The United States, the world's largest ethanol producer, is weighing options to boost domestic use of the controversial fuel, according to the country's new agriculture administrator.
U.S. Department of Agriculture Secretary Tom Vilsack recommends that a higher percentage of ethanol be blended into gasoline to support the nation's struggling biofuel industry. The United States currently allows gasoline to contain a maximum of 10.2 percent ethanol, most of which is produced from corn.
"My hope is that we get a blend rate that's higher than 10 percent," Vilsack said, according to Reuters. "That's going to create more opportunities for the ethanol industry."
Vilsack said he is discussing an increase in the blend target with the U.S. Environmental Protection Agency
Ethanol demand has fallen since oil prices plunged following a peak last summer. Several ethanol producers have struggled ever since. An estimated 21 percent of U.S. ethanol production capacity is currently shut down, according to ethanol producer Archer Daniels Midland.
Industry groups suggest that the EPA respond by increasing blend rates to 15-20 percent, which they argue would guarantee greater demand.
"Just think - if the EPA would move the ethanol blend cap from 10 to 20 percent - that would open up an additional 15 billion gallons of potential demand," said Monte Shaw, executive director of the Iowa Renewable Fuels Association, at a conference last year.
The EPA and U.S. Department of Energy are studying how a higher blend rate would affect both vehicle handling and the environment. According to the auto industry, most cars are not designed to run on a higher ethanol blend. It also remains unclear how the higher blend ratio would affect air pollution and greenhouse gas emissions.
A coalition of environmentalists, meanwhile, is calling for the biofuel to be phased out altogether. The groups, which include the Clean Air Task Force, Environmental Working Group, and Friends of the Earth, say the U.S. ethanol standard should remain at current levels and then be lowered gradually - unless the fuels can be guaranteed to meet "minimum environment, health, and consumer protection standards."
Researchers have criticised corn-based ethanol for its varied environmental and economic impacts. In the United States, rising demand for corn has been associated with greater usage of fertilizers and pesticides, as well as the depletion and contamination of water resources. Converting the crop into a fuel source may have contributed to last summer's global rise in food prices. And several studies suggest that the life cycle of ethanol, from the field to the fuel tank, may release more greenhouse gas emissions than conventional gasoline, depending on the feedstock used and how this is grown.
The United States is slated to increase its use of biofuels from 9 billion gallons in 2008 to 36 billion gallons by 2022, under a federal "Renewable Fuel Standard" [PDF]. While Vilsack recognizes the limitations of corn-based ethanol, he says the fuel will help the country transition to more-advanced "cellulosic" biofuels made from non-food crops or waste materials. Such biofuels are considered to be more environmentally friendly.
"There are a number of challenges to the way in which ethanol is being produced today, and we have to respond to those challenges," Vilsack said in his first press conference as agriculture secretary. "One way we respond is by accelerating significantly the research that will allow us to be more efficient with the feedstocks that we have today...at the same time, working on promoting second- and third-generation feedstocks that may be even more beneficial from a climate change perspective."
Craig Cox, Midwest vice president at the Environmental Working Group, said that government support for corn-based ethanol may prevent the industry from transitioning rapidly to advanced biofuels. Corn ethanol accounted for three-quarters of the tax benefits and two-thirds of all federal subsidies allotted for renewable energy sources in 2007, according to his organization's research.
"The financial and political capital invested in corn ethanol may be a barrier rather than a bridge to cellulosic ethanol," Cox said.
But the industry insists that ethanol efficiency is improving, and cellulosic ethanol is on its way to becoming cost efficient.
"It is intentionally misleading to deny the concrete strides American farmers and ethanol producers are making to improve our energy security, mitigate climate impacts...and create hundreds of thousands of jobs and billions of dollars in economic opportunity," the Renewable Fuels Association said in a statement on Wednesday.
Environmentalists in the European Union have also called for their region's ethanol targets to be reduced, in part out of a concern about rising food prices. Biofuel supporters prevailed, however, and the EU in 2008 included a 10 percent mandate for renewable fuel in its region-wide plan to reduce greenhouse gas emissions 20 percent by 2020.
The United States produced almost 9 billion gallons of ethanol last year. It was followed by Brazil, which generated 6.5 billion gallons, primarily from sugar cane. The European Union and China rounded out the top four, producing a combined 1.2 billion gallons, according to commodity analyst F.O. Licht.
Courtesy of ENN