Views from the Cab
By David Tollefson, Columnist
During this past long, long winter, we’ve heard a lot about ethanol.
President Biden recently flew to Iowa to an ethanol plant not far from Des Moines to announce that E-15 would be able to be sold the year round, instead of only in the colder months.
In a recent issue of Minnesota Farm Guide, Gene Lucht has a column in the April 8, 2022 issue, explaining some of the history of the corn-based fuel that is added to most gasoline in America.
Here is the column, edited for length:
Gas prices have been soaring, and ethanol production races to keep up with demand.
Of course, that hasn’t always been the case in an industry that has seen more than its share of ups and downs over the past 40 years. And the crystal ball doesn’t yet provide a clear picture of whether it will be the case in another few decades. But there is a sense of optimism behind the waterfall of corn flowing from the trucks into the grain bins of ethanol plants these days.
“The industry is still doing well,” says Nick Bowdish, president and CEO of Elite Octane near Atlantic, Iowa. “The margin is profitable today.”
It’s a sentiment echoed by others at a time when the economy is still recovering from the long COVID-19 shutdown and people are dealing with high fuel prices due in part to the war in Ukraine.
The industry is facing some challenges, and there are questions about the future, but it may be worth taking a look at the trend lines of ethanol.
“I’ve been in this almost since the inception, says Bill Couser, a farmer and long-time board member at Lincolnway Energy.
The industry really started more than 40 years ago as a response to the oil embargoes in the 1970’s and the ensuing high gas prices that the embargoes fueled. Farmers began investing in very small-scale production of what was then called “gasohol.” The Renewable Fuels Association was formed in 1981, but the industry remained small until the Clean Air Act of 1990 established oxygenated gasoline programs for metro areas with air quality issues.
Early on, MTBE was the additive of choice for oil companies, but over time it became clear that MTBE was contaminating ground water. Environmental issues led to ethanol being the oxygenate of choice.
In 2005, President George W. Bush signed the Energy Policy Act into law, which established the Renewable Fuel Standard, a program that would probably ramp up the amount of biofuel to be blended into the national fuel supply. Ten percent blends of ethanol were suddenly headed toward eventually being the national norm.
Of course, the RFS has seen challenges. The push to move from an E10 standard to acceptance of year-round E15 has been met with resistance. There always seem to be battles to be fought in Congress or at the EPA or the White House, no matter which party is in power.
“D.C. is a crazy place,” says Monte Shaw, executive director of the Iowa Renewable Fuels Association.
But he says the basic idea of ethanol as a home-grown and environmentally friendly fuel remains a solid one.
Some environmental groups disagree, saying ethanol production leads to the planting of too much corn and that leads to environmental degradation. Shaw and other industry leaders dispute that idea, saying that while roughly 40 percent of the nation’s corn goes through ethanol plants, a third of that comes back out in the form of byproducts such as distillers grains which make excellent livestock feed.
What isn’t in dispute is that right now ethanol costs less than oil, and that means ethanol blends are less costly than non-ethanol blends of liquid fuel, Cooper says. At a time when fuel costs are shooting through the roof, that is an important point. He argues that this would be a good time for lawmakers in Washington to promote ethanol production as a way of addressing fuel shortages and fuel price increases. When E15 was first approved it was not approved for summer usage in many areas due to concerns about ozone emissions. In 2019 President Donald Trump approved year- round E15. In 2021 the courts overturned that regulation.
But Cooper and other industry leaders say the future lies beyond E15.
Couser says “I think the next step will be E30. That’s the perfect mix.”
Mixes such as E85 are useful for people who have flex-fuel vehicles, but Couser says it is likely that regular vehicles will eventually be approved for E30 blends and that could be the right combination of environmental and price benefits while not reducing fuel mileage too much.
Those moves to E15 and E30 could benefit farmers and the ethanol industry and could also improve air quality and climate issues in the short run, Couser argues.
And if the nation does move toward electric vehicles, it still may not sound a death knell to ethanol, Cooper says. He points toward markets such as ship and large vehicle transportation as a potentially large market for biofuels. And sustainable aviation fuel holds tremendous opportunity.
“It’s a huge market,” Cooper says.
Right now, the United States is producing about 14-15 billion gallons of ethanol, primarily for autos. The sustainable aviation fuel market could be double that figure.
“This Russian aggression isn’t going to last forever,” Shaw says. “We don’t really know yet if it will spur a new round of innovation (such as the oil embargo that started the ethanol industry).”
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Please contact David Tollefson with thoughts or comments on this or future columns at: email@example.com