US may be going too fast into ethanol - Marathon - VIDEO

17 February 2010 15:23  [Source: ICIS news]

ORLANDO, Florida (ICIS news)--Ethanol is a valuable complement to transportation fuels but the US may be trying to move too fast into biofuels, an oil executive said on Wednesday.

Policymakers are pushing for too much too soon in targets under the Renewable Fuels Standard (RFS), said Cliff Cook, senior vice president, supply, distribution and planning at Marathon Oil.

The RFS calls for the US to use nearly 13bn gal of ethanol in 2010, rising to 22bn gal/year in 2016 and 36bn gal/year by 2022.

The targets would require the US to significantly change the way it consumes fuels, including putting millions of E85 ethanol-capable flex-fuel vehicles (FFVs) on the roads and allowing higher ethanol blends in existing vehicles.

But policy doubts on issues such as measuring ethanol's greenhouse gases, whether the US would eventually have a cap-and-trade system on carbon emissions, and potential state-by-state regulatory changes were keeping the brakes on new entrants in the ethanol industry and on its access to financing, Cook told the National Ethanol Conference in Orlando.

"When we talk about future investment, we see a lot of uncertainty in the market," he said.

Cook said ethanol cannot compete with crude oil at current prices, adding that fossil fuels are still the most cost-effective available.

The executive also cast doubt on the ability of so-called second-generation technology such as the cellulosic process to lift ethanol production quickly.

"I think the development of going from laboratory to market will take a little longer than first thought," he said.

Marathon Oil blends around 1bn gal/year of ethanol in gasoline, and the company is the equity owner in two ethanol plants with combined capacity of 220m gal/year. The facilities are located in Indiana and Ohio.

The Houston-based oil company has also invested $10m (€7m) in Massachusetts cellulosic ethanol developer Mascoma.

($1 = €0.73)

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By: William Lemos
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