Ethanol — a renewable fuel made from corn and other plant materials — is an important commodity for U.S. railroads.
The U.S. ethanol industry — and railroad carloads of ethanol — has grown tremendously since methyl tertiary butyl ether (MTBE), a gasoline additive, was banned from use in 2006. Coupled with high oil prices and low corn prices, the ban gave rise to ethanol’s replacement of MTBE as a fuel additive. Government policies since then requiring the use of renewable and biofuels since then has only strengthened the demand for this energy resource.
Because of its alcohol content, ethanol cannot move in oil pipelines, making railroads the chief mode of transport for this commodity. Today, railroads account for 60 to 70% of ethanol movement. Each of the seven U.S. Class I railroads transport ethanol, with some serving several dozen plants. An estimated 15 to 20% of ethanol rail movements originate on short line and regional railroads — not surprising, given the rural nature of many short lines and much of America’s ethanol production.
Ethanol production is concentrated in the Midwest where most of the corn used in ethanol production is grown, but many of the major markets for ethanol are on the East Coast, California and Texas.
More than 99.999% of hazardous materials reach their destination without release from an incident. Because of the freight rail industry’s strong safety record, the government requires railroads to carry ethanol. Railroads have worked diligently with federal regulators to strengthen standards for tank cars carrying this material.