BY RYAN BRADLEY, Medill News Service
Times of Northwest Indiana
Although the ethanol-boosting provisions of the 2005 Energy Act don't take effect until the government's fiscal year beginning Oct. 1, 2006, both large and small ethanol producers are gearing up to take advantage of the coming government largesse.
The act doubles the requirement for ethanol additives in gasoline and promises greater subsidies for ethanol producers and gasoline refiners, with the goal of boosting ethanol production from 3.4 billion gallons in 2004 to 7.5 billion in 2012.
"We have several plants that are coming online or at least beginning construction," said Kent Yeager, director of government relations at the Indiana Department of Agriculture. "The Clean Indiana Energy Act deals with various forms of energy that give enhanced tax incentives and includes biofuels."
Under construction just east of Rensselaer is the Iroquois Bio-Energy 44,000-square-foot facility, which will become Northwest Indiana's first ethanol production plant.
Agriculture giant Archer Daniels Midland Co., the world's largest producer of ethanol, which received subsidies totalling nearly $150 million in its fiscal year ending last Sept. 30, has announced plans to increase its ethanol production by nearly 50 percent, from 1.2 billion to 1.7 billion gallons a year. ADM plans to build at least two new ethanol facilities.
Smaller ethanol producers can benefit, too.
New Energy Corp., in South Bend, is one such producer, though it declined to comment on its involvement in the USDA's bioenergy program.
The 81 ethanol facilities nationwide, regardless of size, receive a price break on bushels of corn purchased. The price break drops slightly for plants producing more than 60 million gallons of ethanol. The government pays the difference between the market price and the price paid by the ethanol makers.
Most ethanol comes from corn, and the alcohol produced through a chemical breakdown of corn is mixed with gasoline to create fuel for your car. The blend of gas and ethanol is called E85, meaning it's 85 percent ethanol.
Last week, Ford Motor Co. announced plans to step up development of vehicles running on alternative energy, like ethanol. General Motors Corp. plans to replace the original gas caps in 400,000 of its flexible-fuel vehicles with yellow colored caps, so that drivers may easily distinguish if their vehicle is E85 compatible.
Earlier this month, Reynolds, Ind., just west of Monticello, was given the title "BioTown USA" by several state leaders in the hopes that the town will become a model community in its use of renewable energy, namely, ethanol produced directly from the corn fields around Reynolds.
"Having the government support has helped moved this industry along," said Chad Heart, a research scientist at the Center for Agriculture and Rural Development at Iowa State who has been tracking the ethanol industry for several years. "Part of the reason ethanol needed the support is that this is a production process that is improving over time." But, he adds, "there's all sorts of tradeoffs."
The first, according to Heart, is that ethanol is still very much a "fledgling industry." While there are about 180,000 gasoline stations nationwide, fewer than 500 blend E85, and most that do are concentrated in the Midwest. Ethanol burns at a higher temperature and burns cleaner than many alternatives. That's the good news. The bad news is that it is not as efficient as unleaded fuel.
Critics of the ethanol program, like Keith Ashdown, a writer at Taxpayers for Common Sense, a Washington-based watchdog group, see little potential and lots of taxpayer money.
"(Ethanol producers) are probably more of a welfare drain on the country than the stereotypical welfare queen," Ashdown said.
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