Menu
Share
Share this story
Close X
 
Switch to Desktop Site

New prospect for US: glut of ethanol plants

Next Previous

Page 2 of 3

About these ads

That extra capacity has major implications for agriculture and the ethanol industry. Using the RFA's lower estimate, the US Department of Agriculture has forecast that ethanol biorefineries – also called distilleries – will need about 60 million tons of corn from the 2008 harvest. But if EPI's higher estimate for plants is correct, then up to 139 million tons of corn will be needed.

For its part, the RFA defends its more conservative estimate. "Our list is a pretty accurate snapshot – about the best you can get in an industry that changes as quickly as this one," says spokesman Matt Hartwig. "If we were to do our list based on announcements, it would be much longer. But that would be misleading because not all those come to fruition. Those on our list we believe will be built and up and running."

Last month, the RFA added about a dozen new facilities to its list, which suggests about 11.4 billion gallons in capacity by 2008, which is still lower than the EPI's range of 12 billion to 15 billion gallons.

Besides the potential impact on food exports, the glut in capacity could throw the ethanol industry into turmoil. The problem isn't demand for ethanol. The energy industry could use far more than what's currently produced. The real challenge is that competition for corn could drive its price so high that profits evaporate, some analysts warn.

"We see significant overcapacity in the short term, 2007-2010," warned a Deutsche Bank analysis last month. That analysis, based in part on RFA data, sees capacity of only about 8.3 billion gallons a year by 2008 – similar to a Citibank analysis in September.

Factor in the EPI numbers and the crunch gets worse.

Next Previous

Page:   1   |   2   |   3


Follow Stories Like This
Get the Monitor stories you care about delivered to your inbox.

Loading...