December 2004 eNews Bulletin

Editorial: Time Is Now for Biofuels

November 19, 2004
by Elaine Shein & Carl Sampson

Farmers in the Midwest are leading the way toward reducing our nation’s dependence on foreign oil, cleaning the air and increasing the profitability of American agriculture. Along the way, they have added a new buzzword to the modern agricultural lexicon: biofuel.

The term “biofuel” describes the production of ethanol from grains such as corn or wheat or the production of diesel fuel from canola or mustard seed.

In the Midwest, biofuels are big business. Nationally, 82 ethanol plants have a production capacity of 3.5 billion gallons a year. Most of those plants are in the Midwest. Another 14 plants are under construction and will add 600 million gallons to the nation’s overall capacity.

While this won’t immediately put a significant dent in the nation’s thirst for crude oil –- the United States imports 500 million gallons of oil from Saudi Arabia alone every week – it does put the United States on a path toward greater energy independence.

States like Minnesota have taken the lead in encouraging ethanol production. The Minnesota legislature requires that state’s unleaded gasoline to contain 10% ethanol. That requirement has created five main benefits:

• First, it assures a built-in market for the ethanol produced at the 16 plants across the state, many of them farmer-owned cooperatives. In turn, the cooperatives and companies create a market for the farmers’ corn and create jobs building and operating the plants. Neighboring state Iowa has 14 ethanol plants, with six more under construction. Nearly all of those plants are in rural areas, strengthening the local economies.

• Second, biofuel reduces Minnesota’s foreign fuel consumption by 10%. The United States depends most heavily on the Middle East for crude oil; political instability in that region makes it wise for the United States to be less dependent on oil from that area. Some people worry about whether their cars can burn ethanol. Although E10, the 10% mixture in Minnesota, requires no modification of cars to burn it, E85, a mixture of 85% ethanol and 15% gasoline available at some stations across the nation, does require minor modifications.

• Third, unlike oil refineries, ethanol provides a valuable by-product as potential cattle feed. The methane produced by the cattle can then be used in a digester to generate the electricity to run the ethanol plant. This is energy-efficient, plus it reduces air pollution from the cattle.

• Fourth, ethanol burns clean. That opens the doors for environmentalists and others who are looking for ways to clear our nation’s air. And, as a renewable energy source, ethanol requires no drilling platforms, no mines and no dams.

• And fifth, ethanol’s stable price moderates the price of fuel at the pump as the price of foreign crude oil bounces up and down, dragging U.S. drivers’ wallets along with it.

Gasoline prices have skyrocketed in the past year. Crude oil prices have jumped from an average of $30 to nearly $50 a barrel, propelling gasoline prices up an average of 47.2 cents a gallon, according to the U.S. Energy Information Administration. Diesel fuel prices have jumped even more, up an average of 65.1 cents a gallon in the past year.

In the West, however, biofuels haven’t yet taken hold. Small plants in Idaho, Washington and California have used byproducts such as potato and brewery waste to make ethanol, but that’s all. That could change in the near future. Treasure Valley Renewable Resources plans to build a biofuel plant near Ontario, Ore. Construction is set to begin next spring on the 30 million-gallon-a-year plant.

Oregon officials are on the right track. They worked with plant sponsors and area farmers to get a commitment for 100,000 acres of corn, wheat and barley to supply the TVRR plant. In addition, the state offered other incentives, the plant’s sponsors say. Other biofuel proposals are in various stages of development in Boardman, La Grande and St. Helens, according to the Oregon Department of Agriculture.

The lessons learned in the Midwest, however, involve more than incentives and cooperative local and state governments and federal tax credits and other incentives. The lessons are that ethanol plants work, as long as the local, state and federal governments work together with the sponsors and other groups to provide the tax incentives and help create a market. That means a requirement for the use of biofuel blends at the pump.

Oregon officials are also looking beyond ethanol. Canola and mustard seed can be used to produce biodiesel. As is the case with ethanol plants, the byproduct of making biodiesel can be used as cattle feed.

Farmers and legislators around the West are hearing the wake-up call for biofuels. “Oregon is where Minnesota was 10 years ago,” Tom Koehler of the Celilo Group recently told the Oregon Board of Agriculture. “Minnesota now produces 10% of its fuel requirements. There will never be an oil refinery built in Oregon, but I can see a day when there is a biofuel refinery in every Oregon county.”

And elsewhere, as long as the plant sponsors do their homework and obtain contracts for their raw materials and products. In addition, the state or federal government must provide the key ingredient – demand – in the form of a requirement that biofuels be used.

Some legislators are listening closely when the word biofuel comes up. Oregon Rep. Jeff Kropf, R-Sublimity, is one. “We have a profound, unique opportunity to get things going,” he told the board of agriculture. He is correct. Now is the time for Oregon and the rest of the West to get serious about biofuels, but they also must make sure the foundation is in place before boarding the biofuel bandwagon.

By working together, farmers, government officials, entrepreneurs – and even environmentalists – can make biofuel plants a reality. Done correctly and prudently, the results will benefit our farmers, our ranchers, our environment and our nation.