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Corn+Soybean Digest

Geared Up For Demand

Farm politics will make it to the fuel pumps if the Renewable Fuels Standard (RFS) of the 2003 Energy Bill passes. The biofuels industry is gearing up. Dozens of plants are under construction to satisfy the demands of fuel-guzzling consumers.

A key driver of ethanol and biodiesel demand, the RFS — if passed — proposes a mandate that will raise the use of renewable fuels. That mandate is important because it means more than 1 billion bushels of corn and 9 million bushels of beans will be required to meet the mandate this year.

Currently, the ethanol industry has 73 plants in operation and 13 more under construction, with total production capacity of 2.9 billion gallons. If the RFS is passed, however, the industry will need more plants to meet demand, according to Bob Dinneen, president of the Renewable Fuels Association.

“Demand for ethanol is increasing at an unprecedented rate,” he says. “The demand created by the RFS will outpace our current capacity. So certainly we'll need additional capacity if energy legislation is passed.”

Raymond Defenbaugh, president, CEO and chairman of Big River Resources LLC, is preparing to meet the demand. His 872-member cooperative is building a 40 million gal./year capacity ethanol plant near West Burlington, IA. Set to open in June 2004, the plant will have the capability to expand to 80 million gallons if needed.

“People in corn production are eagerly searching for avenues to add value to their crop, and to keep that addition on the local level, “he says.

The growing biofuels market helps meet rising energy demands, reduce exhaust emissions, improve air quality and reduce dependence on foreign oil. The industry also boosts rural economies by creating jobs and value-added markets.

As a gasoline oxygenate, ethanol is replacing harmful Methyl-Tertiary Butyl Ester (MTBE) additives through bans in states such as New York and Connecticut, creating a market for an additional 500 million gallons of ethanol, Dinneen says.

On the flip side, the biodiesel industry has 15 operating plants and seven more planned or under construction. The Commodity Credit Corporation included in the 2002 Farm Bill spurred growth with incentives to build new plants, says Bob Metz, president of the National Biodiesel Board.

Ethanol will represent the larger share of the renewable fuels market, but biodiesel still plays an important role, especially in the freight industry, Metz says. Biodiesel provides a cleaner burning fuel for over-the-road diesel engines that carry 90% of all freight.

“Some cities will actually burn B20 — a 20% blend of biodiesel with 80% #2 diesel fuel” in city and utility fleets to improve air quality, he adds. In addition, the EPA mandates the removal of most of the sulfur in diesel fuel, a reduction from 500 to 15 ppm.

Across the country, more and more biodiesel gets pumped every day. For example, in June the city of Berkley, CA, began using 100% biodiesel (B100) in its diesel vehicles. Also, biodiesel blends are being used at seven military installations across the nation. The U.S. Department of Energy and Ford Motor Company even sponsored a competition for college students to re-engineer the Ford Explorer sport utility vehicle to run on biodiesel.

Around the world, biofuels are gaining attention. “There's a worldwide demand for ethanol,” Dinneen says. “The U.S. is not unique in trying to implement programs to stimulate ethanol production and use.”

Efforts are under way in the European Union, Southeast Asia, India, China and Africa to create a renewable fuels marketplace, he adds. In fact, Brazil, a powerhouse in ethanol production from sugarcane, has been using ethanol for years.

Dinneen is confident that some kind of legislation will come through. Even if the energy legislation is “bogged down in partisan wrangling,” there will still be opportunities to include it in another piece of legislation before the session ends. He says, “The concerns related to MTBE water contamination, reviving the flexibility in meeting the Clean Air Act requirements and the rural economic benefits associated with increasing the demand for ethanol through a RFS are too serious to not move forward with this program this year.”

Information At Your Fingertips

Industry association Web sites are primed with information on biodiesel and ethanol. Visit the following sites to learn more on both topics, including locations on where to purchase biodiesel in your area:

National Biodiesel Board: 800-841-5849

Renewable Fuels Association: 202-289-3835

American Soybean Association: 800-688-7692

National Corn Growers Association: 314-275-9915

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