Corn ethanol production gets a start in EU, thanks to Fagen, Inc.

(from an article by Scott Tedrick, editor, West Central Tribune, published Sept. 30)

Ron Fagen had to chuckle. It was not long ago that the President and CEO of Fagen Inc. had presided over the groundbreaking of the company’s first international ethanol plant in Dunaföldvár, Hungary and already representatives from several countries were requesting that they be built one too.
“We’ve got to do one at a time,” said Fagen recalling the event that took place late August. “Our original goal was to get one up and running and show people that it works pretty good, but I got a feeling we’re not going to wait … I would say we’ll be breaking ground on a second one before this one is built.”
In the United States, Fagen Inc. led the ethanol plant construction boom, which peaked over the course of 2005-2007. The company built over 60 percent of all ethanol plants in the country before interest dried up when commodity market investments caused corn prices to rise at the same time that oil prices fell and the demand for ethanol hit, what is expected to be, a temporary ceiling.
By diversifying its capabilities the company has remained active building wind farms, anaerobic digesters, biomass fired boilers and other green energy projects throughout the United States. Unfortunately, that construction is taking place outside of Minnesota, where Fagen says corporations have become hesitant to build.
“Work in Minnesota is almost non-existent because of the high tax-base. Industries don’t want to do anything in Minnesota anymore,” he said.
The idea seems a thorn in his side. One is given the impression that there are few things that Fagen takes more pride in than creating jobs, particularly in his home state. Such is the reason why that when developing the contract to build the company’s Dunaföldvár plant, that he insisted on fabricating needed materials Stateside.
“Almost the entire plant is being exported,” he  said.
 As of two weeks ago, 15 full truckloads of material manufactured at the Fagen fabrication shop and Par Piping has embarked from Granite Falls to the Gulf Coast for shipment, with many more to follow. Fagen said that originally he had planned to use a Lake Superior port, but unions wouldn’t allow non-union labor a staging area to put the equipment together prior to the voyage. In the end, he said it was cheaper to haul it to the Gulf, “which was disappointing because we wanted to make it an all Minnesota thing.”

Full article may be viewed at http://www.granitefallsnews.com/news/business/x1305344094/Breaking-new-ground-Fagen-begins-construction-of-first-overseas-ethanol-plant

Our Take:
We predict the Europeans will get hooked on the efficiency of corn to ethanol, and will be quick to adopt fractionation, zero-water discharge and other cutting edge technologies developed here in the United States. Among other benefits, this will grow industry and wealth here in the US, and it will likely strengthen the world market for corn, and win broader acceptance for US corn in the EU and around the world.

We applaud Ron Fagen’s loyalty to Minnesota–we have observed that farm-based energy encourages devotion to the local and regional economy.

And we are struck by Fagen’s discomfort at the fact that ethanol and other green energy projects have been slow to move forward in Minnesota. But we think his diagnosis (at least as reported in this news article) is a little simplistic. The availability of programs like JOBZ and before that TIF have blunted the edge of the tax issue.

We think at least three other significant factors have created far greater obstacles to development of ethanol projects in Minnesota: 1) The recession. 2) The regulatory atmosphere–widely regarded as making industrial development slower and more expensive here, but the most important reason may in fact be 3) given the current markets for ethanol, production capacity has maxed itself out here in Minnesota.

We think Minnesota could benefit from continued growth in ethanol and the whole spectrum of bioenergy. As a region that produces no petroleum there is still a lot of upside in the transportation energy sector.

We believe the most important measures that would put a shot in the arm of new farm-based energy projects in Minnesota would be approval of E15 by the EPA, and federal law requiring increased production of flexible fuel vehicles and programs to create wider distribution of E85/blender pump infrastructure. (If Brazil can do these things, the US surely can as well).

(A caveat about criticism of regulation: if overall, western nations’ are favoring increased environmental regulation, then Minnesota’s approach is making for ethanol and other industries that are ahead of the curve and can expect to be able to export their technological innovations that reduce environmental impact both widely and profitably)

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