ST. LOUIS -- The ethanol industry has draped itself in the American flag for years, positioning itself as a cleaner, homegrown alternative to oil. Never has it made that argument more loudly than today.
With regulators and legislators poised to decide issues that will shape ethanol's future for years, the ethanol lobby increasingly is making the scene in the Gulf of Mexico, where millions of gallons of crude spilled from BP's deepwater well, a backdrop for the nation's energy debate.
"The choice between the dangers of our addiction to oil and the promise of American renewable fuels is as clear today as the contrast between the blackened estuaries of the Gulf Coast and the sparkling green fields of rural America," said Robert Dinneen, president of the Washington-based Renewable Fuels Association.
Dinneen was speaking in St. Louis at the recent International Fuel Ethanol Workshop and Expo, which bills itself as the world's largest and longest-running ethanol conference.
Ethanol use has grown exponentially in the past decade. An estimated 12.5billion gallons will be produced this year, almost exclusively from corn. In fact, most gasoline consumed in the country is 10percent ethanol.
Now, producers and corn growers are looking to expand their market by increasing the level of ethanol in gasoline to 15 percent. The Environmental Protection Agency is weighing a waiver request to allow billions more gallons of corn-based fuel in American gas tanks. A decision is expected this summer.
The ethanol industry also is lobbying Congress to extend a tax credit for blending ethanol with gasoline, and to maintain a tariff on imported ethanol; the measures were implemented years ago to help a fledgling industry grow. Both the tax credit and tariff are to expire at the end of the year.
Industry officials say the BP spill is another tragic reminder that America's increasing thirst for fossil fuels is pushing the oil industry to drill deeper and explore for oil in more far-flung places.
"You turn on cable news right now, and people can see the environmental consequences of oil," said Tom Bius, CEO of Growth Energy, an ethanol-industry group. "I think it's our duty to point out the differences and the benefits of moving to renewable fuels."
Washington-based Growth Energy said its argument isn't new. Days before the BP rig explosion, the group launched a national advertising campaign that said: "No beaches have been closed due to ethanol spills."
To be sure, ethanol has more than its share of critics. Among them are environmental groups warning that an increasing reliance on corn-based ethanol isn't the solution to the nation's energy woes.
The push to increase the amount of ethanol in the U.S. gasoline supply also faces resistance from equipment manufacturers, automakers and the oil industry. They say higher blends could degrade older engines, gas pumps and emission-control systems.
John Felmy, chief economist for the American Petroleum Institute, the oil industry's main lobby, said retailers and gasoline producers whose logos are on hundreds of thousands of gasoline pumps will be held responsible if 15 percent ethanol blends being considered by the EPA cause problems for motorists.
"What happens when engines are damaged?" Felmy said. "Is the ethanol industry going to step up?"
The API and others have suggested that the ethanol industry is now large enough that it no longer needs the tariff to protect U.S. producers from ethanol imports, or the 45-cents-per-gallon tax credit for blending ethanol with gasoline. That's a subsidy of $6billion a year at current levels of production.
Ethanol producers and corn growers disagree. They say that government incentives for ethanol are just a fraction of what the petroleum industry gets and still are necessary to help jump-start investment in next-generation technologies, such as new fuels made from agricultural waste and dedicated energy crops.
One example is a 25-million-gallon plant being developed by ethanol producer Poet in Sioux Falls, S.D. The plant, nicknamed Project Liberty, represents the cutting-edge future of ethanol. It will make fuel from corn waste normally left behind on farm fields.
But Poet CEO Jeff Broin has said the project will not advance unless the company receives federal loan guarantees that help offset what investors see as increased risk associated with new technology.
The Poet project is one of many new investments that won't be made until investors have assurances that there will be a growing market for ethanol and that existing tax credits and tariff protections will be extended, industry officials said.
"The ethanol industry is still in its infancy," said Growth Energy's Bius. "We can do more."
©2010, The Columbus Dispatch
