General Clark's Ethanol March

Published March 9, 2009

General Wesley Clark, the former Supreme Allied Commander of NATO, is now a flag carrier for the ethanol industry. In remarks at the National Press Club on Friday, Clark was pushing for the maximum allowed blend of ethanol in gasoline to be increased from 10 to 15 percent. He said the move would create 136,000 new jobs and $24.4 billion in economic growth. However, critics say the proposed increase is far more vital to the bottom line of the struggling ethanol industry than it is to the national unemployment rate.

The future of ethanol in the United States is looking bleak these days. Gas prices are low, industry leaders like VeraSun are going under, plants are idling, and a host of new projects have been put on hold or canceled entirely.

In California, regulators are attempting to lower greenhouse gas emissions by 10 percent in the coming decade, but lower carbon levels won't be counted. The California Air Resources Board made that decision after investigating the total emissions from ethanol at every step of production, including the growth of the raw materials it's made from. Their study confirmed what others have already concluded: that there is a net increase in greenhouse gases when ethanol is substituted for gasoline. The finding has come under heavy protest from the industry.

What's more, the Obama administration seems considerably less sympathetic to the sector than many had expected. (Ethanol was largely excluded from the stimulus bill, while the solar and wind industries enjoyed significant subsidies.) It's looking less and less likely that ethanol use in America will more than triple by 2022, as mandated in President Bush's Energy Independence and Security Act of 2007.

All Roads Lead to Washington

A number of organizations in Washington representing farmers and the producers are committed to not only keeping corn ethanol afloat, but ensuring that cellulosic ethanol doesn't get left out of America's green energy portfolio. Growth Energy, the group behind Friday's Press Club event, has recruited an impressive lineup of Beltway players, including Clark, Tom Buis (the former president of the National Farmers Union) and former Congressman Jim Nussle.

Growth Energy, the Renewable Fuels Association, and several dozen other trade groups are digging in their heels and crossing their fingers in hopes that the legalization of E15—a 15-percent blend of ethanol to gasoline—coupled with a steady uptick in pump prices might give new life to the struggling ethanol industry.

But since the remedy the industry seeks can only come from the EPA and not from Congress, there is relatively little that the ethanol lobby can do beyond holding press events. None of President Obama's top energy appointees have an affinity for corn ethanol—currently the only widely used biofuel in the United States—and there would be little current benefit to a cellulosic fuel industry that hardly exists yet.

Still, it is the industry's overwhelming presence on K Street and ability to win over big name supporters like General Clark, Senator Tom Harkin, and Rahm Emanuel that has gotten it this far. For ethanol producers, all roads to future profitability clearly run through Washington.

---