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Iowa to become top ethanol producer and grow E85 market


Iowa has the products, infrastructure, manpower, and soon, the tax base, to produce more renewable fuels to help the local economy and lessen the nation’s dependency on foreign oil.

On Oct. 11, a new bill, known as the Jobs Creation Act of 2004, received Senate approval, and if approved by President George W. Bush as expected, it will make it easier to manufacture ethanol and E85, a 15 percent petroleum and 85 percent ethanol fuel blend, according to Christi Vander Voort, Iowa’s E85 coordinator.

“The landscape of ethanol in Iowa will change,” Vander Voort said.

In a press release, David Calderwood, the president of the Iowa Corn Growers Association, called the bill’s passage “a big win” for corn farmers and the Iowa ethanol industry.

“The ethanol excise tax reforms in this bill are going to make it a lot easier to expand ethanol use all across our nation,” he said. “It will also help us take the next step to expand the use of E85, which is 85 percent ethanol and can be used in flexible-fuel vehicles.”

Vander Voort estimates that Iowa has nearly 50,000 FFVs registered in the state, which include popular models such as the Ford Taurus and Explorer, the Chevrolet Suburban, Dodge Caravan and many others. Vander Voort said consumers often times aren’t aware that their vehicle has the capability to run on E85, but as they become more educated about FFVs, the opportunities for the ethanol industry will be enormous.

“With the passing of the legislation which includes the Volumetric Ethanol Excise Tax Credit and Iowa becoming the No. 1 ethanol producer in the nation in 2005, we will see more stations offering E85 across the state,” Vander Voort said.

According to Vander Voort, 82 percent of Iowa’s ethanol is shipped out of the state, mainly to coastal states to be used in E10, a 90 percent petroleum and 10 percent ethanol blend, as a way to help meet clean-air standards. Ethanol sales of the account for about 30 percent of fuel sales nationwide and about 65 percent of all fuel pumped in Iowa. Iowans have accepted the importance of ethanol, as the usage numbers show, and expanding the state’s use of E85 is a way to establish new markets for ethanol within Iowa, she said.

“Education is one of the obstacles we face in building awareness and demand for E85,” Vander Voort said. “The Iowa E85 team is being developed to establish E85 stations and to provide more support necessary to achieve a sustainable E85 market.”

Vander Voort said there are currently 12 E85 fueling sites in the state, with four more opening in October and November. There is not a fueling station in Greater Des Moines right now, but she says establishing one is a priority because of the large number of vehicles based in the area.

Until there is a local E85 connection for consumers, Jim Poppe, the truck manager at Charles Gabus Ford, says it is doubtful that the sales team will do much marketing with the flexible fuel component of many of the vehicles they sell.

“We need to build the infrastructure first before we sell the product,” he said. “The state fleets use it regularly, but as for individuals, frankly, FFVs don’t mean much to them right now because the fuel isn’t readily available for them.”

Dale Schroeder, the bureau chief of the fleet, mail and print bureau of the Iowa Department of Administrative Services, says Iowa started using FFVs on a test basis in 1991, about five years before the vehicles were available on a commercial basis. Now, the state fleet includes about 1,500 FFVs, a result of both state and national legislation encouraging the use of alternative fuels in commercial fleets and because it makes sense for Iowa.

“Governors Branstad and Vilsack have both endorsed and promoted the development of additional markets for ethanol,” Schroeder said. “Of course, the 10 percent additive has been a very important part of the ethanol market nationwide, and moving from 10 percent ethanol to 85 would significantly increase that market.”

Iowa’s ranking as the top ethanol-producing state in the nation is due to its growing number of production facilities, according to Denny Harding, a commodity services coordinator with Iowa Farm Bureau and a renewable energy advocate.

“Since 2000, eight farmer-owned ethanol plants are in production and another 10 are in the planning or construction phase,” Harding said. “If you add up all of these, that means more than 900 million gallons of ethanol would be produced using more than 330 million bushels of corn.”

According to the Iowa Renewable Fuels Association, Iowa’s ethanol industry already generates $363.6 million in economic activity in local communities, and will have a $481 million impact when all the plants under construction and in planning are in operation. The timing couldn’t be better for more ethanol production, the IRFA says, as crude oil prices have hit record highs in recent months, and the nation’s demand for the energy source continues to grow.

“Ethanol is made in Iowa but petroleum isn’t, and as we can use more and more of the ethanol, it’s going to reduce our dependence on foreign oil,” said Shannon Textor, the marketing manager for the Iowa Corn Growers Association.

According to a recent New York Times article, the country’s demand for oil could increase by as much as 43 percent by 2025, resulting in an immediate need for ways in which to change Americans’ dependence on gasoline.

Harding said ethanol, the “hamburger helper” of the gasoline industry, is one solution to stretching non-renewable petroleum.

“It (ethanol) extends the gasoline production that is out there, and not only reduces the dependence on foreign oil, but it burns cleaner and reduces emissions of volatile carcinogenics such as MTBE. Ethanol is good for Iowa’s farmers and will lessen the country’s energy and environmental problems,” he said.

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