An Iowa Ethanol Booster in Washington

Secretary of Agriculture Tom Vilsack hasn't been shy about stating his firm support for the ethanol industry.
By Holly Jessen, Photos By USDA | July 15, 2010
Secretary of Agriculture Tom Vilsack makes no bones about it. In an interview with EPM, he calls himself a strong proponent of biofuels and declares his boss, President Obama, is a strong proponent as well. "We want a nationwide robust market for biofuels," he says. It's not the only time he's pledged support for alternative fuels such as ethanol. Still, with the U.S. EPA announcing yet another delay on the E15 issue and no assurance of tax incentive extensions as of the end of June—some in the industry wonder if it's all talk and no action.

Certainly a step in the right direction, the USDA's "Regional Roadmap to Meeting the Biofuels Goals of the Renewable Fuels Standard," released June 23, acknowledges the role of corn starch ethanol by pointing out that the U.S. is already on its way to meeting the 15 billion gallon goal set by the renewable fuels standard (RFS2). "I am confident that we can meet the threshold of producing 36 billion gallons of biofuel annually by 2022," Vilsack says. "The current ethanol industry provides a solid foundation to build upon and reach the 36 billion gallon goal."

To generate the 21 billion gallons of advanced biofuels, the June USDA report says, an estimated 527 biorefineries will need to be built, at a cost of $168 billion, assuming an average size of 40 MMgy for each plant. In addition, the report says that up to 50 percent of advanced biofuel production will come from the Southeast, due to a robust growing season that supports the highest gallons per acre. Closely trailing the Southeast is the central east region, with a potential to produce 43.3 percent of the advanced biofuel production goal.

Beyond just building biorefineries, the USDA recognizes that infrastructure is needed so that biofuels can get from the plants producing them to consumers using them. One area where the department could immediately offer assistance is blender pumps, the report says. Although the bulk of flex-fuel vehicles (FFV) are in the Midwest, there is a demand for ethanol elsewhere, with the primary targets for blender pumps and FFVs being California, Texas and Florida. In addition, infrastructure to distribute ethanol by rail or truck as well as blending terminals and storage facilities is needed.

The Future of an Industry
After Vilsack's April 28 visit to Macon, Mo., where he accompanied the president on a tour of Poet Biorefining-Macon, EPM had an opportunity to interview the secretary. As stated in the regional roadmap, he stresses that it won't just take emergent biofuel technologies to fulfill the RFS2. It will take current technologies too, namely ethanol produced from corn. The president's visit to a corn ethanol plant was an appropriate recognition of the fact that ethanol will be a permanent part of the U.S. fuel supply, he says. "I think it sends a good message to the biofuels industry."

When asked about the negative publicity campaign waged by anti-ethanol advocates, the head of the USDA downplays it. Don't worry about that, he tells EPM. Some people just don't realize the efficiencies and improvements made in the ethanol process over the years. "I think people are operating under the assumption that this is an energy user and not energy saver." The more important issue, he says, is moving the industry forward. The goal is to enable the industry to flourish to take the pressure off fossil fuel and reduce the nation's reliance on foreign oil. But it's not just foreign oil that's the bad guy here. As the oil spill in the Gulf of Mexico has shown, drilling off U.S. shores has risks with some very serious environmental consequences, Vilsack points out, and biofuels are an essential part of what it will take to move away from petroleum.

To do that, the blend rate issue must be resolved. "I'm interested in ultimately getting to E15," he tells EPM, adding that he'd like to see the EPA move as quickly as it can, with proper scientific justification. He's not willing to comment whether E15 would be approved for all vehicles or only newer models, saying only that it is currently being researched. Vilsack says the administration must work with the auto industry so flex-fuel vehicles continue to be built. What he doesn't want to see, he says, is a situation in the market where a large majority of new vehicles aren't built to utilize ethanol. In addition, there must be a functioning fuel distribution system, so all consumers have easy access to the fuel they want and need. That means, whether it's a standard vehicle, one that takes E85 or an older model, the proper fuel should be available at every gas station. "That should be the goal," he says.

Vilsack is also in favor of long-term extensions of the ethanol financial incentives. Without incentives such as the blenders credit, or Volumetric Ethanol Excise Tax Credit, and the Cellulosic Biofuel Producer Tax Credit, it will be difficult to get investors interested, he says.

Impact on Rural Areas
In May, Vilsack hosted a clean energy economy forum at the White House, where speakers included USDA officials, the chairperson of the White House Council on Environmental Quality, the Union of Concerned Scientists and others. Also on hand were farmers, ranchers and producers. Held on the one year anniversary of Obama's Biofuels Directive, the group discussed renewable energy opportunities for rural communities and the administration's efforts to help rural America build a clean energy economy that creates jobs, reduces the nation's dependence on foreign oil and enhances its position in the global economy. "Renewable energy production is a key to sustainable economic development in rural America," Vilsack said at the forum. "We must rapidly escalate the production of biofuels to meet the 2022 federal renewable fuels standard goal, and much of this biofuel will come from feedstocks produced by America's farmers and ranchers."

The week the clean energy forum was held, USDA announced that funds were available from the Biorefinery Assistance Program, Repowering Assistance Payments to Eligible Biorefineries, Payments to Eligible Advanced Biofuel Producers, and the Rural Energy For America Program (REAP)—several key energy provisions of the Farm Bill. USDA is also implementing the Biomass Crop Assistance Program to provide matching payments to help encourage the development of biomass feedstocks.

Vilsack is no stranger to agriculture or issues facing rural areas. Obama appointed the former Governor of Iowa to the Secretary of Agriculture spot 18 months ago. His goal for the clean energy forum, he says, was to put it in a very rural perspective. "To my way of thinking, it's really more than the obvious. It's more than energy independence, it's more than the commitment to the environment that this administration has made, it's more than jobs. It is really a critical component to a strategy to rebuild a rural economy that, for decades, has been in need of revitalization."

Ninety percent of the counties with persistent poverty are rural. Those regions have aging populations, with 28 percent of farmers over the age of 65. In comparison, he says, only about eight percent of the general workforce is over age 65. In addition, rural areas are hemorrhaging residents. A whopping 56 percent of rural counties saw population decreases in the 2000 census, and it's very likely that trend will continue in the 2010 census figures.

Iowa is a classic example of what is facing rural areas, Vilsack says. In 1900, more people lived in Iowa than California and Florida combined and the state had the representation of 13 members in Congress. Today, Iowa has skidded to 30th in population and is represented by only five members of Congress—one of which the state is likely to lose due to further population loss. Most of this country's founding fathers were farmers rooted in a rural way of life. Today, only one-sixth of the population lives in a rural setting. Agriculture became more efficient, requiring fewer farmers, and the country failed to create a companion economy to agriculture to allow people to remain in the rural areas. "This discussion, from my perspective, is really about the core values of the country," Vilsack says. "It's about revitalizing a very important part of that core."

And biofuels are an integral part of that. Developing a clean, green American economy, with a focus on renewable energy and biofuels, he says, "creates the first real opportunity to develop a holistic approach to revitalizing rural America."

Building more biorefineries to create jobs in rural economies will help improve the bottom line for farmers and landowners. It will help repopulate rural communities and help those who want to stay there find good jobs. And not just jobs at ethanol plants—it stimulates jobs at companies that provide parts, equipment and software for the plants—to name just a few examples. "There are just a multitude of good news stories with that," he says, giving moms and dads, grandpas and grandmas the ability to say to youth that they have just as much opportunity for success in rural America as they would if they moved to a bigger city. EP

Holly Jessen is associate editor of Ethanol Producer Magazine. Reach her at (701) 738-4946 or hjessen@bbiinternational.com.