Potential for Ethanol Looks Good if Things Play Out Right

Blending and indirect land use are determining factors.

Published on: Jul 3, 2009

The potential future growth of the corn-starch ethanol industry is at least 45% from current production levels. That’s according to Energy Economist Robert Wisner. But can the industry snap back from the wave of idled plants, losses and bankruptcies? He says three questions raise doubts and the answers could determine the future for today’s corn-based ethanol plants and tomorrow’s cellulosic ethanol. Those questions are: will the EPA raise the maximum blend rate to E-15; will Underwriters Laboratory approve the use of retail pumps with a 15% blend; and will California and EPA re-think their indirect land use calculations?

 

Wisner notes the 2007 Energy Independence and Security Act mandates the blend of 15 billion gallons of ethanol with gas in 2015. That goes even higher to 35 billion gallons by 2022. But he says ethanol demand is limited by the E-10 limit for most cars and the small number of flex-fuel vehicles that use blends up to E-85. Wisner believes there may not be demand for more than the 10.36-billion gallons of fuel ethanol being produced this year if these limits stay in place. This could cause the hard times for the ethanol industry to continue.