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Ethanol is Bracing for Challenges in 2009

The year 2008 was a difficult year for American businesses and the ethanol industry was no exception. With unprecedented economic collapses, the freezing of the credit market, wild swings in commodity markets and a great deal of manufactured hysteria over the food versus fuel debate, all of which created challenging conditions for America's farmers and ethanol producers.

"But 2008 is now behind us and the American ethanol industry is completely focused on the future and we are dedicated to not only the success of current ethanol producers but also to the development and the deployment of next generation technologies that will expand the basket of feedstocks from which ethanol is produced," said Renewable Fuels Association Chairman Chris Stanlee during a press teleconference on Tuesday. "This will also create hundreds of thousands of green jobs in all sectors of the economy, it will provide even greater reductions in greenhouse gas emissions and further lessen our dependence on foreign oil."

Stanlee said that achieving the promise offered by a robust and dynamic American ethanol industry will require a steadfast commitment to renewable energy technologies from both the public and the private sectors. It will also require modernization of existing fuel regulations.

"In 2009, the RFA and all of our member companies will be addressing all of these opportunities and these challenges that are facing our industry," Stanlee said. "The first issue I'd like to address is the primary challenge, which is to get America's economy moving again. A growing economy is certainly the medicine all industries need and ethanol production is no exception to that rule."

Stanlee said that Congress and the Obama Administration must recognize and continue to build upon the success of America's farmers and America's ethanol producers in providing a growing, renewable alternative to foreign oil and creating green jobs. He said access to capital must be made easier in order to ensure that the more than 325,000 jobs related to ethanol production continue to be secure and that the potential of next generation ethanol technologies is realized.

The second issue Stanlee addressed was the fuel regulations that limit ethanol blends to 10% and the need to modernize those regulations.

"While that limit may have made sense 30 years ago when the ethanol industry was just beginning, it is no longer practical as ethanol becomes more than just a component but a fuel in its own right," Stanlee said. "Preliminary scientific data suggests all vehicles could accommodate ethanol blends of 12-13% with virtually no modifications required at all."

In the short term this increase would help buy time and provide a market for the increasing volume of ethanol coming into the market in the next two to three years. In the longer term Stanlee said the Environmental Protection Agency must consider to moving to higher blends such as 15-20% to ensure the Renewable Fuels Standard has a chance to be successful. He said data shows such a move is possible and practical, and RFA will continue to work with EPA to make changes to fuel regulations.

"Third, the RFA remains fully engaged in the discussions about life-cycle greenhouse gas emissions of ethanol and the modeling, which is currently being developed at the EPA in accordance with that 2007 Energy Bill," Stanlee said. "This is an issue EPA must get right if we are to develop and deploy the needed renewable energy technologies to wean us off our dependence on foreign oil and to mitigate the climate changing impacts that the irresponsible use of fossil fuels have generated."

Stanlee admitted that 2009 will clearly present more challenges to the American economy and to all industries including ethanol, but he said the challenges are not insurmountable.

"The opportunities available to an ever innovating and evolving industry like America's ethanol industry far exceed any such challenges," Stanlee said. "2009 will no doubt be exciting and the RFA and its members are ready."