Biofuels industry urged to unite against ‘common enemy’

Posted 5 November 09

The ethanol industry has faced tough times but the real crisis is the world’s slavish dependence on fossil fuels, according to Bob Dinneen, chief executive of the US Renewable Fuels Association.

“In just 25 years there will be 3bn cars as people in Indian and China want to drive like we do in the US and Europe. And these won’t be electric cars, these will be liquid fuels. These cars will use 120 mln barrels of fuel (per day) from 86 mln barrels currently,” Mr Dinneen told the FO Licht World Ethanol 2009 conference in Paris. “Mother Earth does not have this much oil. Even if it did we can’t afford to drill it. And even if we could our environment could not survive the onslaught.”

In his typically passionate style, Mr Dinneen called on delegates to join – wherever they are in the world or biofuels supply chain – to stamp out misinformation in biofuels.
The speaker noted that no nation has been able to build an ethanol industry without strong government support including tax breaks, subsidies and import protection. “It is important countries are allowed to build their own ethanol production with indigenous feedstocks,” he said. “We need to band together; stick together and move forward without cannibalising each others’ markets.”

He noted that the US has faced one of its worst ever economic crises ever but that 31 new ethanol plants were started up with the creation of around 250,000 jobs. The US can meet the rising requirement under the Renewable Fuels Standard (11.1 bln gallons of which 10.5 bln gallons is ethanol), but is constrained by the 10% blend wall.

“On December 1 the EPA decides whether a higher blend can be introduced in the US and to be frank I am not that confident of a 15% or 20% level,” said Mr Dinneen, explaining there was a lack of data on the effect on engines. However, 2% MTBE can be blended with 10% ethanol so Mr Dinneen was hopeful an interim measure would be introduced. “There is no way in the world the US ethanol industry should be held back by a capricious standard that limits use to 10%,” said Mr Dinneen.

The speaker said the biofuels industry must focus on the record-breaking yields farmers are harvesting, the return of by-products into the feed supply and the need for grain ethanol as a foundation for advanced technologies to take on the common threat of enemies.

Asked by The Public Ledger how the Environment Protection Agency might adapt the RFS to a lack of cellulosic ethanol (a 100 mln gallon requirement in 2010, rising to 250 mln gallons in 2001), Mr Dinneen said it was unlikely to be opened up to other advanced fuels, but should be maintained as an important structure for pioneering firms.

“The EPA has some flexibility after two years that the target is not met,” said Mr Dinneen. “It is critically important that cellulosic ethanol producers have a certain, identified market in order to attract investment capital.”

He explained that this was even more important given the failure of a guaranteed loans programme run by the Department of Energy to help cellulosic ethanol producers get hugely important credit. He hoped the failures would be resolved in the next few months and a similar programme by the USDA due out soon would help.

“If we get over these credit issues we can have the production of cellulosic ethanol required in the further out years,” he concluded. “But I don’t think the EPA necessarily needs to do anything in 2010.”

Source: F.O. Licht’s World Ethanol & Biofuels Report

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