As summer begins to cool, ethanol is heating up. The corn-based (in the U.S.) motor fuel is under fire for eating into a dwindling national corn crop that has been decimated by drought.
Gov. Beverly Perdue has now joined livestock producers in calling on the Environmental Protection Agency to suspend the Renewable Fuel Standard so that this federal mandate, which results in corn-based ethanol being added to gasoline, wont put even more upward pressure on food and feed prices.
Some economists argue that the effect on prices of waiving the mandate would not be substantial, even though it requires more than 13 billion gallons of ethanol to be blended into gasoline this year. Nonetheless, Congress, in setting up the Renewable Fuel Standard, included a provision for waiving its requirements during times such as these. Perdue, as governor of a state in which turkeys, pigs and chickens are a much bigger agricultural factor than corn, is taking on a natural role as a defender of livestock producers who raise their animals on increasingly expensive Midwestern grain.
A reasonable compromise might be for the EPA to lower the ethanol requirement for the duration of the drought but not eliminate it entirely, even during hard times. That would be less harmful, long-term, to a domestic industry that has the potential to emerge from a web of federal supports and become a useful, freestanding part of the energy supply scene.
As the head of Novozymes North America notes in a Point of View article on the opposite page, biofuels, of which corn-based ethanol is the main one in the United States, now make up 10 percent of the nations energy supply. Ethanol use serves to displace imported oil that must be refined into gasoline and contributes to cleaner exhaust emissions. Certainly its a plus for farmers, who enjoy higher prices than they otherwise might, due to increased demand for their crop.
Balanced against that is the pressure that growing so much corn puts on farmland and on food prices, plus the market-distorting federal mandates that have led to so much food corn and some soybeans being converted into motor fuel. This is an industry that needs to learn to stand on its own.
Those same federal mandates, however, outline a path forward in which corn would gradually be supplanted as the main ingredient of ethanol. As Adam Monroe, president of Franklinton-based Novozymes, writes, future Renewable Fuel Standard production is intended to lean heavily to advanced biofuels such as cellulosic ethanol made from agricultural waste, municipal solid waste and purpose-grown energy grasses.
An important step toward that future is slated to get under way in rural Sampson County. There, Chemtex International, in partnership with Novozymes, plans to build a new ethanol plant that would convert switchgrass, a tall-growing inedible fiber, into liquid fuel.
This apparently will be the first commercial-scale test of using a field grass to make automotive fuel; production is expected to begin in 2014. Novozymes will provide an enzyme cocktail used to extract carbohydrates that can be fermented into fuel. Area farmers are being signed up to grow the grasses, although The N&Os John Murawski reported last week that the sign-ups are going slowly.
The pace may pick up now that the federal government has agreed to a $99 million loan guarantee for the project. That offers some certainty for farmers thinking of switching to switchgrass (actually, the crop, which can be grown on marginal land, is not expected to greatly displace others). But it also raises the specter of another Solyndra the solar panel manufacturer whose bankruptcy cost the taxpayers a bundle.
Solyndras problem wasnt so much its vision or its product but a relentless drop in the cost of solar-energy panels, a decline largely fueled by (state-subsidized) Chinese panel manufacturers. Something similar could happen to innovative Renewable Fuel Standard projects, because the current low price of fracking-boosted natural gas is reconfiguring the overall U.S. energy scene.
Federal help may well needed to find out if grasses can ever help power the family chariot. But the governments auditors will have to watch that Sampson County project like hungry hawks.