Accelerating Innovation

Ethanol industry lauded, challenged in Orlando
By Susanne Retka Schill | March 05, 2012

The American public takes for granted the role that U.S. agriculture plays in providing low-cost and abundant food, not to mention the role corn ethanol plays in keeping fuel costs down, Secretary of Agriculture Tom Vilsack said in his keynote address on day two of the National Ethanol Conference, held Feb. 23-24 in Orlando, Fla.  He stressed the industry needs to play a role in educating the public on the importance of these contributions. “It is important for us to market this,” he said. “Ninety-eight percent of America does not farm and are generations removed from the farm.”

Vilsack outlined the programs USDA is administering to support the growth of renewable energy, highlighting one creative approach to furthering advanced biofuels. The joint effort on drop-in aviation fuels involving the USDA, the U.S. DOE and the Navy addresses financing hurdles by including a Navy precontract for fuel supplies from a biorefinery. Maintaining funding for future energy programs may be a challenge in the Farm Bill negotiations ahead. Vilsack explained that it took time to get the rules in place and begin implementation of the new energy programs. Only those programs that were funded throughout the life of the current farm bill, however, are part of the baseline. Thus, none of the energy programs are in the baseline budget, and continued funding will require reducing funds for programs covering crop insurance, conservation, nutrition and others. With budget cuts to the baseline expected, Vilsack said USDA will seek more flexibility to use existing programs to fund further work in renewable energy.

Renewable Fuels Association President and CEO Bob Dinneen outlined the accomplishments of the industry in producing 13.9 billion gallons of ethanol and 39 million metric tons of high-protein feed last year while employing 90,000 people. “Despite a world-wide recession, deeper and more severe than any since the Great Depression, the U.S. ethanol industry has been the fastest growing industry in the nation, with the value of our output growing by an average annual rate of 7.9 percent since 1998,” Dinneen told the 1,200 attendees in his opening State of the Industry address. The U.S. economy grew just 2.2 percent per year on the average in that period, while the ethanol industry’s rate of growth beat the Internet publishing and broadcasting industry, as well as the petroleum refining and oil and gas extraction industries.

In addition to reducing oil imports and improving air quality, Dinneen stressed the success of the ethanol industry in revitalizing rural America. “Ethanol has become the single most important value-added market for farmers, stimulating investment and allowing farmers to get their income from the marketplace, not the taxpayer,” he said. He pointed to gains in corn production with the past five corn crops averaging 12.6 billion bushels compared to a 10.5-billion-bushel average in the previous five years and 9.6-billion-bushel average in the five years before that, when corn prices were around $2 a bushel. “That increased productivity has allowed the ethanol industry to grow without diverting corn supplies away from other important markets,” he said, adding there was more corn available for nonethanol uses in the most recent five-year period than ever before.

While the corn ethanol industry did not fight the loss of the tax incentive, Dinneen said it is critical that in the year ahead the industry remind policymakers that cellulosic ethanol needs policies to help it develop. Other priorities for the association will be to complete the work begun to aid the rollout of E15, encourage the growth of E85 and work with automakers to fully realize the octane benefit of ethanol.

In a discussion on E15, Kristy Moore, vice president of technical services for the RFA, said there are 10 E15 registrations sitting on the desk at the U.S. EPA waiting for approval. The necessary federal approvals, however, are only half the battle, she added. RFA is focusing its initial efforts for state-level regulatory approvals in 12 Midwestern states where E15 will launch, plus preparing materials to meet misfueling mitigation guidelines and for future point-of-sale retailer forums. —Susanne Retka Schill