Facing high gasoline prices and calls for sustainable energy sources, the U.S. ethanol industry is alive and kicking.
Ethanol fuel—usually derived from crops such as corn—can be blended with gasoline to reduce petroleum consumption and air pollution by automobiles. Critics of ethanol object that mass production would distort and elevate the price of corn and other commodities.
Recently, Huntsville, Alabama-based Flex Fuels USA Inc. was taken over by the newly formed Alternative Energy Sources Inc. (AES)
"Flex Fuels has developed proprietary technology to efficiently produce ethanol using biomass and other forms of waste rather than corn or sugar," according to an August 11 press release. "As a result, these facilities [with such technology] will not be affected by fluctuations in prices or supplies of corn and sugar."
The goal is to produce ethanol "on a mass scale," according to Mark Beemer, CEO of AES. "Our ability to convert everyday biomass waste streams to useful renewable fuels will give us the lowest cost position in the industry.
Production will most likely begin late next year, after construction of the first ethanol facility in the second quarter of 2007.
Aventine Renewable Energy Holdings Inc. of Pekin, IL and Consolidated Grain and Barge Co. based Mandeville, LA have partnered to build a $400 million ethanol production facility, according to an announcement on August 11 on Business First, a web-based business journal in Louisville, KY. Armed with $1.77 billion of capital, the plant will go into production in 2008 and create 675 new jobs in the region.
General Motors Corp., VeraSun Energy Corp., Sheetz Inc. and the Commonwealth of Pennsylvania recently announced the joint creation of three ethanol fueling stations in the Pittsburgh area.
An Expanding Industry
There are currently 97 ethanol plants in the U.S. with 24 more under construction, according to the Renewable Fuels Association (RFA), a U.S. ethanol trade association.
Archer Daniels Midland Co.—with plants in Illinois, Iowa and Nebraska—is by far the largest ethanol producer in the U.S., with a production capacity of 1.1 billion gallons per year (bgy), or 22.2 percent of total U.S. production.
VeraSun Energy, with facilities in South Dakota and Iowa, is the second largest ethanol producer.
In 1980, the U.S. produced .2 bgy of ethanol, which had increased to 1.6 bgy by 2000. Today, total U.S. production has reached 4 bgy. RFA predicts that production would increase to 7.5 bgy by 2012.
In 2005, President George W. Bush signed into law the Energy Policy Act of 2005. Under the Act, a small producer tax credit for up to .06 bgy was introduced. Such subsidies helped smaller producers gain a foothold in the industry.
RFA sees great benefits from ethanol production to the nation's energy consumption. The production of ethanol would reduce U.S. oil imports by 2 billion barrels per year and add "$6 billion in new investment in renewable fuel production facilities, and create 234,840 jobs."
Ethanol Additive in Gasoline
Did you know that today's gasoline already contains up to 10 percent of ethanol?
Washington resident David Dettner said, "I don't know if [the ethanol] has any adverse effect on the engine or if it affects performance in the long term. I would like to know the answer, and will definitely research the subject now."
The majority of people interviewed didn't realize that gasoline already contains ethanol.
"No, I have not noticed, nor did it ever cross my mind that gasoline was anything else than the oil from Middle Eastern or other wells," said David Carter, a federal government employee.
Significant decreases in pollution was found in Denver, Colorado where "ethanol, consisting of 35 percent oxygen, is a key ingredient in reducing emission," according to a RFA report.
"Ethanol plants run much cleaner than petroleum" says Reese Nanfito, senior director of the Omaha, Nebraska Information Council in an article by Energy Central Magazine. "The main output is steam. [And] the byproduct can be used as high-protein animal feed."
U.S. Government Takes Initiative
As fuel prices continue to climb, the U.S. government and industry leaders are joining forces to research alternative fuel resources.
Sandia National Laboratories, a U.S. government-owned, contractor-operated laboratory in Livermore , CA, and Monsanto Co., a global agricultural conglomerate headquartered in St. Louis, MO have formed a strategic partnership under a five-year umbrella cooperative research and development agreement to produce a constant and cheap supply of ethanol.
"The arrangement is aimed at aligning Sandia's capabilities in bio analytical imaging and analyses with Monsanto's research in developing new seed-based products for farmers, including corn products that may be able to produce more ethanol per bushel," said a joint release.
The United States Department of Agriculture and Department of Energy awarded $5.7 million this month towards alternative fuel research. The highest award, $1.4 million, was granted to Purdue University in Lafayette, IN.
"To be a reliable, renewable energy source, farmers and ranchers will need to be able to grow biomass in large quantities," said Mike Johanns, U.S. Secretary of Agriculture. "This joint research initiative will address our nation's need for alternative energy resources to produce renewable fuels such as ethanol."
Voices of Caution
Former Federal Reserve Chairman Alan Greenspan did not foresee much cost savings from Ethanol. "Its ability to displace gasoline is modest at best," Greenspan told the Des Moines Register in June.
"Ethanol imposes significant direct and indirect costs on consumers," said Jeff Dircksen, policy analyst at the National Taxpayers Union (NTU), a non-profit, non-partisan organization.
"It is more expensive to produce than gasoline. Agricultural subsidies lead to overproduction, which is then used as a justification for using ethanol. Since it is not economically viable, it has relied upon subsidies… costing taxpayers $2 billion a year."
Another problem according to Dircksen is that ethanol research has already cost taxpayers $1 billion since the 1980s and will cost another $2 billion over the coming years.
Kristin Brekke, spokesperson for the American Coalition for Ethanol disagrees, and calls the NTU study "a deceptive piece of propaganda with no basis in reality." Apparently, NTU later announced that the study forgot to mention "a host of benefits to our nation's economy, environment and energy security."
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