EPA: Ethanol production expected to grow in 2012

(Published by Des Moines Register, Dec. 31, 2011. Article written by Dan Piller)

The U.S. Environmental Protection Agency last Tuesday said ethanol production in 2012 should reach 15.2 billion gallons, an increase of about 1.25 billion gallons from this year.

The agency’s 2012 targets for renewable biofuels, however, shows non-corn ethanol made from crop residue, grasses or wood chips falling short of the goals set in the 2007 federal law mandating biofuel use.

In a statement, the EPA projects that cellulosic ethanol will hit 8.65 million gallons, or 0.06 percent of the 15.2 billion gallon total. That is considerably short of the 500-million-gallon target for 2012 set by Congress in 2007 when it wrote the law mandating that 36 billion gallons of non-petroleum biofuels be used in the nation’s transportation fuel mix by 2022.

Our Take:
For enemies of ethanol this cellulosic shortfall is the loose thread they will try to pick at to unravel the whole Renewable Fuels Standard—therefore grain ethanol has a stake in the success of cellulose ethanol. Here in Minnesota, cellulose ethanol represents a huge opportunity for both the agriculture and forestry sectors—another way to create a value added product here rather than shipping our dollars out of state for energy, or shipping our raw products so that others can make money and jobs by adding value to them.

Cellulosic ethanol’s success—it could succeed in non-farm regions of the US—would help broaden the political support for biofuels in general.

In answer to RFS critics, the elected leaders of both parties that passed RFS in 2007 did not have a crystal ball and the one thing they could not anticipate happening in 2008 was the worst economic conditions for launching new businesses in nearly a century. Venture capital for the promising new ethanol technology was non-existent and the advent of the Great Recession put cellulose ethanol at least 24 months behind what could have been reasonably expected, if economic conditions had remained stable in 2008 and 2009.

We would like to go on to illustrate how a clever reporter can still be completely off-base in his depiction of ethanol:

Piller writes: “Corn-fed ethanol, which uses century-old manufacturing techniques and enjoys a ready supply of feedstock in the Midwest, has gotten off to a fast start and now constitutes 10 percent of the nation’s gasoline supply.”

Our Take: The only thing accurate in that paragraph is that ethanol is now 10 percent of the national gasoline supply. To say ethanol uses century-old technology because it is distilled alcohol (actually, distillation is approaching 2,000 years old, as a chemical process) would be like saying that automobiles and airplanes use technology that’s a century old. We don’t know what Piller considers a fast start, but ethanol was a vision among the founders of Minnesota Corn Growers Association when they organized in 1978. It wasn’t until 2005 that a national renewable fuels standard passed congress, and it took another two years to reset it to its current requirements: that’s got to be the slowest overnight success in the history of business, and it represents the dogged, uphill battle of small independent farmers against Big Oil and Big Food that continues today. As much as Cargill and ADM benefit from RFS, they were not the elbow grease that got ‘er done. It was farmers.

Piller continues: “In 2011 an estimated 13.8 billion gallons of ethanol were produced, 3.7 billion gallons of it at 41 plants in Iowa. Ethanol production now consumes 5 billion bushels of the 12.4-billion-bushel U.S. corn crop.”

Our Take: How can the newspaper of record in the largest ethanol producing state, Iowa, at this late date, continue to fail to mention distillers grains animal feed. A full third of the raw grain feedstock used to make ethanol returns to the livestock industry in the form or a high protein, high energy, high quality feed.

Piller writes: “The Iowa ethanol industry now takes in about $15 billion in revenues and employs about 2,000 workers at the plants and is credited with an equal number of maintenance and transportation jobs.”

Our Take: We believe Pillar underestimates the jobs impact of ethanol by at least half. To say ethanol in Iowa supports only 4,000 jobs would be like saying that farming in Minnesota supports only farmers. The fact is, renewable energy has become a cornerstone of the rural economy and the economy as a whole. Urban manufacturing jobs with companies like John Deere depend on the strong farm economy built on crops, livestock and energy production. Take any one of these away and the job losses would spread far beyond the farm gate. The Renewable Fuels Association has estimated that the 200 ethanol plants in America have an ultimate economic reach that supports 400,000 jobs.

Piller writes: “So established is corn-fed ethanol that the industry allowed the expiration of the 45 cents-per-gallon tax credit for ethanol production, as well as the 54-cent fee on ethanol imports, to lapse at the end of this year, preferring to fall back on defense of the Renewable Fuel Standard set in the 2007 law.”

Our Take: It’s a bit flattering to be depicted as having even a plebiscite, yes-no vote on keeping the tax credit and tariff. Fact is, the relatively small biofuels industry was no match for a Congress looking for places to balance the budget. We would have preferred to keep these incentives in place to help secure market space for our product. It’s simply a matter of having a level playing field. We notice that Congress left the $30-plus billion dollars of oil industry incentives alone—that’s five times what Americans paid to underwrite ethanol.

If you want to read the full text of the Des Moines Register article, and perhaps rebut some of its inaccuracies, we encourage you to do so. Go to:

http://www.desmoinesregister.com/article/20120101/BUSINESS/301010044/-1/gallery_array/EPA-Ethanol-production-expected-grow-2012

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