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Ethanol Proponents Cheer Momentum, Eye Challenges
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US: August 10, 2006


KANSAS CITY, Mo. - Ethanol is gaining rapid momentum in its battle with Big Oil over how to fuel America's future, but several key skirmishes lie ahead, ethanol proponents said Wednesday.


With sky-high oil prices spooking consumers and environmental worries mounting amid growing evidence of the ill effects of global warming, ethanol is positioned to see rapid growth this year and beyond, according to industry and government leaders gathered in Kansas City Wednesday for the annual American Coalition for Ethanol conference.

"People have finally recognized the importance of ethanol," Missouri Gov. Matt Blunt told approximately 1,500 attendees. "It is really ethanol's time to shine."

Missouri is one of four states to pass legislation requiring gas sold inside its borders to have ethanol blended into it and is on track for production of 500 million gallons "in the near future," according to Blunt.

Currently there are 100 US ethanol plants in operation, most in the heart of the US Midwest, with 46 more under construction. The USDA has forecast the amount of corn to be turned into ethanol next year will be 2.15 billion bushels, a near 35 percent jump from the previous year's 1.6 billion.

Through 10 percent blends with gasoline, which can be used in conventional cars and delivered through conventional pumps and through 15 percent blends, also known as E85, which power flex-fuel vehicles, ethanol now is blended with approximately 40 percent of the nation's gasoline supply. Still, it comprises only 3 percent of the nation's fuel supply, according to coalition officials.

One key to the growth of ethanol production and use is the federal renewable fuel standard that took effect in February. It requires usage of 4 billion gallons of ethanol in 2006, 7.5 billion gallons by 2012, and 8 billion gallons by 2008-09.

The EPA is still writing rules that will provide for the trading of ethanol usage credits and hopes to have something completed by next year.

As that progresses, ethanol proponents are pushing for larger requirements while also seeking restrictions on credit trading.

"We think there is a compelling case to seek a larger RFS (renewable fuel standard)," said Brian Jennings, executive vice president of the American Coalition for Ethanol. "We need to do more to break our dangerous addiction to foreign oil."

Ethanol proponents said heavy criticism from the petroleum industry was spurring a lot of misconceptions about ethanol. They also said oil industry lobbying was threatening passage of a November ballot measure in California that would tax oil production to promote alternative fuels.

Still, the growth of ethanol at this point appears unstoppable, many conference leaders said. The three major US automakers have joined the chorus of those arguing that wider use of E-85 could sharply reduce the US reliance on imported oil. And governors across the country are pushing a variety of ethanol usage and production initiatives.

Kansas Gov. Kathleen Sebelius, who chairs a 35-member governors' ethanol coalition, told conference attendees they were on the verge of a biofuel "boom."

"Biofuels can play a huge part in meeting our energy needs here and in the future," she said.


Story by Carey Gillam


REUTERS NEWS SERVICE


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