Ethanol has become a lightning rod for debate lately – in Washington, blogs, media reports, and industry conferences. It turns out ethanol plays a big role in the US economy (and that of Brazil, though that comes from sugar cane overseas and not corn, the mainstay of US ethanol). It does get difficult to follow coverage of what’s happening with Environmental Protection Agency standards, the E15 political battle, and the impact of long-term drought conditions in the US market and its impact on fuel and food prices. So here’s an overview of what’s been happening lately…
• On Feb. 11, the US Dept. of Agriculture released a forecast that included a section on where biofuels will be going in the next 10 years. It’s expected to grow 40% in production during that time with the US, Brazil, EU member countries, Argentina, Canada, China, and Indonesia dominating the global market. Steady economic growth and global demand will fuel biofuels production. Demand for ethanol and biodiesel feedstocks will continue growing, but a slower pace than recent years.
• Economists and market analysts are looking at the cost of corn production as its own market to closely follow, along with the amount of corn that will be going into a gallon of gasoline, affecting fuel prices. More than 1.4 billion gallons of the country’s 14.7 billion of ethanol production have been suspended because of expensive manufacturing costs. It’s very similar in Brazil, where ethanol market conditions affect national policies. Brazilian ethanol prices trading above raw sugar futures for the first time in almost two years are spurring speculation that millers will favor making the biofuel over the sweetener starting in April.
• About 40% of US corn is used in ethanol production – which has been the focal point for debate during last year’s record-breaking drought. Ethanol plants have been cutting back on production as corn dwindles. Ethanol industry trade group Renewable Fuels Association provided data showing 20 of the nation’s 211 ethanol plants have ceased production over the past year, including five last month. Production won’t likely resume until after 2013 corn is harvested in late August or September.
• US Agriculture Secretary Tom Vilsack spoke at the National Ethanol Conference, and told 1,100 attendees that they’re responsible for increasing farm income, allowing Americans to have less expensive gasoline, reducing the country’s dependence on foreign oil, and increasing entrepreneurship. He made similar comments at the National Biodiesel Board conference, telling industry leaders that they’ve given birth to a “biobased economy” and the “possibility of new American economy.”
• Also during the 18th annual National Ethanol Conference, panel speakers addressed the future of the federal Renewable Fuel Standard. They’re pleased to see where it’s going with Obama administration support, but would like to see language changed that’s restricting corn from being considered an advanced biofuel. “The industry has a petition at EPA right now to see if we can have a pathway approved for corn fiber from the kernel as an advanced biofuel,” said National Corn Growers Association CEO Rick Tolman.
