THE FALL OF ETHANOL

Ethanol, Just Recently a Savior, Is Struggling
Clifford Krauss, February 11, 2009 (NY Times)

"Barely a year after Congress enacted an energy law meant to foster a huge national enterprise capable of converting plants and agricultural wastes into automotive fuel, the goals lawmakers set for the ethanol industry are in serious jeopardy.

"As recently as last summer, plants that make ethanol from corn were sprouting across the Midwest. But now, with motorists driving less in the economic downturn, the industry is burdened with excess capacity, and plants are shutting down virtually every week."

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"In the meantime, plans are lagging for a new generation of factories that were supposed to produce ethanol from substances like wood chips and crop waste, overcoming the drawbacks of corn ethanol. That nascent branch of the industry concedes it has virtually no chance of meeting Congressional production mandates that kick in next year.

"The decline in fortunes has been extreme…Only months ago, refiners in some regions were buying up as much corn ethanol as they could…But since the summer, oil and gasoline prices have plunged, while the price of corn, from which virtually all commercial ethanol in this country is made, has remained relatively high…

"The government’s Energy Information Administration recently projected that the industry would fall short of the targets for expanded use of ethanol and other biofuels that Congress set in a 2007 energy law…"

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"VeraSun Energy, one of the nation’s largest ethanol producers, has suspended production at 12 of its 16 plants…Renew Energy, Cascade Grain Products and Northeast Biofuels have filed for bankruptcy protection. Pacific Ethanol said it would suspend operations…

"…Congress mandated a doubling of corn ethanol use…[and]the use of an additional 21 billion gallons of ethanol and other biofuels produced from materials collectively known as biomass…it is becoming clear that even these modest targets will not be met…"