After Backlash, Ethanol Industry Is Thriving

Play associated audio

Five years ago, ethanol was seen as the next big thing to wean the U.S. off foreign oil. Then some studies on the corn-based fuel cast doubt on its environmental benefits, and auto companies turned their attention to hybrids and electric cars. The hype died off, but the ethanol industry is alive and well, driving a big change in America's corn consumption.

Rising up out of the corn fields outside Lake Odessa, Mich., is the ethanol refinery for Carbon Green Bioenergy. The company's CEO, Mitch Miller, says a lot of refineries were popping up when this one was built in 2006.

"Five years ago, ethanol was a craze. It was the next best thing," he says. Now, not so much. Refineries aren't being built. Politicians aren't stopping by with platoons of reporters.

Yet when the ethanol hype went away, the ethanol industry got bigger than ever.

'A Dramatic Change'

On a tour of the refinery, Miller points out a storage silo as big as an office building. From there, the corn is broken down, starch turns into sugar and, well, the process is basically like distilling moonshine — chemically precise, 200-proof moonshine.

Miller says there's plenty of demand to keep this massive plant busy.

"This was built as a 40-million-gallon plant. We're running at 50 million gallons per year, so we have not reduced capacity at all," he says.

And this isn't the only ethanol plant that has been busy. Last year, for the first time ever, more corn in this country was used to make ethanol than to make livestock feed.

University of Missouri agricultural economist Ron Plain says that's an incredible change.

"Ten years ago, we were using about eight times as much corn to feed livestock and poultry as we were to make ethanol. And now we're using more corn to make ethanol. So it's a dramatic change," he says.

Five years ago, the federal government projected that in 2012, ethanol production would use up 30 percent of the nation's corn supply. Last year, it used 40 percent.

But that huge growth didn't come about because of E-85, the ethanol blend that starred in political speeches and TV commercials. It happened because ethanol makes up about 10 percent of almost every gallon of gasoline sold in this country. You use it every time you fill up your tank.

Policies And Subsidies Playing A Role

Government policies have played a huge role in this. For years, ethanol producers received a 45-cent-per-gallon subsidy. That subsidy ended earlier this year, but there's still a mandate that forces refineries to blend ethanol with gasoline.

Plain, the economist, says ethanol would still be around without the mandate. But before the mandate, refineries used about half as much as they do today.

Ethanol advocates hope the next step is a 15 percent blend of the fuel. The EPA already approved it for use in all vehicles built after 2001. But not everyone is betting big on it.

Craig Hoppen, the president of J&H Oil, a company that owns 36 filling stations in West Michigan, expects this new blend to do about as well as E-85.

"Is it a real up-and-coming business? No, no, it's still a niche business," he says.

That will please some environmentalists, who say ethanol isn't any cleaner than gasoline, when you consider what it takes to raise corn. Some livestock farmers are also rooting against ethanol, since corn prices have tripled in the past decade, raising their feed costs. Hopes that corn stalks, or switch grass, could replace corn as the feedstock for ethanol have mostly come up empty.

So for now, ethanol will continue to be made from corn. And maybe the biggest expansions in the industry are behind us. Then again, ethanol projections have been wrong before.

Copyright 2012 National Public Radio. To see more, visit http://www.npr.org/.

WAMU 88.5

Barry Meier: "Missing Man"

Nine years ago, former FBI agent Robert Levinson disappeared in Iran while on a mission for the CIA. The story of his secret journey to Iran, the CIA cover-up that followed and efforts to rescue the longest-held U.S. hostage.

NPR

'Invisible Army' Of Immigrant Women Finds Its Voice Through Cooking

Brazilian immigrant Roberta Siao says being both a foreigner and mother made it hard to find work in London. At Mazi Mas, a restaurant that trains and employs immigrants, she found more than a job.
WAMU 88.5

The Fight for D.C.'s Budget Freedom

Last week, a House committee with oversight of the District passed legislation that would block the ability of the Council to spend its own tax dollars.

WAMU 88.5

The U.S. Expands Ties To Vietnam

President Barack Obama lifts the embargo against U.S. arms sales to Vietnam. We discuss what closer ties between the U.S. and Vietnam mean for trade, leverage on human rights and growing concerns over China's military expansion.

Leave a Comment

Help keep the conversation civil. Please refer to our Terms of Use and Code of Conduct before posting your comments.