Ethanol (ethyl alcohol or grain alcohol) is a type of transportation fuel, produced from the fermentation of cellulosic feedstock with plenty of sugar or starch. Ethanol is produced in various countries from different crop feedstock, such as corn in the U.S, sugar cane in Brazil and sugar beets from Europe.
Ethanol Produced from Different Feedstock
Ethanol was first experimented as a fuel in 1876 in the first modern internal combustion engine, the Otto Cycle. Later, Henry Ford’s Model T in 1908 used a mixture of ethanol and gasoline. However, ethanol had not been commercialized until the 1970s when oil prices hiked as a result of the oil crises.
The invention of ethanol is NOT a general purpose innovation. Gasoline can be regarded as a general purpose innovation because the use of refined crude oil as gasoline for automobile dramatically changed the entire economy and lifestyle of human beings, whereas ethanol can only serve as fuel additive . Ethanol has been used as a high-octane additive which helps prevent “knock” and enables engines to run at a higher compression ratio, improving the vehicle’s performance. With high oxygen content, it reduces tailpipe emissions of carbon monoxide. However, ethanol has a higher freezing temperature than gasoline, thereby having cold start problems in severe winter. Ethanol has a lower heat value or energy content (76,100 BTU per gallon), compared to oil (114,100 BTU per gallon), thus it takes 1.5 liter of ethanol for the same amount of energy that 1 liter of gasoline produces (Pimentel, 1997). Due to these weaknesses, ethanol can not serve as a perfect substitution for gasoline.
In this light, the invention of ethanol is NOT a Schumpeterian innovation, but rather a routinized innovation. As for innovations in the ethanol industry itself, these innovations are mostly on the use of new kinds of feedstock that can generate more energy. These are considered non-drastic innovations, rather than drastic ones.
Ethanol is blended with gasoline in different proportion. E10 including 10% ethanol and 90% gasoline is available in almost every gas station in the U.S. The highest gasohol with highest percentage of ethanol is E85 with 85% of ethanol and only 15% of gasoline. E85 is commonly used all over Brazil but only in the Midwest of the U.S. E85 can only be used by flex-fuel vehicles (FFV) which have internal combustion engines designed to run on more than one fuel. Services stations that offer E85 are not widely spread in the U.S. Nowadays, the majority are built in the Midwest where most of ethanol is produced and consumed.