US ethanol industry optimistic despite drought, lobby opposition

06 February 2013 19:35  [Source: ICIS news]

HOUSTON (ICIS)--The US ethanol industry faced a difficult year in 2012, but one trade group leader said on Wednesday that producers are still “standing in the battle” and will “continue fighting” to make sure the industry will continue to expand.

The US was hit with the worst drought in 50 years, affecting the growth of corn and other crops used as feedstock by ethanol producers, according to Bob Dinneen, president and CEO of the Renewable Fuels Association.

He made his comments during his state of the industry address at the National Ethanol Conference in Las Vegas.

The drought prompted 36 of the nation’s 211 refineries to shut down and others to drastically reduce capacity, Dinneen said, causing ethanol production to decline for the first time since the government began collecting data over two years ago.

Food and oil lobby groups launched campaigns against ethanol, he added, opposing tax incentives and policies created to help the industry.

Still, Dinneen called ethanol “an American success story” – mainly because of the Renewable Fuel Standard (RFS), which was created by the Energy Policy Act of 2005 to establish a volume mandate in the US.

In 2012, about 13.3bn gal of ethanol were produced, making up 9.7% of US motor fuel, Dinneen said.

Additionally, Phillips 66 opened the first E-15 station in Kansas, a milestone in efforts to begin selling the higher octane fuel with a blend of 85% gasoline and 15% ethanol that was approved by the US Environmental Protection Agency.

As a byproduct in ethanol production, about 36.6bn tonnes of feed was produced to raise livestock, Dinneen said.

Ethanol also helped the economy, supporting 87,000 direct jobs and 295,000 indirect jobs, as well as contributing over $40bn (€30bn) to the nation’s GDP, he added.

Looking forward, Dinneen said the ethanol industry’s mantra should be “Don’t mess with the RFS”.

He said the RFS was created to do two things – drive technology, which is what the industry is currently doing, and drive the market, which is what the industry should be doing with E-15.

“We look at 2013 with renewed hope,” Dinneen said. “Together, we will see E-15 commercialised. Together, we will open new markets, here and abroad. And together, we will make sure the RFS is reserved because we will never, ever let them mess with the RFS.”

($1 = €0.74)

By: Tracy Dang
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