August 30, 2006

U.S. D.O.E.: Ethanol Growth Faster than Expected

The power and vision of American business has rarely been more in evidence than the recent boom in the demand for ethanol and growth of production capacity to meet that demand.

“The U.S. ethanol industry has responded to the challenges of the President, the American public and the marketplace to increase the supply and availability of this cleaner-burning fuel,” said RFA President Bob Dinneen. “As a result, we are reducing our dependence on foreign petroleum, helping preserve air quality standards in America’s most polluted regions, and revitalizing economies in hundreds of rural communities around the country.”

In the absence of a top-down development program from the federal government, American business has embraced the paradigm shift to renewable energy with a flurry of partnerships, investments, programs, and deployments that is, perhaps, the most concrete response to the high price of oil that the world has yet voiced.

Even the Department of Energy acknowledges that the biofuels component of the national Renewable Fuels Standard passed as part of the Energy Policy Act of 2005 totally underestimated the rate of change possible. Here is what they say in their online Energy Efficiency and Renewable Energy newsletter (EERE News):

Growth in Ethanol Industry Makes National Mandate Moot

The ethanol fuel industry is growing so rapidly that a national Renewable Fuels Standard (RFS), passed as part of the Energy Policy Act of 2005, is already moot. The RFS requires 4 billion gallons of biofuels production in 2006 and 4.7 billion gallons in 2007, increasing gradually to 7.5 billion gallons in 2012. But according to the latest press release from the Renewable Fuels Association (RFA), there are currently 101 ethanol facilities nationwide with the capacity to produce more than 4.8 billion gallons of ethanol per year, an amount that already exceeds the requirement for next year. With an additional 41 ethanol facilities under construction and 7 expansions underway, the industry is in the process of adding nearly 2.8 billion gallons of new capacity. That will provide enough capacity for the industry to produce 7.6 billion gallons of ethanol per year, which already exceeds the goal for 2012. Unless the industry experiences a downturn and some production capacity goes uncompleted or unused, the ethanol fuel industry should easily exceed the RFS requirements. See the summary of the RFS and the latest press release on the RFA Web site.

While most of the new ethanol facilities are being built in the Corn Belt, a number of facilities are planned or under construction in other parts of the country. BioEnergy International, LLC, for instance, started preparations in May for building an ethanol plant able to produce 108 million gallons per year (mgy) in East Carroll Parish, Louisiana, and announced plans on August 21st to build an equally large facility in Clearfield County, Pennsylvania. Both plants will produce ethanol from corn, but the company plans to introduce technology to produce some of the ethanol from agricultural wastes. In addition, Agri-Ethanol Products, LLC (AEP), plans to build 20 ethanol plants on the East Coast, including three in North Carolina. The company's first ethanol plant is slated for Aurora, North Carolina. Meanwhile, Pacific Ethanol has completed a 40 mgy ethanol plant in Windsor, Colorado, and is building plants in California and Oregon. See the press releases from AEP, Pacific Ethanol, and BioEnergy (PDF 14 KB and PDF 15 KB).

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