Don’t limit the potential of ethanol

(A guest column published in the DesMoines Register written by David Nelson, president of Midwest Grain Processors, a farmer owned ethanol coop)

Ethanol has gone from a Midwestern phenomenon to an economic powerhouse fulfilling two urgent national goals: energy security and promoting American exports. Simultaneously meeting both goals raises questions the nation’s policy makers should ask: Is it better to rely on domestic renewable fuels and reduce oil imports? Or should we improve our balance of trade by exporting U.S. ethanol stocks?

The answer is: Let’s do both in due time, but put America’s energy security first.

Recently compiled ethanol export data from the federal government delivers one unmistakable message: An industry founded to relieve American dependence on imported oil is being forced to find new markets beyond our borders.

Record U.S. ethanol exports exceeded 83 million gallons during the first quarter of 2010, and are on pace to exceed 330 million gallons this year. In fact, American ethanol is doing so well on the global marketplace that its biggest buyers include some surprising customers, such as the petroleum-producing United Arab Emirates and two leading ethanol-exporters, Brazil and India.

American ethanol is succeeding for the best of reasons. It’s a high-quality, clean-burning fuel that works well in cars of all kinds. And, because of advances in ethanol-processing technology and the unparalleled productivity of American farmers, it’s the most cost-effective alternative fuel on the global market today.

Read the full article at http://www.desmoinesregister.com/article/20100612/OPINION01/6120313/1036/OPINION/Guest-column-Don-t-limit-the-potential-of-ethanol

Our Take:
Does anything confirm the value and desirability of ethanol as a motor vehicle fuel more than the fact that an export market has risen? The world is hungry for alternatives to oil. Countries like China are furiously developing their own ethanol production capacity, in order to deal with smog problems in their major cities. Brazil, our only major competitor in ethanol production, has not been able to keep up with demand.

And the world (and investors) is watching closely how BP deals with the worst oil spill in U.S. history. Both government and industry officials are now thinking hard about how much to expand offshore drilling and other oil extraction methods that have a high environmental impact, or a great potential for disaster.

Nelson’s point is well-taken: rather than sending ethanol abroad, shouldn’t we make sure we are using the most we can at home, to make the most of one of its key benefits—providing greater energy independence. An EPA waiver to allow 15 percent ethanol in gasoline will help grain ethanol expand in the most expeditious way.

One question becomes, if export demand is strong enough to call for more production capacity, then why not allow corn ethanol to exceed the current 15 billion gallon ceiling? Why not allow as much of the 36 billion gallons called for by RFS to come from corn ethanol as possible, rather than sending anything in excess of 15 billion gallons overseas? As cellulose ethanol production comes on line, the excess corn ethanol capacity can be shifted to export or retrofitted to biomass ethanol, as the market dictates.

Expanding ethanol production is so much more desirable than expanding oil. Hopefully the situation in the Gulf of Mexico is clarifying that contrast in the minds of many Americans.

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