacts include the additional impacts that result from changes from the baseline in agricultural commodity prices, government payments, and acres planted in both traditional crops and dedicated energy crops. The impacts in the renewable energy and interstate commerce sectors incorporate the entire production of the ethanol and biodiesel industries.

An estimated $25 billion per year in the year 2030 is added to the nation's economy as a result of changes that occur in the agricultural sector (acres planted, commodity prices, and reduced government payments) in producing the feedstock required for an additional 51 billion gallons of ethanol and 1.54 billon gallons of biodiesel. In addition, an estimated 360,000 additional jobs will be created in 2030. In 2010, an estimated $12 billion is added to the economy primarily through increased proprietary income as a result of increased agricultural prices. The multiplier is estimated at 1.46 and measures the impact to the economy that occurs primarily through increased proprietor incomes. This increases to $24.9 billion in 2020 and $37.5 billion in 2030.

Table 18. Amount of Ethanol and Biodiesel Production Assumed in the POLYSYS

Baseline and the Amount of Additional Gallons Required to Meet the Estimated

Goal.

Table 18. Amount of Ethanol and Biodiesel Production Assumed in the POLYSYS

Baseline and the Amount of Additional Gallons Required to Meet the Estimated

Goal.

Fuel and Scenario:

Projected in the Year:

2010

2020

2030

Billion Gallons

Ethanol:

Baseline

7.02

8.75

8.75

Additional

2.98

21.17

51.6

Goal

10

29.92

60.35

Biodiesel:

Baseline

0.0385

0.05

0.05

Additional

0.68

1.2

1.54

Goal

0.72

1.25

1.59

Table 19. Estimated Annual Economic Impacts from Meeting 10, 30, and 60 Million _Gallon Ethanol Goals in 2010, 2020, and 2030, Respectively._

Change in Industry Impact in Employment _Output_ _

Table 19. Estimated Annual Economic Impacts from Meeting 10, 30, and 60 Million _Gallon Ethanol Goals in 2010, 2020, and 2030, Respectively._

Change in Industry Impact in Employment _Output_ _

Direct

Total

Direct

Total

Year and Sector

Impact

Impact

Impact

Impact

Million Dollars

(in 2006 $)

Number Of Jobs

2010:

Agricultural Production Sector

$12,078

$17,657

63,776

122,161

Renewable Energy Sector

$7,287

$15,423

3,198

76,796

Interstate Commerce a

$0

$13,357

0

103,210

Total

$19,365

$46,437

66,975

302,166

2020:

Agricultural Production Sector

$13,906

$21,903

161,146

242,487

Renewable Energy Sector

$37,466

$76,378

23,296

398,864

Interstate Commerce a

$0

$73,282

0

558,986

Total

$51,373

$171,564

184,442

1,200,337

2030:

Agricultural Production Sector

$24,869

$37,527

235,709

359,674

Renewable Energy Sector

$85,093

$171,096

57,597

898,192

Interstate Commerce a

$0

$159,730

0

1,229,325

Total

$109,962

$368,353

293,306

2,487,191

a Since ethanol is a relatively new industry in many of the states, the estimated state level a Since ethanol is a relatively new industry in many of the states, the estimated state level impacts did not capture the impacts of interstate commerce.

In 2030, the impact to the sectors supplying cellulosic material is estimated at over $7.8 billion. In both 2020 and 2030, the impacts to agricultural input sectors increases $1 billion and $2 billion, respectively, reflecting the decrease in inputs used in the production of traditional crops, as well as the increase in the production of dedicated crops and the harvesting of stover and wheat straw.

Although the estimated impacts are distributed throughout the nation, the central part of the nation receives the largest benefits. All states, except Maine, show a gain in economic activity and jobs as a result of the agricultural sector impacts on each state's economy as a result of meeting the Governors Ethanol Coalition Goal (Figure 19). However, Maine is expected to have a positive impact in forestry rather than agriculture. These impacts are incorporated in the conversion impact analysis.

Figure 19. Estimated Impacts to the National Economy as a Result of Changes in Agricultural Production, Prices, and Government Payments to Meet the 60 billion Gallon Ethanol Demand in 2030.

Figure 19. Estimated Impacts to the National Economy as a Result of Changes in Agricultural Production, Prices, and Government Payments to Meet the 60 billion Gallon Ethanol Demand in 2030.

4.13. Impacts in the Ethanol Energy Conversion Sector

By 2030, an estimated $330.8 billion is generated annually in the conversion of renewables to energy based on expenditures of $85 billion in the ethanol conversion industry, excluding expenditures in the agricultural sectors that supply feedstocks. Assuming the renewable energy sector is developed in close proximity to the feedstocks, the states that receive the greatest benefit include Arkansas, Illinois, Iowa, Oklahoma, and Texas (Figure 20). Other states receive an estimated $5 billion to $10 in economic activity associated with conversion. Interstate commerce associated with conversion that cannot be assigned to any individual state is nearly equal to impacts that are allocated. Including both allocated and unallocated economic activity, nearly 2.1 million jobs are estimated to be created from the development of a renewable energy sector beyond what exists today.

Change in TIO (S Millions) I I S6-S100 I I S100 - S1,000 I I S1,000 - S5,000 I I S5,000 - S10,000 I I > S10,000

\EconoMc Activityfrom Ethanol Secto£? Direct - SS5.0 Billion Total - $331.0 Billion

Change in TIO (S Millions) I I S6-S100 I I S100 - S1,000 I I S1,000 - S5,000 I I S5,000 - S10,000 I I > S10,000

\EconoMc Activityfrom Ethanol Secto£? Direct - SS5.0 Billion Total - $331.0 Billion

Employment Impacts

Economic Activityfom Ethanol Sector-

Employment Impacts

Economic Activityfom Ethanol Sector-

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