6/19/01

By MARK POWELL

About 125 Salem County, N.J., farmers were on hand earlier this month at the county ag building as Larry Johnson of the Delta-T Corporation gave an upbeat report on the potential for ethanol.
This was the latest in a series of meetings held around the state to fully explain and explore the potential for an ethanol plant in the Garden State.
Peter Furey, executive director of New Jersey Farm Bureau, said the speaker was well received by those attending.
“His knowledge and experience had everyone’s full attention,” Furey said.
Johnson is among the country’s foremost consultants on ethanol production.
While no decisions have been made yet by producers on whether to invest in an ethanol plant, interest in a project appears strong. New Jersey Farm Bureau, Rutgers University and the state’s grain and forage producers received a detailed feasibility study for an ethanol plant last week. Furey said the report was being looked over by those involved.
And, this week Furey and Dave Specca of Rutgers University are scheduled to attend a national ethanol workshop in Minnesota. The workshop, with some 600 in attendance, is expected to be chockfull of the information New Jersey farmers would benefit from should they decide to invest in an ethanol plant. Upon their return, Furey and Specca will present their findings to Garden State farmers.
New Jersey farmers considering the future for an ethanol plant say they will need to get investments totalling about $9 million. An ethanol cooperative modeled after those in the upper Midwest could provide significant returns to investors. However the value of such plants to grain producers not members of the cooperative would be minimal.
The announcement, June 12, that the Environmental Protection Agency would not grant California’s request for a waiver from the federal oxygen content requirement for reformulated gasoline should be a major boost to proponents of ethanol. Without the waiver in place, California will be forced to explore the use of ethanol as an oxygenate, instead of the petroleum product, methyl tertiary butyl ether (MTBE). California has banned MTBE because of its invasion of ground water in some areas. Ethanol, because it is essentially corn liquor, does not threaten water supplies. Furey said, “This should be the opening of floodgates of interest in ethanol production.” It could mean that hesitant bankers who may not have supported ethanol projects would now have less reason to worry. Ethanol production and consumption has been increasing at 20 percent a year, without a requirement that oxygenates other than MTBE be used in reformulated gasoline.
Bob Stallman, a Texas farmer who is president of American Farm Bureau Federation, praised the Bush Administration’s decision on California’s request for a waiver.
“The announcement sends a strong signal to investors and farmer-owned cooperatives that ethanol has a strong future,” Stallman said. “We believe this signal will result in a new round of construction of ethanol plants. Construction plans for a number of facilities have been on hold while the federal government has considered this decision.”
In Maryland, members of the state’s grain producers association said they were thrilled at the Bush Administration decision. St. Mary’s County farmer Donnie Tennyson, president of the Maryland Grain Producers Association, said, “The administration’s decision sends a clear message: the oxygen requirement is working and is necessary for clean air. This is a positive step in turning the nation towards the use of ethanol.”
Tennyson added, “Maybe more importantly, there is confidence in the domestic industry to produce enough ethanol so that this requirement can be met in a cost-effective manner to benefit consumers.”
Bush Administration officials were defending their decision on the California waiver in Congress. California’s governor and others say that the fact that the use of ethanol after MTBE is no longer permitted, Jan. 1, 2003, will increase the price of gasoline in the state.
California congressman Henry Waxman said the adminstration is “playing politics,” and playing up to special interests like Archer Daniels Midland, the major ethanol producer in the country.
The EPA is considering two regulatory changes which could improve the future for ethanol even further. First, the agency will decide soon whether to allow higher volatile organic compound content in reformulated gas to reduce carbon monoxide. Current limits on volatile organic compounds are an obstacle for ethanol blended into gasoline.
EPA also will decide this summer whether to limit or totally ban MTBE. If it bans MTBE, the EPA would create a major market for ethanol in the Northeastern states which have not banned MTBE.
Ethanol production this year is on schedule to exceed 2 billion gallons. There are currently 40 proposals for new ethanol plants in the United States. In the Mid-Atlantic region, New Jersey, Pennsylvania and Maryland farmers are actively exploring the potential for ethanol plants.
Maryland’s grain producers association earlier this month announced a deal to hire a Minnesota firm to study the potential for a barley and wheat fueled ethanol plant.
A New Jersey plant, according to Delta-T, could be configured to handle grains other than corn.
Ethanol, according to the National Corn Growers Association, costs 95 cents to $1.10 per gallon to produce. For every 100 BTUs of energy used to produce ethanol, 125 BTUs of the fuel is created.