Texas oil man cheers for ethanol

If there's one clear sign it's no longer business as usual in the U.S. energy sector, it's a Texas oil man proclaiming the virtues of renewable fuels. Especially when the oil man in question is the President of the United States.

"I welcome low gasoline prices, however, it's not going to dim my enthusiasm for making sure we diversify away from oil,•bCrLf President Bush told a crowd of 1,500 at last week's Advancing Renewable Energy Conference in St. Louis. "We need to do so for economic reasons and for national security concerns. We cannot be complacent about our future when it comes to energy."

 Those of you involved in agriculture should be jumping for joy right now. Sure, the President is on record he's pro renewable fuel. But still, it's not every day you get the leader of the free world to come out in public and cheer for new markets for your products (corn for ethanol, soybeans for biodiesel). "A good farm economy is important to a good national economy," he said. "It make sense to have our farmers growing the feedstock for new energy."       

"We're too dependent on oil,•bCrLf said President Bush. "We've got to change our habits if we want to remain the economic leader of the world.•bCrLf

Those of us watching the President were impressed with what seemed to be mostly off-the-cuff comments supporting renewable energy. He was warmly received, except for the one protester who was courted away by police after shouting for the president to get the U.S. out of Iraq.

Bush rightly pointed out that this is a unique moment in our country's history. I mean, how often do you hold an energy conference where the Secretary of Energy AND the Secretary of Agriculture AND the EPA Administrator all attend and all agree on the topic?

"We need to diversify away from oil for economic reasons,•bCrLf Bush said. "We live in a global world. When the demand for oil goes up in China or in India, it causes the price of crude oil to rise and, since we import about 60 percent of the crude oil we use, it causes our price to go up, as well, which means the economy becomes less competitive.•bCrLf


USDA co-sponsored the event with the Department of Energy, which announced it would spend $250 million to create two new bioenergy research centers focused on developing new bioenergy crops and processes for the next generation of ethanol plants fueled by cellulosic biomass.

A lot of farmers seem to be worried that cellulosic technology will come along and wipe out the ethanol business. That's not necessarily going to happen, according to several of the speakers at this conference.

Patricia Woertz, CEO at Archer Daniels Midland (ADM), believes corn ethanol and vegetable biodiesel will continue to account for a significant percentage of biofuels for years to come. "They will be supplemented by products that are largely still in the laboratory,•bCrLf she says. "Will they ultimately be supplanted? We don't know.•bCrLf

ADM, which now has one-fourth of U.S. ethanol capacity, is bringing two new ethanol plants online next year. The company is already working to develop cellulosic ethanol by focusing first on the materials already handled in their plants. "Our process involves thermochemically treating corn hulls to allow part of their fibver to be fermented to alcohol,•bCrLf says Woertz. "We believe this process would boost our production of ethanol by 15% without adding an additional ear of corn.•bCrLf

At a press conference with Secretary of Energy Sam Bodman, USDA Secretary Mike Johanns was asked, Will cellulosic replace corn as feedstock of choice? "Unlikely,•bCrLf responded Johanns. "The (ethanol) plants are already out there and working. While we continue to believe there is exciting potential for cellulosic, complete replacement of corn-based ethanol seems unlikely.•bCrLf

Cellulosic is a big wildcard. It could mean switchgrass grown in North Dakota, wood chips in the northeast, and corn in the midwest, or 10 other crops, depending on research results in the coming years. No doubt there will be a broad and diverse new industry springing up when cellulosic technology arrives.

But if I'm a corn or soybean farmer, I wouldn't lose any sleep over cellulosic. We're going to need every bit of energy you can produce.

"U.S. energy use is projected to increase by over 30 percent by 2030,•bCrLf said USDA Chief Economist Keith Collins at the conference. "This means renewable energy production must also

increase by 30 percent over the period simply to maintain its current share of total energy use. And, it must grow substantially more than 30 percent to significantly reduce fossil-fuel dependence.

"It is very clear that the expected growth in total U.S. energy demand represents an enormous potential for renewable fuels, with crucial implications for agriculture, forestry, and rural America.•bCrLf

USDA Chief Economist Keith Collins 


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