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Agricultural News

Ethanol Industry Battles for Hearts and Minds of Consumers, Regulators

Thu, 08 May 2014 13:04:55 CDT

Ethanol Industry Battles for Hearts and Minds of Consumers, Regulators
The ethanol industry is still waiting for the Environmental Protection Agency to make a final decision on the amount of ethanol required to be blended with the nation's gasoline supply for 2014. The agency originally indicated it wanted to lower the figure for this year and the final decision was to be made last November. Tom Buis, CEO of Growth Energy, said the decision is still at least another month away.

He spoke recently with Radio Oklahoma Network's Ron Hays and said that there is a lot of misunderstanding about the ethanol industry among the American public, fueled in no small part, by the oil industry.

"There seems to be a lot of folks who just don't understand what happens in rural America and there's a lot of folks," he said, "who don't really understand how ethanol and renewable fuels are made and what their value is."

Buis said there is a lot of disinformation making the rounds and it's hard for the public to sort through it all and come up with the facts.

"We still hear a number of people out there saying, 'You use 40 percent of the corn crop.' That's a gross number. It's like someone's paycheck. You've got a gross amount and you've got a net amount. And the net amount is about 17 percent because all we take out of that kernel of corn is the starch. We have an abundance, an excess, of starch in the world. All the protein, which we don't have an abundance of, but all of the protein, oil and fiber comes back in a very good livestock feed called distillers grains. But a lot of people seem to think that whole kernel disappears."

Another misperception that Americans have, Buis said, is that ethanol production takes food off of Americans' tables and out of their mouths.

"For the record, and anybody can look this up, we don't make ethanol out of sweet corn, canned corn, popcorn or even candy corn. It's out of #2 yellow corn, not what Americans eat. It goes for livestock and all the good stuff out of that kernel of corn gets returned to the feed market."

In the debate over the government mandate that ethanol be blended with gasoline, Buis said he often hears people saying the government has no business picking winners and losers when it comes to what fuels consumers choose. That's an argument, he said, he agrees with, but only if all the other players would agree to it as well. Seen the other way around, the government is mandating that fossil fuels get 90-percent of the fuel market.

"It's a fight over market share. We took ten percent of the fuel market. We're on the cusp of being able to develop and produce ethanol out of additional feedstocks which will benefit all 50 states. And the volume requirements for that are twice what they are for grain ethanol and that's what scares them. They don't want to see that next generation succeed because that's potentially more market share lost. And all we're really asking for on the Renewable Fuel Standard is market access because without that the delivery and sales of fuel to Americans is controlled by a monopolistic industry that doesn't want competition. That's all we're asking for. We're willing to compete. We're not mandating you have to use higher blends. We want that consumer to be able to buy them based on price, performance and the type of vehicle they have."

In addition to ethanol made from grain, it can also be made from cellulose. That was touted by the industry as a way to make even more ethanol available at even lower prices.   But the promise has not kept up with the reality. Buis blamed the lag on several things including the recession of the last several years which sent investors in the technology to the sidelines. As things have improved, three companies have jumped back in and will begin producing cellulosic ethanol this year. Two of the plants are in Iowa and will be using corn stover as their feedstock. The third plant in Kansas will use wheat straw.

It will take some time, Buis said, before those plants will be operating as profitably as they can.

"Like any industry, they have to squeeze out the efficiencies. They have to get started. No industry starts out as efficient as it ends up and that process has to happen. Is everyone disappointed that it didn't occur earlier? Sure."

He said the corn ethanol infrastructure is already built out and there's not much that can be done about that by the oil companies. The cellulosic plants, however, still have a long way to go and the oil industry doesn't want to see it develop, he said.



Tom Buis talks with Ron Hays about overcoming challenge to the RFS.
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