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New prospect for US: glut of ethanol plants

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Like at least four others building new ethanol plants in Illinois, Mike Smith expects his new biorefinery to begin pumping out fuel from corn by summer.

Unlike the other plants, Mr. Smith's Canton, Ill., facility is nowhere to be found on a key industry tally, which the US government and Wall Street analysts use to track ethanol plants under construction. A study released Thursday reports that at least 14 new biorefineries – representing nearly 1 billion gallons of extra fuel – are not on that tally. That oversight could mean problems ahead for the food supply and the "green fuel" industry, some analysts say.

•Ethanol production could pull so much corn out of the food supply by 2008 that US corn exports could plummet.

•The food-fuel competition could push corn prices so high that some ethanol producers in the fledgling industry, which many deem vital to US energy security, would merely break even – or, if corn gets pricey enough, actually lose money.

Even before Thursday's report, some analysts had warned of a future glut of ethanol production capacity.

The immediate concern of the Earth Policy Institute (EPI), which released the new report, is the impact on the global food supply.

"We're worried there will be less to feed the world if we're using too much corn to make fuel," says Lester Brown, EPI's president. "The US ... supplies 70 percent of the world's corn exports. These previously unidentified distilleries could have a big negative impact."

Wall Street investment banks and farm cooperatives continue to pour billions of dollars into building ethanol plants, basing their decisions in part on predictions of future capacity by the Renewable Fuels Association. The RFA lists 65 plants under construction. But EPI, which put together its own tally using several industry lists, has found 79 such plants.

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