Ethanol bandwagon has room for one more

MARION, Ohio – The bandwagon for ethanol production picked up speed recently when the feds denied California an exception to reformulated gasoline. But those booming for ethanol production in Ohio say that even though the wagon is getting crowded, there is still plenty of time for Ohio farmers to hop on.

Ohio’s proposed farmer cooperative ethanol plant at Leipsic is still in the process of formulating its business plan, while a string of new plants across the country, waiting for good news, have announced construction plans.

The decision affecting California only increases the demand for ethanol, says Mike Wagner, executive director of the Ohio Corn Marketing Program, which has been spearheading the ethanol project. Plans to construct a dozen or more new ethanol plants in the next year in other states are no drawback for continuing with Ohio’s plans.

Development stage. The development group in Putnam County is still working on a business plan before it can form a cooperative to construct and operate the plant, Wagner said.

“If they don’t find a market for more ethanol, the project won’t continue,” he said.

But Wagner is convinced the market is too large to saturate in the short run.

The Environmental Protection Agency announced June 19 that California must abide by federal clean air regulations regarding the use of oxygenates in federal reformulated gasoline.

Ethanol alternative.

In discontinuing the use of MBTE, California requested permission to sell gasoline with no oxygenate additive. The EPA decided they could not do that and still meet federal clean air standards. Ethanol is the alternative approved additive.

In the past 10 years, most of the new ethanol production capacity has been financed and built by farmer-owned cooperatives across the Midwest.

On the day the EPA decision was announced, Tall Corn Ethanol, a farmer-owned cooperative in Coon Rapids, Iowa, began construction of the first of three planned 40 million-gallon production facilities.

Other new plants are scheduled to start this year in South Dakota, Minnesota, Wisconsin and Oregon.

Broin Fagen, one of the leading plant construction companies, has contracts to begin construction of plants totaling 210 million gallons of additional ethanol capacity in the current calendar year.

Signal to expand. “The impact of President Bush’s decision to uphold clean air standards has been tremendous,” said Bob Dinneer, vice president of the Renewable Fuels Association. “The ethanol industry has been given an unambiguous signal to expand at an unprecedented pace.”

In the week the decision was announced, Dinneer said 600 million gallons of ethanol production capacity began moving forward.

Wagner said the proposed Ohio plant will not have to look that far into the future to find a market. The planned 20-million gallon facility will not come close to replacing the 220 million gallons already being consumed in Ohio each year.

And with all the new plants being built west of Ohio to take care of the California market, Wagner said, that leaves the East Coast market for Ohio to supply. There are better rail connections to the East from Putnam County, Ohio, than there are in states further west, he added.

Wagner said proximity will give Ohio about a 10-cent a gallon advantage in the East.