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No. 200 on the Horizon

Posted: September 22, 2008 at 10:10 AM CST

The U.S. fuel ethanol industry is closing in on another milestone. Sometime in the next few months the industry will start up its 200th commercial-scale facility. While construction has slowed considerably from the break-neck pace of late 2006, developers continue putting together projects. There are now 178 operating plants with the capacity to produce 10.964 billion gallons of ethanol per year in the United States. Thirty three facilities that will be able to produce another 2.951 billion gallons are under construction. In addition, eight small-scale plants remain offline primarily due to market conditions.

That means the industry has quickly moved to 200 plants. The pace at which operating plant No. 200 will be reached is truly incredible. It’s a doubling of an industry in a little more than two years. In fact, No. 100 was highlighted in EPM’s July 2006 issue.

Lincolnway Energy LLC, Frontier Ethanol LLC and Front Range Energy LLC started grinding corn and producing ethanol in May 2006, becoming the 99th, 100th and 101st operating commercial-scale ethanol plants in the United States. The headline for that story, written by ex-EPM Staff Writer Holly Jessen, was “Speeding Right Past 100.” Obviously, the industry won’t be speeding quite as quickly past No. 200, but is does appear ready to supply the federal renewable fuels standard.

It also appears to be on pace with the vision of National Corn Growers Association Chief Executive Officer Rick Tolman. Attend any ethanol-related event in which Tolman speaks and you’ll likely hear him speak about the NCGA’s 15 x 15 x ’15 strategic vision. It’s a vision in which a portion of 15 billion bushels of corn will produce 15 billion gallons of ethanol per year by 2015. Corn production and ethanol capacity appear to be on pace to reaching that target. After all, the ethanol industry grew from 1.5 billion gallons per year to 4.6 billion gallons per year in less than five years. Just two years later, the industry will grow from 4.6 billion gallons to more than 13 billion gallons.

While the growth has been exciting to watch, all good things must come to an end. In this case, however, it could be just the slow down before cellulosic ethanol sparks another boom.

In Jessen’s 2006 article, Poet Energy (then Broin Companies) Chief Executive Officer Jeff Broin hit the nail on the head. He predicted the industry would see growth for the next couple of years until the corn supply tightens and profit margins change. “It’s my opinion that the grain and energy markets combined with the commercial viability of cellulosic ethanol will determine the growth after that,” he said.

-Dave Nilles