Wednesday, February 4, 2009


Despite being pinched by the economic downturn, ethanol producers are expanding so rapidly that they are pressing the government to overturn its 25-year-old rule that limits to 10 percent the amount of the corn-based additive that can be put into a tank of gasoline.

The effort comes as the industry finds itself well ahead of its federally mandated schedule to produce, by 2015, 15 billion gallons of ethanol each year for use in U.S. vehicles.

Federal environmental rules now limit to 10 percent the amount of ethanol that can be added to a gallon of gasoline. On Tuesday, ethanol industry representatives told reporters and editors of The Washington Times that they plan to lobby hard to expand that amount to as much as 15 percent.

The ethanol supporters cite Brazil — where motorists can choose up to 100 percent ethanol at the pump — as an example of the fuel’s potential for growth in the U.S. marketplace.

Robert Dinneen, president of the Renewable Fuels Association, explained that his industry continues to expand and could easily sell plenty of additional ethanol, even though lower oil prices and the credit squeeze lately have forced the closing of several ethanol plants. The industry now is producing about 10.5 billion gallons of ethanol per year and has the capacity to produce about 14 billion gallons.

The lobby campaign comes as the industry has decided not to seek significant new provisions in the nearly $900 billion economic stimulus package working its way through Congress.

“We’re not actively lobbying anything specific for our industry in the stimulus package,” Mr. Dinneen said. “We just want the economy turned around and the credit markets to open up so our industry, like others, can get healthy again.”

About 15 percent of the industry’s 171 plants have been idled recently. Some are in bankruptcy court after being forced to pay high prices for corn while oil prices fell steeply.

The ethanol producers also are eager to expand into non-corn-based fuels. In particular, they are speeding toward providing 21 billion gallons of ethanol produced from other sources such as switchgrass and wood waste. The additive made from those sources is known as cellulosic ethanol.

Many environmentalists have advocated such advanced biofuels as a fuel that would emit little or no carbon pollution during their production. Corn-based ethanol produces more carbon at the production stage than these other fuels.

The chairman of the Renewable Fuels Association, Chris Standlee, said many corn ethanol producers are developing cellulosic capacity but must have more federal support to make the more advanced fuels profitable. The industry hopes the new administration’s environmental team, including Energy Secretary Steven Chu, will increase emphasis on research that would reduce the cost of cellulosic fuel production.

“I think one thing that you have to have is government support of a relatively new industry, and that still applies to the existing starch-based energy and, even more, it applies to the new cellulosic industry,” said Mr. Standlee, who is executive vice president of Abengoa Bioenergy.

“For the cellulosic industry to flourish we need continued support,” Mr. Standlee said.

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