Ethanol Makes Fortune

Cindy Zimmerman

Fortune Mag How to Beat the High Cost of Gasoline. Forever! – from the current issue of Fortune magazine is the most comprehensive and well-written article about ethanol that I have ever read. My sincere thanks to Fortune reporter Adam Lashinsky for sending it to me. Great job, Adam! It is extremely well-researched and balanced, addressing many of the concerns and criticism about ethanol while at the same time conveying significant enthusiasm for the future of the industry.

Here are just a few choice excerpts:

Instead of coming exclusively from corn or sugar cane as it has up to now, thanks to biotech breakthroughs, the fuel can be made out of everything from prairie switchgrass and wood chips to corn husks and other agricultural waste. This biomass-derived fuel is known as cellulosic ethanol. Whatever the source, burning ethanol instead of gasoline reduces carbon emissions by more than 80% while eliminating entirely the release of acid-rain-causing sulfur dioxide. Even the cautious Department of Energy predicts that ethanol could put a 30% dent in America’s gasoline consumption by 2030.….

It takes about 30% more ethanol than gasoline to drive a mile, and the stuff is more corrosive, but building a car that’s E85-ready adds only about $200 to the cost. Ethanol has already transformed one major economy: In Brazil nearly three-quarters of new cars can burn either ethanol or gasoline, whichever happens to be cheaper at the pump, and the nation has weaned itself off imported oil.….

ADM aims to be a big player in what Andreas calls the shift “from hydrocarbons to carbohydrates.” But for now it’s ignoring E85 and cellulosic ethanol in favor of keeping pace with demand that is already booming. Corn ethanol’s main use is as an additive that helps gasoline burn more efficiently. ADM sells nearly its entire output to oil companies, which use ethanol as a substitute for MTBE, a petroleum-based additive that is toxic and is now banned in California and 24 other states. With two billion gallons of MTBE still in use annually and 25 states that have yet to ban it, the ethanol industry could grow 50% simply by replacing MTBE.….

With Brazilian ethanol selling for 45% less per liter than gasoline in 2003 and 2004, flex-fuel cars caught on like iPods. In 2003, flex-fuel had 6% of the market for Brazilian-made cars, and automakers were expecting the technology’s share to zoom to 30% in 2005. That proved wildly conservative: As of last December, 73% of cars sold in Brazil came with flex-fuel engines. There are now 1.3 million flex-fuel cars on the road.….

No one, not even a professionally optimistic VC, thinks we’re anywhere near getting rid of gasoline. The oil superstructure is simply too efficient and too entrenched to just go away. Nor could corn ethanol generate enough fuel to run America’s cars, pickups, and SUVs. Already ethanol gobbles up 14% of the country’s corn production. Converting a bigger share into fuel would pinch the world’s food supply–a favorite objection of skeptics. Critics also contend that producing fuel from crops consumes more energy than it yields. On this topic of endless Internet bickering, the Energy Department recently reported, “In terms of key energy and environmental benefits, cornstarch ethanol comes out clearly ahead of petroleum-based fuels, and tomorrow’s cellulosic-based ethanol would do even better.”….

Okay – that should be enough to get you hooked – now go read the whole article…. NOW!

Ethanol

Xethanol Plans Southeast Plants

Cindy Zimmerman

Xethanol Plants that would make ethanol from wood biomass are planned for three Southeastern states. Xethanol Corporation today announced plans to build ethanol plants in Florida, Georgia and South Carolina through a newly-formed subsidiary CoastalXethanol LLC. The new company will be based in Savannah, GA for two main reasons, according to Xethanol Chairman and CEO Christopher d’Arnaud-Taylor, “first because of rapidly expanding regional demand for ethanol and second for its abundance of biomass feedstocks that are readily available. Our long-term goal for the region is to develop production capacity of 250 million gallons of ethanol per year.” The corporate release quotes a recent Atlanta Business Journal story that said demand for ethanol in Georgia could skyrocket if a federal court rules that metro Atlanta drivers must use reformulated gasoline to comply with Clean Air Smog standards — a move experts say could generate overnight demand for 250 million gallons or more of ethanol. In addition, the company notes strong support for biofuels from GA Governor Sonny Perdue who recently proposed allocating $2 million of state money for research into using wood chips, peanut hulls and other organic material for energy sources. (link to release)
Gotta love the name, gotta love the logo and gotta love the forward-thinking of this company.

Ethanol, Production

Ethanol Continues Record Setting Pace

Cindy Zimmerman

RFAYet another new record for monthly ethanol production was set in November, according to the Renewable Fuels Association. The latest figures from the U.S. Energy Information Administration (EIA) put November ethanol production at 275,000 barrels per day, up 6,000 b/d from October. Demand for ethanol also set a new record of 297,000 b/d, up 15,000 from the old record set in August last year. Here’s a link to all the data from RFA.

Ethanol, Production

Dodge Ram Grabs Biodiesel by the Horns

Cindy Zimmerman

The National Biodiesel Board is very happy with DaimlerChrysler’s decision to approve the use of 20 percent biodiesel in Dodge Ram pickups. Chrysler Group President and CEO Tom LaSorda also sang the praises of biodiesel this week in remarks prepared for the Economic Club of Detroit Jan. 23 meeting saying, “Biofuels represent a huge opportunity to reduce fuel consumption and our dependence on foreign oil.” (link to Chrysler release) As would be expected, NBB is very pleased, according to CEO Joe Jobe, “Chrysler Group continues to blaze new trails in the industry by supporting the use of biodiesel in their various diesel vehicle programs. These are important steps in making clean, renewable biodiesel an appealing option for all diesel owners, and we anticipate that other OEMs will follow DaimlerChrysler’s lead.” (read NBB’s release)

Biodiesel

Honda and Toyota Urged To Market FFVs

Cindy Zimmerman

The president of the Renewable Fuels Association this week took Honda and Toyota to task for not marketing flex fuel vehicles (FFVs) in the United States. Bob Dinneen wrote letters to the heads of U.S. operations for both car makers asking them to reconsider their decisions.
In the case of Honda, Dinneen questioned the decision in light of the fact that Honda does market FFVs for use in Brazil.
“Honda’s willingness to produce flex-fuel vehicles in Brazil, but not in the U.S., is curious, and it puts your company at a tremendous disadvantage to its American counterparts,” Dinneen wrote
The letter to Toyota refuted comments that the national manager of advanced technology for Toyota’s U.S. operation made in a recent Wall Street Journal article regarding ethanol’s environmental friendliness and sustainability.
“Ethanol has also been a key component of America’s effort to reduce tailpipe emissions,” Dinneen responds in the letter. “Adding ethanol to gasoline dramatically reduces carbon monoxide pollution, and its oxygen content helps to reduce exhaust hydrocarbon emissions as well. Ethanol also helps to reduce combustion chamber deposits. Finally, ethanol is providing refiners with a clean octane alternative to more toxic gasoline additives.”
In both letters, Dinneen also notes that a recent survey found that more than 90 percent of American drivers would prefer an FFV to a conventional gasoline or diesel engine. In addition, Dinneen strongly urged both automakers, who have built strong reputations in the hybrid vehicle market, to incorporate the use of renewable fuels like ethanol in future hybrid technology development.
Here’s a link to the full news release. Copies of the letters are also available there.

Ethanol, Flex Fuel Vehicles

Hawaii Ethanol Plans Running Behind

Cindy Zimmerman

Hawaii Okay, show of hands out there. How many of you already knew that Hawaii is one of only two states in the nation currently with an ethanol mandate on the books? The other one is Minnesota – which makes sense since it is one of the nation’s largest ethanol-producing states. But, Hawaii is apparently going to have a problem meeting the requirement approved in September of 2004 that a majority of the state’s gasoline contain ten percent ethanol by April 2, 2006 … none of the six ethanol plants currently being built there are finished yet. I guess it seemed doable at the time, but a story in today’s Honolulu Star Bulletin says the state’s ethanol producers now expect it will be another year before they are fully operational to meet the demand. Hawaii will have to produce about 38 million gallons of ethanol a year to meet the requirement that 85 percent of the gasoline sold in the state be blended with ten percent ethanol – which it will be able to do once the plants are on-line. Until then, officials say they will be importing ethanol from the mainland to meet the requirement. Of course, the Hawaiian produced ethanol will not be made from corn – it will be made from sugar cane or it’s by-product bagasse. Meanwhile, the state has been getting prepared for the mandate by educating the public about ethanol.

Ethanol, Legislation

A New Team For Ethanol

Cindy Zimmerman

EPICEPIC Ethanol is moving up in the racing world. Paul Dana, driver for Team Ethanol, will be jumping into a Rahal Letterman IndyCar® Series car this year. Dana announced the switch today during an Indy Racing League (IRL) press conference. “This is a huge step up for us from a competitive standpoint because Rahal Letterman has such an excellent track record,” Dana said. “My teammates will be Buddy Rice, who won the Indy 500 in 2004, and, of course, Danica Patrick, who was Rookie of the Year last year.”
Rahal Letterman Racing (RLR) is co-owned by 1986 Indianapolis 500 winner Bobby Rahal and television talk show host and comedian David Letterman. Team Ethanol is sponsored by the Ethanol Promotion and Information Council (EPIC). Executive Director Tom Slunecka said they could not be more thrilled with the switch to one of the best and well-known IRL teams.
“The Rahal Letterman team, having produced Indy car winners and having the sensation in race car and sports media Danica Patrick, is just a fabulous way for ethanol to get its name out to that many more people.”

Click here to listen to the full Rahal Letterman/Team Ethanol announcement with Bobby Rahal, Paul Dana and Tom Slunecka.

EPIC, Ethanol, Indy Racing

Ethanol in the National News

Cindy Zimmerman

Here’s a couple of national feature stories about ethanol and flex-fuel vehicles (FFVs) that have come out in the last couple of days:

This Knight-Ridder article, dateline Maryland, has the headline “Ethanol gets a push, but road ahead fraught with challenge.” It starts off talking about how E85 is not selling well outside of the midwest unless it is lower in price, but also brings up the fact that there some five million FFV’s on the road, that ethanol production is increasing and that oil companies are the major obstacle to increased ethanol use. This story, which includes quotes from Bob Dinneen at the Renewable Fuels Association and Phil Lampert at the National Ethanol Vehicle Coalition, got some very good distribution nationwide. The link is to the long version of the story, which also includes some international bio-fuels facts at the end of the piece.

This Associated Press article just came out today, dateline Los Angeles. In typical mainstream media fashion, it starts out with the charge that automakers are making more FFVs to “skirt mileage standards.” Not a real positive tone in the story for the industry, but it does point out the number of FFVs on the road, that E85 is often cheaper than gasoline and that car companies are starting to promote their FFVs. It also points people to e85fuel.com to find out if their car will run on 85 percent ethanol fuel.

Ethanol, Flex Fuel Vehicles

Comments are Welcome

Cindy Zimmerman

The great thing about a blog is that it allows interactive commentary – and this is a great way for the domestic fuel industry to address some of its critics in a public forum.
So, you might notice negative comments about domestic fuels from time to time in the comments section of some posts. I will try to address them myself, but I would also encourage others in the industry to make comments in response as well. There are lots of people out there who are experts in this field, and it’s important that we address critical and false statements about biofuels. Making comments is easy – just click on the comments/trackbacks link under the post you want to make a comment on and follow the directions.
I would also note that comments are screened before being allowed on the site – so please be nice.

Miscellaneous

Luke Perry and Biodiesel America

Cindy Zimmerman

Biodiesel America A new book is being unveiled at the National Biodiesel Conference in San Diego next month. “Biodiesel America” was written by Josh Tickell, author of “From the Fryer to the Fuel Tank: The Complete Guide to Using Vegetable Oils as an Alternative Fuel.” According to a release about the book, Tickell shatters the myth that America must remain dependent on Middle East oil. Tickell shows how biodiesel, a cleaner-burning fuel made from vegetable oil and other natural fats and oils, could bring over one million jobs back to America, invigorate our economy and create a stable domestic fuel supply, while leaving our lifestyle and food supply completely untouched.

I thought it was interesting that one of the quotes about the book was from Luke Perry “actor & farmer” who says “Biodiesel America gives me hope for the future of our great country. Thanks to Josh’s book, we can grow our fuel, bring money into our communities and stop our dependence on foreign energy.” You should remember Luke Perry from Beverly Hills 90210, “in which he portrayed the brooding but sensitive Dylan McKay.” That little teen cutie is now 40 years old and, I guess, a farmer. I could not find any info on line to confirm that, although I did discover he was ranked #6 in TV Guide’s list of “TV’s 25 Greatest Teen Idols” in January 2005. I would be very interested to know what he farms and where.

“Biodiesel America” will be launched on February 6, 2006 at 10:30 a.m. during the general session of the National Biodiesel Board Conference and Expo at the San Diego Convention Center. The Biodiesel America.org website, which was started by Josh (a little cutie himself who looks kind of like Ron Howard when he was Opie and had hair), has all kinds of good stuff on it. Check it out.

Biodiesel, Miscellaneous