US govt support to save ethanol from 'perfect storm' - RFA

24 February 2009 15:57  [Source: ICIS news]

Ship in a stormSAN ANTONIO, Texas (ICIS news)--Government support will tide the US biofuels industry through the "perfect storm" of economic and market conditions that has ethanol makers reeling, the head of the Renewable Fuels Association (RFA) said on Tuesday.

Policy provisions such as the Renewable Fuel Standard (RFS) "will always provide a ray of hope in a sea of despair", RFA president Bob Dinneen told the opening session of the National Ethanol Conference in San Antonio.

But there is more to done on the policy front, Dinneen said, calling on US President Barack Obama to live up to the pro-biofuels statements he made while campaigning for office.

"As president, now is the time for that bold action," Dinneen said.

Specifically, the development of new ethanol technologies in the current financial climate would need the aggressive support of the federal government, he said.

While acknowledging the problems that have forced some US ethanol producers into bankruptcy, Dinneen painted a scenario of opportunity in a crisis.

"I do see that the glass is more than half full," he said. "I see a strong industry, and I refuse to wallow in its perceived weaknesses."

RFA data shows the ethanol industry added $65bn (€51bn) to US gross domestic product in 2008, including the creation of 256,000 new jobs, the official said.

The opening of 31 new plants last year took national ethanol capacity to 13bn gal/year, and another 21 plants would be completed in 2009, he said.

Most importantly, Dinnen said, one of the new plants coming this year would be the first commercial plant using the cellulosic process, which can convert ordinary plant matter into fuel, rather than using corn.

"Cellulosic ethanol is no longer around the corner or on the horizon," he said. "Cellulosic ethanol is here today."

But Dinneen warned that both the first- and second-generation technological tiers of the industry must stay united or risk being marginalised by its motivated and well-funded enemies in the oil and food industries.

Food companies have waged an orchestrated campaign against ethanol in an offort to protect their own predatory pricing strategies, he contended.

At the same time, the oil industry - including OPEC oil producers - have made outrageous claims because they fear the downward pressure that ethanol puts on fuel costs, Dinneen said.

In the face of that opposition, the biofuels industry needs to beware the attempts at "Balkanisation" by its opponents, who are seeking to create the idea that there is "good ethanol" and "bad ethanol", he said.

($1 = €0.79)

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By: Stephen Burns
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