Geoff Cooper from the Renewable Fuel Association reports about the increasing export of ethanol from the US.

 

With all my appreciation for ethanol and the corn-ethanol industry, we need not forget that there are significant state and federal subsidies going into corn-growing and ethanol production as well as protective price subsidies. Further, the lay argument for ethanol was a “domestic” renewable supply for “domestic needs”.

 

If we now discover, that essentially four ethanol plants purely worked for export in 2010 and around nine large-scale ethanol plants produced purely for export in 2011, why should there be any need for cellulosic ethanol from a market demand perspective? Especially if it is so much more expensive in terms of CapEx? Why would any investor (or government) invest in cellulosic ethanol if the domestic market is so saturated with first generation ethanol that the surplus goes into export???

 

The RFA and the entire ethanol industry certainly has some explaining to do, especially if both ethanol as well as the side product DDGS both are being heavily exported, as the domestic market does not absorb all. It also raises questions about the seriousness of the use of tax payer subsidies for growers or tax subsidies for investors. The system is seriously broken.

 

What needs to happen is that the internal market demand for ethanol is raised to a level that the “low-cost” ethanol is actually being used internally as long as there are tax or other subsidies involved, or remove those. Further, the fermenting ethanol industry may need to look for higher value added, different products to ferment and produce that will allow removal of subsidies and take out ethanol capacity to bring capacity and market in balance. Gevo comes to mind but there are other options as well.