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Published May 24, 2010, 12:09 PM

Panelists push lawmakers to support biofuels industry

SIOUX FALLS, S.D. — Although the May 18 U.S. House Agriculture Committee hearing in Sioux Falls, S.D., was a fact-gathering exercise on current policies, there was no testimony against expanding the ethanol industry, an industry that has drawn criticism from some environmentalists and others.

By: Mikkel Pates, Agweek

SIOUX FALLS, S.D. — Although the May 18 U.S. House Agriculture Committee hearing in Sioux Falls, S.D., was a fact-gathering exercise on current policies, there was no testimony against expanding the ethanol industry, an industry that has drawn criticism from some environmentalists and others.

Rep. Bob Goodlatte, R-Va., and the ranking minority member on the committee, got few clear answers when he asked how long panelists think it will be before ethanol can stand on its own without subsidies. While some suggest that could be 10 to 15 years away, the current emphasis is on keeping or expanding government supports.

David Hallberg, chief executive officer of PRIME BioSolutions L.L.C., says the ethanol industry has expanded effectively only in years when the federal government has enacted stimulus policies — gas reformulation, passed in 1990 and effective in 1995, and renewable fuels standards, passed in 2000 and effective in 2007, requires 36 billion gallons per year of ethanol by 2022.

“What you and your colleagues are doing here today will ultimately have a substantial — if not defining — impact on the future of the domestic biofuels industry and on the nation’s campaign to significantly reduce, and one day eliminate, its costly dependence upon imported oil.”

Hallberg says there “is no ‘free market’ in the transportation fuels business.”

He says the “blend wall” of 10 percent ethanol in gasoline mixes is going to stop capital investment in the industry because potential investors won’t see the industry as “sustainable.”

Follow the leader?

He notes that the U.S. should emulate policies in Brazil, where 95 percent of the vehicles are flexible-fuel vehicles. Higher-octane fuel, provided by ethanol blends, will fit in well with government goals for downsized, turbo-charged vehicles with higher compression ratios.

Hallberg says the United States should require all new U.S.-made vehicles to be flex-fuel and offer incentives for blender pump installation.

Scott Weishaar, vice president of commercial development for POET of Sioux Falls, the largest ethanol producer in the world, asked the congressional members to increase the base blend in today’s standard vehicles to at least 15 percent, mandate that all new vehicles purchased in the U.S. are flex-fuel and pay for incentives for blender pumps.

He also says Congress should help the first cellulosic ethanol production facilities obtain loan guarantees, as well as granting long-term extensions on the cellulosic ethanol tax credits and provide long-term assistance for farmers who produce biomass for cellulosic ethanol.

POET today produces more than 1.6 billion gallons of ethanol and 4.5 million tons of distiller’s grain-based livestock feed in 26 facilities.

He says grain yields have doubled in the past 50 years to 160 bushels per acre and are expected to double again in 20 years.

“The higher yields would generate an additional 13 billion bushels of corn,” and that “ethanol is the only growing market for that additional supply of corn,” Weishaar says.

Weishaar says corn-based ethanol is steadily becoming more efficient. In 22 years, the energy and water use per gallon of ethanol produced has been cut by 50 percent and 80 percent, respectively, he says.

The company’s “vision” is to “be responsible” for 3.5 billion gallons of cellulosic ethanol, although Goodlatte asked whether there would be any penalty to the company if it didn’t achieve that goal. POET would produce 1 billion gallons of its own cellulosic ethanol, would achieve another 1.4 billion gallons through licensing its technology to others and would achieve 1.1 billion gallons from “other feedstock that we feel will be adaptable to our technology,” Weishaar says.

Kevin Kephart, vice president for research and dean of the graduate school at South Dakota State University in Brookings, among other things, described the Sun Grant program that allows land grant universities like SDSU to study a variety of ag energy issues. An example is that SDSU scientists are breeding native perennial plants, such as prairie cord grass, to produce lignocellulosic feedstocks on marginal (wet and salty) ground. He says investments in land grant research can have a good relative return on investment and shouldn’t be duplicated with other federal research projects.

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