Peak Ethanol Has Passed and It’s All Sunshine From Here

As the transportation sector electrifies, the market for corn ethanol will begin to disappear rapidly, resulting in decreased corn prices and adding pressure on landowners. But as our own Adrian Markocic argues, the energy transition shouldn’t be defined by loss, but by opportunity.

By: Adrian Markocic
Date: January 26, 2024

Reaching Peak Oil

When the phrase “Peak Oil” was first introduced it referred to the theoretical point in time when oil production would achieve its zenith after which production would steadily fall. The oil shocks of the 1970s proved the idea that scarcity drives innovation, and advances in geophysics and other technologies identified new reservoirs and provided access to those hidden hydrocarbons. We’ve left the point where we were concerned about having enough petroleum to fuel tomorrow’s society and have arrived at a time where we can say with reasonable certainty that we have a 50+ year supply remaining.

What has also changed is the way we look at the concept of Peak Oil. No longer is the phrase defined by the supply side of the equation but rather by the demand side. What’s driving this change? It’s very simple—the transition from Internal Combustion Engine (ICE) vehicles to Electric Vehicles (EV). The International Energy Agency releases a yearly report of oil forecasts, and in this year’s report the IEA states “growth in world oil demand is set to lose momentum over the 2022-28 forecast period as the energy transition gathers pace, with an overall peak looming on the horizon.”

Figure 1. Annual Oil Demand Growth, 2022-2028

While EV adoption in the US has been slower compared to other parts of the world, US EV sales are picking up pace and now account for greater than 8% of new car sales. This number is expected to grow even faster due to tax credits found in the Inflation Reduction Act (IRA) combined with new limits on tailpipe emissions. The Clean Air Act is a technology forcing standard, and the EPA is using this authority to propose reductions in greenhouse gas emissions which can only be met economically through electrification. By way of the IRA tax credits and new tailpipe standards, the EPA believes that by 2030, between 54% and 60% of all new cars sold will be EVs, and this number will increase to nearly 67% by 2032. It seems incredible that auto manufacturers will be able to accommodate this rapid change and growth, but once you look at the announced investments in new manufacturing by the likes of Ford, GM, Toyota and others, the far-fetched seems eminently feasible (check out all the announced investments to date at US and Canada Electric Vehicle Supply Chain Map,

The Link Between Electrification, Ethanol Production, and Land Use is Staggering

It’s evident that EV growth negatively impacts oil demand, but there is another indirect impact which has not been as broadly discussed but will have similar ramifications. Ever since the adoption of the Energy Independence and Security Act of 2007, gasoline distillers have been required to combine ethanol into their gasoline to achieve a 90/10 blend, and as the chart (Figure 2) on the next page shows, ethanol production spiked. This requirement has resulted in vast swaths of agricultural land being devoted to corn for ethanol production and effectively increasing the land used for corn by nearly a factor of five. A breakdown of U.S. agricultural land currently consumed by ethanol demand follows:

  • 19 pounds of corn to make one gallon of ethanol
  • ~56 pounds of corn in a bushel (2.92 gallons/bushel)¹
  • ~177 bushels per acre (516.84 gallons/acre)
  • 15.5 billion gallons (2022 production) = ~30 million acres or ~46800 square miles

When initial plans promoting vehicle electrification were announced by the Biden administration in 2021, Sen. Grassley (R-IA) tweeted “U.S. leads world on low-carbon biofuels supporting rural jobs + green revenue for farmers. His program to [have] all cars electric will cut 43k ethanol jobs in [Iowa].” This of course is hyperbolic, but the point should be noted. The transition from ICE to EV will have enormous ramifications, and while there will be many positive impacts, it’s important not to discount the negatives either. Importantly, it will also occur faster than most people imagine.

I ran a model of expected EV growth based on anticipated sales forecasts, and sometime around 2038 over half of all personal on-road vehicles will be EVs. To be clear, that’s not sales, that’s on-road vehicles. Ethanol demand will decrease by 50% within 15 years.²

Figure 2. The rise of EVs directly leads to a decline in corn production

A study published in 2021 by a researcher from Indiana University-Purdue University Indianapolis anticipated this correlation when it looked at some of the impacts of mass vehicle electrification and projected additional outcomes of these market forces (assuming 100% electrification by 2050)³:

  • Worldwide ethanol production decreases by 70%
  • Global cropland demand is reduced by between 1.2 and 10.9 million acres
  • Global corn prices decrease by 10%
  • Avoided emissions increase by up to 638.9 million metric tons of CO2 equivalent (again assuming 100% electrification by 2050)
  • Other environmental benefits which are unquantified but noted in the study include a reduction in fertilizer consumption (and associated emissions), less nitrogen runoff and other impacts associated with conventional corn production

Looking at the Bright Side

A study published in 2021 by a researcher from Indiana University-Purdue University Indianapolis anticipated this correlation when it looked at some of the impacts of mass vehicle electrification and projected additional outcomes of these market forces (assuming 100% electrification by 2050)³:

  • Provision of a greater income return to landowners than agriculture alone
  • Increased economic opportunities & tax revenues in communities compared to corn production alone
  • Preservation of the land for 30+ years delaying other forms of more intensive development
  • Improvement of soil health and the ability to sequester more carbon dioxide if managed through land management approaches such as regenerative agriculture
  • Reduction of the need to develop additional transmission as cropland is more likely to be located near existing transmission

Indeed, a conversion to solar production could potentially become the highest and best use for land currently being used to support ethanol production. And even if some would prefer that land be shifted to other uses, the market for solar only requires a small percentage of this land to meet even the most ambitious targets. In its 2021 Solar Futures Study, the DOE observed that, even at the maximum foreseeable deployment of solar, the total land required in aggregate would be 10.3 million acres of land by 2050, and this figure includes land already utilized for solar.

The decreasing demand for ethanol will undoubtedly have an impact on farm incomes and land values. With the price of land tied to its future income potential, land used for corn production is probably nearing its peak value. The transition from corn production to solar in the next few years provides an opportunity to maximize profit, hedge against risk, and increase tax revenues, in addition to the positive environmental and ecological attributes. The energy transition shouldn’t be defined by loss but rather by opportunity, of which there will be plenty.


1. Trends in the Operational Efficiency of the U.S. Ethanol Industry: 2021 Update. Department of Agricultural and Consumer Economics University of Illinois. 2 February 2022

2. Electric vehicles are forecast to be half of global car sales by 2035. Goldman Sachs. 10 February 2023

3. Light-duty vehicle fleet electrification in the United States and its effects on global agricultural markets. Jerome Dumortier, Amani Elobeid, & Miguel Carriquiry. 2021

4. Land Requirements for Utility Scale PV: An Empirical Update on Power and Energy Density. Bolinger, M and G. Bolinger. 2022

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