July 07, 2010
Bringing biofuels’ benefits back home
Published in Kansas City Star
It’s not your father’s ethanol industry anymore.
Founded three decades ago in order to enhance the nation’s energy security, the U.S. ethanol industry is searching overseas for new opportunities to expand its markets. And the industry is succeeding well beyond what most observers would have believed possible only a few years ago.
According to recent reports by the U.S. Department of Agriculture and the Census Bureau, the industry exported 83 million gallons of ethanol during the first three months of 2010 and is on track to sell a record total of at least 330 million gallons by the end of this year.
While the top importers of U.S. ethanol are Canada and the Netherlands, the industry is also finding some unlikely purchasers, including a major petroleum producer, the United Arab Emirates, and two leading ethanol exporters, India and Brazil.
At first glance, the increase in ethanol exports seems to be unequivocally good news. The ethanol industry supports hundreds of thousands of American families, creates economic opportunity in countless rural communities, and provides new markets for farmers’ grain. During 2009 alone, the industry produced a record 10.75 billion gallons of ethanol, supported nearly 400,000 jobs throughout the economy and bought 3.8 billion bushels of corn.
Moreover, American-made ethanol reduced demand for imported oil by 364 million barrels. And the industry generated $15.9 billion in federal, state and local tax revenues, helping to pay for school systems, police and fire departments and highway construction.
Here in the Farm Belt, ethanol is essential to our economy. Missouri’s six farmer-owned ethanol cooperatives produce approximately 275 million gallons of the biofuel every year, using approximately 20 percent of the state’s corn. In Kansas, 11 plants produce 440 million gallons of ethanol annually, creating a market for about 157 million bushels of sorghum and corn.
The world’s thirst for American ethanol is a tribute to the biofuels high quality and affordable price. This clean-burning, renewable fuel works well in many kinds of vehicles. With American farmers’ unparalleled productivity and American producers’ technological breakthroughs, U.S. ethanol is the most cost-effective alternative fuel on the global market today.
But increased ethanol exports also have a downside. By using more biofuels here at home, Americans can help to cure their addiction to imported oil, reduce air pollution and greenhouse gas emissions, and become less dependent on unfriendly governments in unstable parts of the world.
As the tragedy in the Gulf of Mexico demonstrates, a shift away from petroleum cannot happen soon enough.
The U.S. ethanol industry is seeking new customers abroad because domestic markets have become saturated as a result of public policies that artificially limit demand for the biofuel. The U.S. Environmental Protection Agency (EPA) sets a 10 percent limit on the quantity of ethanol that can be blended with gasoline for use in most cars.
As long as this “Blend Wall” exists and current trends continue for gasoline usage, the domestic market for ethanol cannot exceed approximately 12.5 to 13.5 billion gallons a year. U.S. ethanol producers are expected to produce about that much ethanol this year alone. They’ll be compelled to export the additional ethanol that they produce, while the nation will have a harder time weaning itself off imported oil.
Fortunately, public policies can promote clean-burning American-made biofuels in three ways.
First, tear down the “Blend Wall.” EPA should allow the use of 15 percent ethanol (E15) in a gallon of gasoline.
Second, Congress should extend important tax incentives for ethanol production and use, such as the Volumetric Ethanol Excise Tax Credit.
Third, let’s deploy the infrastructure, such as blender pumps and flexible fuel vehicles, to dispense and use higher level ethanol blends (higher than E15).
Yes, we can ...
