The historic criticism of the US ethanol industry

The blender’s credit may be going away but ethanol will continue to be attacked by its critics – some of whom date back to the early part of the 20th century, writes Growth Energy on their website 15 December 2011.

The first Model T automobiles built by Henry Ford were designed to run on ethanol – the father of the American automobile industry saw ethanol as the “fuel of the future” because it could be made from all sorts of renewable feedstock, writes Growth Energy in the article “The dog that caught the mechanical rabbit.”

But in the 1920’s, John D. Rockefeller, founder of Standard Oil, helped deliver a crippling blow to his competitor in the fuel market by funding political support for Prohibition, which banned distillation of alcohol fuels as well as consumable spirits. By kneecapping ethanol, oil was eventually able to “capture” the American motor fuels market.

Then came the 1970s, and the shock to our economy when OPEC dialed back production. In response, President Jimmy Carter set an E10 standard as a means of breaking the strategic hold that imported oil has over our economy.

With the help of the blender’s tax credit, created by Congress in 2004, the use of ethanol significantly expanded to the point where we are producing 13 billion gallons of ethanol annually. That is enough to meet the goal of a 10 percent blend in every gallon of gasoline sold in America, meeting the stated purpose of the tax credit: to establish a healthy ethanol industry.

The tax credit did what it was supposed to do and most producers will now be able to survive without it. In fact, last year, Growth Energy suggested eliminating the VEETC in return for investment in Flex Fuel pumps that would allow consumers to choose their fuel blend – E10, E15, E30 or E85.

If ethanol is only seeking the ability of consumers to choose, why does it still face criticism from Big Oil, Big Food and Big Meat?

The answer is that ethanol is the dog that caught the mechanical rabbit.

Ethanol’s critics underestimated America’s entrepreneurship and vision. They never thought that ethanol would reach the point where it would compete in the fuels market.

Now, ethanol’s critics are going after the only energy policy we have in this country that will make America more energy independent through the increased use of biofuels: the Renewable Fuel Standard, or RFS.

When Congress created the RFS, the goal was to grow an American fuels industry that would help us break free from our addiction to foreign oil. The RFS set a goal of 15 billion gallons of fuel from renewable sources in 2012, slowly rising to 36 billion gallons in 2022, including the use of 16 billion gallons of cellulosic ethanol.

Today, we are well on our way to reaching the RFS targets for grain ethanol, and with continued innovation in the industry, we can achieve the cellulosic requirements. By making next generation ethanol as commercially viable as first generation ethanol, we have the capacity in this country to produce enough ethanol to nearly eliminate our need to import foreign oil – keeping our money here in the U.S., putting it to work on our economy, and reducing the impact that foreign nations have on our country’s overall security.

Next year, 2012, will surely be filled with more challenges and criticism. But it’s good to be on the right side of history. No matter how fast our critics run, we’re sure to catch them.