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What's Ahead for Ethanol, Biodiesel Industry in 2010?

What's happening with ethanol? What's ahead for the industry? There are a lot of issues on the table to be decided. We gathered the insights from a guy who is certainly on top of the situation—General Wesley Clark of Growth Energy.

General Clark, a retired U.S. Army General who was in command of NATO Forces, is now co-chair of Growth Energy, an organization of ethanol producers and other supporters of renewable fuels. He was keynote speaker at the Iowa Renewable Fuels Association's annual summit January 25 in Des Moines. Here's what he had to say, in his speech and in an interview with Wallaces Farmer.

Will EPA allow an increase in the ethanol blend?

"I think 2010 will be a great year for the renewable fuels industry. We've been very active at Growth Energy in representing America's corn farmers and ethanol producers," says Clark. "We've been pushing the U.S. Environmental Protection Agency to approve an increase in the amount of ethanol allowed in gasoline sold nationwide. We requested EPA allow an increase from 10% ethanol or E10 blend to 15% or E15 blend. I'm cautiously optimistic EPA will allow increased blends.

"I think this would really be a powerful move for the U.S. to make," says Clark. "It would be good for jobs, but would be really good for national security. The truth is, the only way you can really move America away from our heavy dependence on foreign oil is through expanded use of a different liquid fuel. That liquid fuel is here and on the market today and it is ethanol."

You'll be hearing more about "COOL for Fuel" this year

There are a lot of other actions underway to boost renewable fuels, says Clark. One idea that Growth Energy members have discussed in a low-key way for the past several months is 'country-of-origin labeling' for fuel.

"For 30 years in this country people have talked about trying to achieve energy independence," says Clark. "We've never gotten the American public into doing it. It's just a slogan that appears in news articles occasionally when a political leader says it. But imagine if you could go to a gas station and see on the pump where your fuel is coming from, you'd be able to make an informed decision.

"You'd put in your credit card and when you finish you have 12 gallons of gas in the car. It says you gave $4 to Hugo Chavez, the Venezuelan dictator; $6 to Saudi Arabia and the other $2 stayed in America. That would make the American public sit up and think--Why are we doing this?"

Country-of-origin labeling—it can be done for fuel

Clark asks: "Why is America sending $20 billion to $30 billion out of this country every month? That money could be used to build schools, create U.S. infrastructure, do research and development and fund our kids' education. But it's gone, just because of our great dependence on foreign oil. That's why we want to get country-of-origin labeling in use in the U.S., in our liquid fuel system."

Can we do it? "Sure we can do it," he answers. "We can sell the quality aspects of gasoline. If you can sell the differences between 87, 89 and 91 octane in our fuel supply system you can surely sell the fact where it came from."

Clark has been involved in the oil industry and he says that industry knows where every barrel of oil comes from that goes into a refinery and they know exactly what the composition is. "If you know when the oil went into a refinery, you know when it is coming out," he notes. "It's pretty easy to do this if we put our mind to it. It's very important because when the American people make up their mind they want to do something, it gets done."

American public has to make up its mind about biofuel

"If we make up our minds as Americans that we can supply our own fuel for our own people, we'll keep our country stronger and more prosperous," says Clark.

The petroleum industry is arguing against country-of-origin labeling for gasoline and diesel fuel, saying it would cost too much to do it—to inform the public where their fuel comes from each time they fill up their tank.

"But it's not going to cost very much at all," says Clark. "People know it's just a matter of tracking the fuel when it comes out of a refinery and putting labels on it. You can do it electronically or do it with chemical markers the way oil companies do it now with batches of petroleum fuel. There are ways to do this."

U.S. oil industry needs to look at benefits of "COOL for Fuel"

The American public needs to speak up, says Clark. Some people are going to say it's too hard to do, too costly. "But in every other case, such as when we've labeled where food products come from, it's worked. And honestly, it would be a great thing for American oil, too," he adds.

The oil company Clark was involved with has a refinery in Kansas and it gets a lot of oil right out of the ground in the U.S.--from Okalahoma, Texas and especially from Kansas. "It would be great for America to have country-of-origin labeling for gasoline and diesel fuel as well as great for biofuels, too," says Clark. "It would work for the petroleum industry to label fuel the fuel that's made from U.S. petroleum vs. petroleum imported into the U.S. Many people would prefer to buy U.S.-produced petroleum fuel as well as U.S.-produced biofuel.

"That's not to mention what COOL could do for farmers and for our country's national security by also having COOL for renewable fuels such as ethanol and biodiesel," adds Clark.  "Trying to get country-of-origin labeling approved by the government and established in the marketplace by fuel retailers is going to be a focus of Growth Energy's efforts in 2010," he says.

What about El5 concerns of engine manufacturers?

While Clark mentions the need for E15, does he think EPA will allow 15% ethanol blends in gasoline? Automobile manufacturers are afraid it will cause engine problems in older vehicles that are on the road today.

"All signs are positive so far in the testing," says Clark. "Of course the tests aren't completed yet and nothing is done until the tests are finished, as far as EPA is concerned. But the test results with E15 are looking good on cars that are 2001 vintage and newer. There are a lot of older cars on the road—those manufactured prior to 2001. People will have to make their own decisions. But so far, there's not any substantial difference in engine performance using either E10 or E15 in most cars on the road today going back to the 1980s models.

"Once automakers started using fuel injection to comply with air emission quality standards, they put a sensor in the exhaust and it smooths the spark timing to compensate for addition of a little more ethanol. There's not that much difference between E15 and E10. We think it's looking pretty good—the prospects for E15."

Need to install more blender pumps at gas stations

Growth Energy is pushing the government and industry to establish more blender pumps at gas stations, to deliver higher blends up to E85 ethanol (85% ethanol and 15% gasoline). "We need more blender pumps in the U.S.," says Clark. "We want to see every car come out of Detroit as a flex-fuel vehicle. We would certainly like our automobile industry, all manufacturers, to make all cars flex fuel. It doesn't cost much more--only about $140 a car to have it be able to run E85."

He adds, "Think what we could do if we could save $300 billion a year in this country--the better livelihood we could have for our children, and taking care of the older folks. It would be a lot better for our nation to avoid imported oil—which is a tax on America. Growth Energy is going to push this idea hard—to get more blender pumps, and the infrastructure to serve the U.S. motoring public."

What about imports of Brazilian ethanol into the U.S.?

"We have to make sure we're not substituting one kind of dependence for another," answers Clark. "I don't want to see our country bringing in lots of Brazilian ethanol. They've got other problems in Brazil and we don't need their ethanol here. We can produce plenty of ethanol in the U.S. to meet our needs."

What is the feeling in Washington today regarding biodiesel? Congress didn't renew the tax credit for blenders of biodiesel when the legislation expired at the end of 2009. What does that mean for biodiesel long-term? Does it signal a lack of congressional support for biofuels?

Biodiesel tax credit, cellulosic ethanol support increasing

Clark thinks the biodiesel tax credit will be restored by Congress. "There will be increasing congressional support for biofuels. I'll tell you why. We're moving very rapidly into being able to make commercially available cellulosic ethanol. That eases some of the concerns by environmentalists and they're beginning to understand that you can't get the cellulosic ethanol industry going and the market for it established unless you promote the corn-based ethanol to pave the way for development of cellulosic."

"As far as soy-based biodiesel is concerned, the legislative path is unclear at this point, in specific terms. But the forces are such that we will be moving much more strongly in the direction of biofuels—because of the need for job creation," says Clark. "I look at last week's Massachusetts senate race. What was the message? The people in Massachusetts already have health care. Their only concern about health care was they may have to pay for everyone else's health care. What they're really mad about is the poor economy and lack of jobs."

Biofuel industry can provide jobs for Americans

"If you want more jobs in America today, the fastest way to create jobs in this country is in the biofuels industry. I love information technology, I've done some computer programming. But that's a job that's real easy to send overseas. I like high definition television. But those TV screens are manufactured abroad. So when you look at what can't be exported, in the way of jobs that are real jobs, I look at biofuel for America. We can grow our own fuel here in this country, and add value to the land, strengthen America's communities in the Heartland, and keep America strong and safe. I think all those forces are going to come together when the Obama administration asks, "What are we going to do about jobs?"