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Farm-Fed Fuels on the Rise

Ethanol plants grow in the Midwest

BY: | May 2005



Rising oil and gas costs, changes in federal regulations and improved technology all have combined to prompt major investments in alternative fuel production--particularly ethanol made from corn and biodiesel derived from soybeans--throughout the Midwest.

More than two dozen new ethanol plants are under construction, with many more planned--often with government support. North Dakota, for instance, provided more than $2 million in grant and equity funding toward a new ethanol plant in Richardton that will more than double the state's overall capacity. With the help of new technology, the plant will run on coal, rather than natural gas--a much cheaper (if not necessarily cleaner) source of power that may help compensate for shipping costs, given that Richardton is located far outside the corn belt.

Some industry officials are concerned that all the new plants may lead to overproduction. Archer Daniels Midland, the leading ethanol producer, is not expanding capacity. Still, ethanol promoters claim it can help meet urban air quality requirements--especially as the additive MTBE is banned in more states--as well as renewable fuel requirements passed by Congress last year.

If ethanol has sometimes fallen short of fulfilling such promises, others are pinning their hopes on biodiesel. The U.S. Environmental Protection Agency will lower the amount of sulfur it allows in diesel fuel next year to 15 parts per million from 500 ppm. Biodiesel, like sulfur, can be added to diesel as a lubricant but burns cleaner. "The biodiesel industry is set to explode," says Roger Johnson, North Dakota's agriculture commissioner, "and in many ways is set to overtake ethanol as a renewable fuel."


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Alan Greenblatt

Alan Greenblatt is a GOVERNING correspondent.

E-mail: mailbox@governing.com
Twitter: @governing

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