January 13, 2013 | Back to: News

Tax credit to boost ethanol production, help move manufacturers away from corn

At the end of the movie “Back to the Future,” Dr. Emmitt Brown, played by actor Christopher Lloyd, powered up his time-traveling DeLorean by dumping into the vehicle’s fuel tank banana peels and leftover soda pop he’d just found in a nearby trash can.

According to the movie’s story line, the car had been retrofitted to operate solely on garbage in the year 2015.

As real life enters 2013, human innovation looks to fall a little short of the expectations Robert Zemeckis had when he wrote and directed the science-fiction film in mid-1980s.

But listening to Dan Sanders Jr. talk last week about operations at Front Range Energy, perhaps powering vehicles on random waste alone some time down the road isn’t completely out of the question.

At the ethanol plant near Windsor, where about 48 million gallons of corn-based ethanol are manufactured each year, Sanders and his 33 employees are now testing in their lab or looking into the use of sugar-milling byproducts, leftover still heads from alcohol distilleries, flour waste, remnants of beetle-kill pine trees from the mountains, stalks of various plants, agricultural residues, grasses and other cellulosic sources to produce its biofuels.

And, just last week, the federal government put its support behind such ethanol-manufacturing endeavors.

The same “fiscal cliff” bill that recently approved a one-year extension of the Production Tax Credit for wind energy and other subsidies also extended a $1.01-per-gallon tax credit for cellulosic ethanol, biofuel made from sources other than corn kernels.

Cellulosic ethanol has been slow to get off the ground after decades of scientific research and development, but such plants are now under construction in several states.

With help from the tax credit, Sanders said he, too, plans to continue taking Front Range’s ethanol production into “the next generation.”

“The bulk of ethanol, for a long time, will continue to be made from corn grain,” Sanders said. “But we’re moving away from that. We’re really on the verge of doing some amazing things.

“It will take time, but it will happen, and it will benefit us all in a variety of ways.”

Sanders said having more sources from which to make ethanol will increase production, and an increase of U.S.-produced biofuels will continue helping reduce America’s dependency on petroleum from volatile parts of the world.

And more ethanol production will give consumers more options at the pump, he said.

Sanders added the growth of the ethanol industry means more jobs, and he also noted ethanol manufacturers being able to make biofuels from a variety of sources will lower the industry’s dependence on corn grains, which also are heavily needed to feed meat- and milk-producing livestock.

Under the recently passed bill, according to The Associated Press, ethanol makers will be allowed to continue to depreciate equipment for new plants placed in service in 2013. The bill extends biodiesel production tax incentives for two years. Those measures are aimed at encouraging increased production of fuel from renewable sources.

Gas stations that want to install pumps capable of distributing E85, which is 85 percent ethanol and 15 percent gasoline or those who add 15 percent ethanol — or E15 — pumps also can get a tax credit under the bill. Currently, most gasoline is E10.

The bill also adds algae as another source material that will be eligible for the tax credit.

Those measures encourage investment in new plants and are important for the industry to continue to grow, Sanders said.

Rep. Cory Gardner, R-Colo., said in a phone interview Thursday he’s “absolutely in favor” of cellulosic ethanol and the industry using less of the nation’s corn crop, but he didn’t support the tax credits and other incentives recently passed.

“I just don’t think this is the way to go about it,” Gardner said. “The industry needs to get to a point where it stands on its own two feet.”

Sanders and others, though, have pointed out that the subsidies going to the ethanol industry are no different than those going oil and gas companies, like the federal government paying for the U.S. oil and gas industry’s tariffs on petroleum they produce in other countries, he said.

News of the recent cellulosic ethanol tax-credit extension and other subsidies followed a tough 2012 for Sanders and other biofuel producers.

The local ethanol plant shut down its production for two weeks in August because corn prices skyrocketed as drought covered much of the U.S. With the cost of the corn hitting all-time highs, the plant couldn’t make a profit.

It was the first such halt in operations at the plant in its six-year history.

Compounding the problem is the fact U.S. drivers have been cutting back on their gasoline consumption, Sanders said, and gas and ethanol prices haven’t been able to keep up with the increases in corn prices.

Other ethanol plants around the country, too, also were forced to temporarily idle production, or not run at full capacity.

With high corn prices, livestock organizations and lawmakers from some agriculture states recently called for the Environmental Protection Agency to temporarily waive the Renewable Fuels Standard for ethanol being blended in gasoline. The Renewable Fuels Standard required U.S. fuel companies to blend 13.2 billion gallons of ethanol into gasoline by 2013, and this year the ethanol-blending obligation will increase to 13.8 billion gallons.

However, the EPA denied the request.

Sanders, along with others in the ethanol industry and U.S. Agriculture Secretary Tom Vilsack, spent last year fighting for ethanol, and disputing the claim the ethanol industry uses 40 percent of the nation’s corn supply. The ethanol industry, Sanders and others say, is the first user of 40 percent of the harvested corn crop, but of that 40 percent, ethanol plants are only using the starch out of the kernel to make ethanol, and all of the proteins, fats, and fibers are returned to the food chain in the form of a livestock feed called distillers grain.

In addition to producing fuel ethanol, Front Range Energy also produces more than 400,000 tons of livestock feed annually, Sanders said.

When everything is factored in, Sanders and others say, the ethanol industry is only a net user of around 16 percent of the total U.S. corn crop.

“It’s been tough for the ethanol industry recently ... but this tax-credit extension brought some good news our way,” Sanders said. “We’re really excited about what we can do with cellulosic ethanol and what it means for everyone else.”

Eric Brown
ebrown@greeleytribune.com


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My Windsor Now Updated Jan 19, 2013 11:35AM Published Jan 20, 2013 09:14PM Copyright 2013 My Windsor Now. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.