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Agricultural News

Grain Ethanol Battle Winds Down, Paves the Way For a Cellulosic Future

Fri, 27 Apr 2012 12:42:04 CDT

Grain Ethanol Battle Winds Down, Paves the Way For a Cellulosic Future
It's been a battle for the ethanol industry, but Tom Buis, CEO of Growth Energy says the recent approval of the E-15 fuel blend by the EPA signals the end of one battle and the beginning of another. Working with and convincing regulators about the efficiency, affordability and viability of the ethanol-gasoline blend is one thing. Persuading consumers is another. Buis recently spoke with Ron Hays about how far his industry has come and where it is going. (You can hear the full interview by clicking on the LISTEN BAR at the end of this story.)

"It's been three years and two months since we filed the E-15 waiver and it seems like the longest marathon high-hurdle race ever devised by anyone because every time you think you're rounding the corner, more hurdles are erected. But we finally cleared, in the past couple of weeks, the final federal regulatory hurdles and now it's up to the marketplace."

If simply persuading customers that E-15 is a superior product were all that needed to be done, the task might not be so difficult. But, Buis says, his industry is now faced with encouraging the creation of the marketplace itself from bottom to top.

"It's up to retailers to offer the fuels. It's up to the consumers to buy it. And, obviously, most of our focus is aimed at helping retailers get the fuel, urging them to put it out in the marketplace because, number one, it will be cheaper to consumers, number 2, it's a better performing fuel, higher octane. So, once you get that out there, hopefully the market forces will take over because this is voluntary. Nobody's forced to buy it. Nobody's forced to use it. Nobody's forced to sell it."

The next destination on the horizon for the ethanol industry, Buis says, is cellulosic ethanol. Just as the grained-based ethanol refiners are becoming economically viable, he said companies seeking to cash in on what promises to be a cellulosic bonanza will be piggybacking on the successes of E-15.

"Just this past several months we've seen four companies announce that they were breaking ground for producing from cellulose and they should be up and running in 2013. And until that happens, you're not just going to create an industry."

He says the acceptance of E-15 into the marketplace will drive investments in next-generation biofuels. Plus, he says, "Grain-based ethanol is capped out. We can't get any bigger. We're already producing just about the maximum we're allowed under the law anytime. So you want to see that move forward."

And part of that moving forward with cellulosic ethanol includes government support and investment. Buis says there are those who do understand that dynamic.

"The farm bill energy title of 2008 and the current farm bill was actually all about next-generation biofuels. It wasn't about current generation. Unfortunately the chairman's mark and the ranking member's mark doesn't include funding for these programs to incentivize it into the future. But that's important because you've got a billion tons of biomass that is wasted every year in this country that can be converted to energy. No one knows which company is going to crack the code. It isn't going to be cracked until you get started and that's why you want to incentivize that industry and get it moving.

He says that politicians and taxpayers shouldn't be worried that supporting research and start-up for the cellulosic producers would be a permanent drag on the treasury. He said the experience and examp of grain-based ethanol producers proves just the opposite.

"We gave up all our tax credit, voluntarily. The industry came together and said, 'We don't need them.' We don't have a tariff. We're ready for the free market. We're still waiting for oil and gas, by the way, to give up their tax credits so that we've got a level playing field. All we want is access to the marketplace so consumers can make the choice themselves."

Making that choice could be difficult for many. In some areas of the country, gas stations-and consumers-take pride in their choice for "100 percent ethanol free gas." Buis says the myth that 100 percent gasoline is somehow a better fuel choice will be hard to overcome.

"It's perpetuated by industries who don't want to see our industry succeed because of their own vested interests in oil, primarily foreign-sourced oil. They have told a lot of misinformation. They have told some outright lies. Food versus fuel is the biggest lie I've ever heard in Washington and, as you may have imagined, in the past 25 years I've heard some whoppers.

"We still see some of this stuff: 'Ethanol takes more energy to produce than you gain' and that's not true. Our return is 2.2 energy units for each energy unit used to produce it. Gasoline is one to one. We still hear criticisms about water use. We use less water to produce ethanol than they use to produce gasoline. All those criticisms are based on maybe the way the industry was 30 years ago. But that's not based on fact.

"On the food versus fuel stuff, everyone said, 'The sky's going to fall. You're going to run out of corn.' We've never run out of corn. Price goes up. Price goes up to where it's profitable for grain farmers, but guess what? American agriculture enjoyed the most profitable year ever in the history of American agriculture. Not just grain farmers, but ranchers, livestock producers, cattle producers, hog producers. Everybody enjoyed a robust economy."

Buis says, he believes, the future growth of the ethanol industry is cellulosic. He says with a billion tons of biomass that would otherwise be wasted each year, it's a resource that is just waiting to be tapped. He says it will take time, but he's confident cellulosic ethanol will enjoy great success.

"You've got the biomass which can be used, can be converted. And you know you can make alcohol out of virtually any plant. It's how efficiently you can break down those sugars and convert them to alcohol. The enzyme companies and everybody else, once they're assured there's going to be a marketplace, entrepreneurship, innovation takes place.

"You know, 30-some years ago, the corn ethanol industry wasn't economically efficient. It wasn't energy efficient, but it took that investment and, because they had a market, to make it efficient.   Today it's the cheapest, most efficient fuel on the planet, cheapest fuel in the world. And we've come a long way. We can do it again."



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