From Niche to Nation

Ethanol has arrived, association head says

LAS VEGAS -- The 11th Annual National Ethanol Conference recently concluded in Las Vegas, with a record attendance of more than 1,400. Bob Dinneen, president of the Renewable Fuels Association (RFA), announced in the conference's State of the Industry address that ethanol has arrived.

He added, 2005 will long be remembered as a seminal year in the history of the U.S. ethanol industry. Ethanol has moved from a niche market in the Midwest to a national and ubiquitous component of the U.S. motor fuels market. Ethanol today is blended in more than a third [image-nocss] of the nation's gasoline. Ethanol is used quite literally from coast to coast and from border to border; 10% ethanol can be used in every vehicle on the road today, and is the fuel used to power the Indy 500.

Click here to read the full text of his presentation.

Click here to view a complete copy of From Niche to Nation: Ethanol Industry Outlook 2006.

The U.S. ethanol industry now has 95 plants nationwide, added an Associated Press report. Analysts say by 2012 it will double in volume, from producing 4.3 billion to 7.5 billion gallons of biofuel. That growth will be aided by the federal Energy Policy Act of 2005, which gives ethanol producers sizable subsidies, including a federal tax credit for small refiners.

Ethanol plants have attracted hundreds of investors, including Microsoft Corp.'s Bill Gates, who sunk $84 million into West Coast producer Pacific Ethanol Inc., and venture capitalist Vinod Khosla, who is seeding BC International, which will make fuel from switchgrass. But just a handful of companies in the Corn Belt hold the keys to distributing the fuel, which will prove crucial to making ethanol available at pumps across the country.

And ethanol producers are still grappling with how to meet rising domestic demand. Six states have passed laws that require ethanol-blended gasoline, and nine others are considering similar legislation, according to the American Coalition for Ethanol. Kansas and Missouri both are considering proposals to require that all gasoline sold in each state contain 10% ethanol by 2010.

Executives of two oil companies said they are lukewarm about trying to sell more E-85, a blend of fuel made of 85% ethanol, 15% gasoline, according to a recent report in Fort Wayne (Ind.) Journal Gazette.

In letters to Senators Richard Lugar (R-Ind.) and Tom Harkin (D-Iowa), John Hofmeister, the president of Shell Oil, said E-85 cannot be used in most vehicles and has to be stored in its own tanks at gas stations; however, Shell has a pilot program in Chicago and hopes to learn more about E-85, he added.

James Mulva, chairman of ConocoPhillips, was less enthusiastic, saying mileage is better with regular gasoline, and there remains a number of E-85 fuel quality and regulatory concerns.

Meanwhile, Indiana Lieutenant Governor Becky Skillman kicked off the first of four E85 retailer workshops in mid-February by delivering the keynote address in Indianapolis. These free workshops, to be held across the state between through April, are being offered as a way to answer questions retailers might have about offering E85 fuel.

The growth of Indiana's biofuels industry is important as we position our economy to grow in the 21st century. Access to these fuels at the retail level is critical to our success, said Skillman, who oversees the Indiana Office of Energy & Defense Development and the Indiana State Department of Agriculture. Both agencies are working to encourage the production, development and use of biofuels in the state.

These workshops will allow retailers to see the benefits of selling E85. It is a homegrown fuel that reduces our dependence on foreign oil. It is also good for farmers, good for consumers, good for the environment, and good for business. It is a winning proposition and gas station owners across the state will hear that message from many speakers, she said.

Current retailers, fuel producers and providers will talk about the benefits of E85 and how it can help Indiana's economy and environment. At these workshops fuel, infrastructure and code experts will discuss the pros and cons of E85 and what is needed to sell it. Retailers will also discuss what consumers are saying about the fuel and the hurdles gas stations have encountered.

The Retailer Workshops are being made possible by the Central Indiana Clean Cities Alliance in conjunction with the Indiana State Department of Agriculture and the Indiana Office of Energy & Defense Development. Along with the Indianapolis event, workshops are being held in Fort Wayne, Jasper and Michigan City.

Click here for more information.