Ethanol industry sees challenges ahead

Source: By Gene Lucht Iowa Farmer Today • Posted: Friday, June 14, 2013

Delayne Johnson, Quad County Corn Processors

IFT photo by Gene Lucht

Delayne Johnson, Quad County Corn Processors

Delayne Johnson, general manager of Quad County Corn Processors in Galva, is a big believer in the ethanol industry.


GALVA — Delayne Johnson is smiling as he walks through the Quad County Corn Processors ethanol plant, but he knows 2013 is a challenging year for the industry.

“What else is new?” he asks.

The good news is the industry is not fighting for its survival as has sometimes been the case.

It is also not fighting to get any new government support. It is simply trying to stave off attacks from its opponents.

“It’s an ongoing challenge,” Johnson says. “It just continues to be a challenge . . . any industry requires some stability.”

Stability is what Monte Shaw is hoping for as well. Shaw, executive director of the Iowa Renewable Fuels Association, says even with recent flooding and planting delays, the United States is on course to produce a very large corn crop.

Also, he says ethanol continues to support farmers and small communities while helping the country to meet its energy needs.

However, Shaw says large oil companies currently are spending a huge amount of money to try to keep the 15 percent blend of ethanol (E15) out of the market and also to try to eliminate the federal renewable fuels standard (RFS).

“We’re just trying to shine a light on the hypocrisy of the oil industry,” Shaw says.

He notes a hearing held this past week by the U.S. House Oversight Committee and Government Reform subcommittee on energy policy, health care and entitlements that featured testimony by a number of ethanol opponents.

That committee is led by Rep. James Lankford, R-Okla. Ethanol supporters complained the hearing was nothing more than a showcase for the oil industry.

“They (the oil industry) want to get rid of the RFS,” Shaw argues. “That’s their No. 1, 2 and 3 priority.”

Shaw says the U.S. House of Representatives is not especially friendly to ethanol and other biofuels now. The outlook is better in the Senate.

“I do feel we’re in a pretty good spot to defend the RFS in the Senate,” Shaw says. “But, there is a definite monster campaign by big oil right now.”

He notes proposals in Congress, such as one by Sen. David Vitter, R-La., to ban the use of any fuel with more than a 10 percent blend of ethanol.

Still, despite that battle in Congress over the RFS and the use of E15, Shaw says E15 is less expensive than regular gas. Also, he says no ethanol-production facilities in Iowa have closed in the past several years, unlike plants in other parts of the nation.

The ethanol plants that remained open are increasing their production in recent months and are doing relatively well.

“Plants are making a little bit of money,” he says.

At Quad County in Galva, general manager Johnson is a big believer in the industry.

It has elevated corn prices and brought jobs to small, rural communities, he says. It has also been getting gradually more efficient.

The same cannot be said of oil, Johnson says.

While there is an oil boom in North Dakota and Canada now, he says those new fields are shale oil. There is nothing wrong with that, he quickly adds, but explains it is much more expensive and less efficient to extract that oil, and it requires more refining.

In short, the increased oil production coming online is less efficient than existing oil production while the biofuels industry is gradually becoming more efficient.

For example, Quad County is making changes to use more of the corn kernel in a cellulosic process, adding to its production.

He says that bodes well for the future, no matter what the oil industry does.