Guest column: Don’t limit the potential of ethanol
Ethanol has gone from a Midwestern phenomenon to an economic powerhouse fulfilling two urgent national goals: energy security and promoting American exports.
Simultaneously meeting both goals raises questions the nation's policy makers should ask: Is it better to rely on domestic renewable fuels and reduce oil imports? Or should we improve our balance of trade by exporting U.S. ethanol stocks?
The answer is: Let's do both in due time, but put America's energy security first.
Recently compiled ethanol export data from the federal government delivers one unmistakable message: An industry founded to relieve American dependence on imported oil is being forced to find new markets beyond our borders.
Record U.S. ethanol exports exceeded 83 million gallons during the first quarter of 2010, and are on pace to exceed 330 million gallons this year. In fact, American ethanol is doing so well on the global marketplace that its biggest buyers include some surprising customers, such as the petroleum-producing United Arab Emirates and two leading ethanol-exporters, Brazil and India.
American ethanol is succeeding for the best of reasons. It's a high-quality, clean-burning fuel that works well in cars of all kinds. And, because of advances in ethanol-processing technology and the unparalleled productivity of American farmers, it's the most cost-effective alternative fuel on the global market today.
Finding new markets of U.S. ethanol is good news. After all, this is an industry that supports hundreds of thousands of American families. Last year alone, the industry produced a record 10.75 billion gallons of the biofuel, reducing demand for imported oil by 364 million barrels while supporting nearly 400,000 jobs in every sector of the economy. Ethanol production also provides much-needed boosts in local tax revenue, helping build schools, hire police officers, and repair highways.
No state better appreciates the importance of ethanol than Iowa. Last year, Iowa turned out a record 3.1 billion gallons of the biofuel - almost a third of the nation's total output. Iowa's ethanol industry generates $2.3 billion in income for Iowa households, supports more than 70,000 jobs and boosts state tax revenue by $532 million. For many years, Iowa has provided ethanol for use in other states and, in 2009, the state helped supply millions of gallons of ethanol overseas.
But finding these markets overseas means the nation is forgoing greater rewards in terms of economic opportunity and energy security all because our ethanol market is artificially capped. Commonly called the "blend wall," this outdated barrier sets a 10 percent limit on the quantity of ethanol that can be blended with gasoline and consumed in most cars.
The math here is simple. As long as this "blend wall" exists and current trends continue for gasoline usage, the domestic market for ethanol tops out at approximately 12.5 to 13.5 billion gallons. America's ethanol producers are expected to produce near those volumes this year alone.
The answer to this ethanol riddle is also simple: Now is the time for the Environmental Protection Agency to approve the use of 15 percent ethanol blends in all vehicles. This decision would generate new jobs, enhance our energy security, reduce climate-changing carbon emissions and encourage the continued growth and evolution of America's ethanol industry. Coupled with renewing key tax incentives for ethanol production and use, a favorable and comprehensive decision by the EPA would ensure we can answer both questions about ethanol exports in time.
There is only one immediate answer to the enigma of U.S. ethanol exports: To paraphrase what an American president once said about another unnecessary barrier, "EPA, tear down this blend wall."
