BISMARCK, N.D. -- Trying to make sense of the ethanol industry, corn ethanol refining in particular, suggests trying to catch a greased, corn-fed hog.
The industry faces out-of-whack pricing because of up-and-down spikes in corn and gasoline prices and other issues, such as refiners faced with debt and credit issues not unlike those looming over the auto industry; environmentalists in favor of ethanol, except for corn-based; and federal mandates that seem to ignore all of the above.
In North Dakota, three big corn ethanol operations have siphoned from state coffers all the funds set aside for them from farm vehicle registration revenues and ag fuel refunds. The money was there to help them through a startup phase in an uncertain industry. The parent company of VeraSun Hankinson in North Dakota, one of the three, recently announced it's filing for bankruptcy.
Where should we be going with ethanol?
Where we would like to be going is to cellulosic ethanol, which would use nonfood crops such as switchgrass., crop waste or material such as wood chips as raw materials. But the technology and industry isn't there yet for commercial-scale cellulosic ethanol refining.
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Corn ethanol production becomes part of the learning curve, stepping stones toward cellulosic ethanol production. There's a certain value in that effort. And, too, farmers and investors in the ethanol industry deserve a modicum of consistency from federal programs.
President-elect Obama has said he wants to keep the federal mandates for ethanol production in place moving from about 7 billion gallons today to 36 billion gallons by 2022. And he wants to make that shift to cellulosic ethanol. Well, we have some research, development and learning to do.
Meantime, there's an expectation that there will be a sorting out and a consolidation in existing ethanol operations, and the recent move to bankruptcy by VeraSun Energy would bear those predictions out. There's also a need by the auto industry -- on which notice has been served that cars and trucks take ethanol, biodiesel, electricity, hydrogen and other alternatives into consideration as fuel sources. And a national energy policy needs be laid out, one in which everyone can see the role that ethanol might play.
Western North Dakota isn't traditional corn country. But the demand for corn in ethanol production and expanded livestock production, based on steady and solid prices, has encouraged an increase in non-irrigated acres of corn west of the 100th meridian. This part of North Dakota would be able to better serve cellulosic ethanol production.
Certainly, the North Dakota Legislature will have to reconsider its support for ethanol. Where are we going with ethanol? We're going forward. One step at a time.
