Power formula

Gas price hikes fuel drive for ethanol production; farmers look to co-ops to gain market share

By Mary Farrell-Stieve

outh Dakota just broke ground on a 40-million gallon ethanol plant owned by a cooperative of corn growers, who believe that consumption of corn to produce ethanol will help boost prices for their crop. National Corn Growers Association President Lynn Jensen, one of the plant owners, says he will send as many as 25,000 bushels - about 25 percent of his total crop - to the plant. South Dakota is are part of a growing trend as farmers and their cooperatives all across the nation are investing in ethanol facilities as a way to add much-needed value to their crop (see related story, page 8). Jensen believes that committing 600 million bushels of corn nationally for ethanol will add 35 cents to each bushel of corn U.S. farmers market. Jensen foresees a bright future for ethanol. Another ethanol plant in that state will begin its fund-raising campaign in July. "These farmer-owned enterprises turning our crops into value-added products create a great opportunity for rural development," says Jensen on a spring day as he readies his equipment for another planting season. "And I'm not just talking about ethanol, but all value-added investments. "Once the start-up costs have been covered and the investments start generating returns for the investors, that money comes back into the community," he continues. "These investors are more likely to use that money to improve their standard of living, pay down debt and invest in equipment to make their work easier." Add those capital reinvestments to the benefits a community realizes in new job opportunities and the security of a local ownership of local business, and it's easy to see why there's increased optimism throughout agriculture and rural development circles for bio-based fuels. The bio-fuel movement is also being backed by those who want to make the United States less dependent on foreign oil-producing countries, which currently dictate fuel availability and prices. Consumers are becoming more interested in bio-fuels, especially with recent concerns about the impact of methyl tertiary butyl ether (MTBE).

just down the road from the Hastings, Neb., ethanol plant, AGP cooperative officials opened a
new soybean processing plant and are laying the groundwork for an adjacent vegetable oil refinery all adding value to farm crops and tapping the bio-fuels market.
Photo courtesy AGP







MTBE phase-ou boosts ethanol

 MTBE is an oxygen-bearing additive the petroleum industry added to gasoline to make it burn cleaner to meet the 1990 clean air requirements. Now the additive that helped clean the air is suspected of contaminating groundwater. To counteract the spreading threat of MTBE to the groundwater supply, MTBE has been banned in places such as Iowa. In California, gasoline suppliers have until Dec. 31, 2002, to eliminate MTBE. The response to these bans has been a call for the end of the reformulated gasoline program's oxygen requirement. This also opens new doors for bio-fuels, such as ethanol. Ethanol can add the needed oxygen to make fuel burn cleaner. It's also organic, non-toxic and reduces the amount of toxic substances in the fuel. The ethanol solution could protect groundwater, clean the air, and lessen dependence on foreign oil, and i is good for engines and gives a much needed boost to farmer income. It can also add economic vitality to rural communities where ethanol is produced, various proponents point out. Ethanol sounds like the solution to host of challenges. Why has there been strong resistance to its use in the past? Some people suggest that there is not enough ethanol produced to replace all the MTBE used in the Unit ed States. The American Coalition for Ethanol (ACE), an organization of ethanol producers, technical experts and supporters, tries to dispel that fear. ACE points out that there is a large amount of unused capacity in its member ethanol plants. If ethanol demand increases, new plants can be built rapidly, notes the Governors' Ethanol Coalition (GEC).

Fill'er up!

Pipeline flowing with new generation ethanol co-ops

By Pamela J. Karg
Field Editor




From sea to shining sea, farmers and their coopeatives are eyeing new ethanol production plants as a way to add value to their crops and build a stronger rural economy. Market studies indicate farmers should build new ethanol plants to provide more value-added opportunities in rural America. For many farmers, new-generation co-ops are the perferred model for gaining a share of the ethanol market. In New Jersey, the Farm Bureau is encouraging its members to consider building an ethanol plant. In Washington, farmers are hoping a facility that would turn barley and wheat into ethanol would buou sagging grain markets. In Illinois, memberships are being marketed for a new ethanol plant, and a Minnesota ethanol facility is being expanded to meet surging demand. In early June, USDA Rural Development agreed to provide funding for a feasibility study for a possible ethanol plant in western Kentucky. That project is being eyed by the Hopkinville Grain Elevator, a 2,200-member grain producers' co-op looking for a way to add value to members' crops. "While-commodity prices remain at historically low levels and changes in tobacco production present additional downward pressures in our rural economy, it is essential that we look together at new and innovative ways to add value to our traditional farm products," Kentucky Gov. Paul Patton said at an event marking the USDA award. Earlier this year, the Environmental Protection Agency announced its decision to phase out the use of methyl tertiary butyl ether (MTBE). The fuel additive helped reduce air pollution but now has been linked to drinking water contamination and cancer in animals. The EPA and USDA are working to find "safe bio-fuel" additions, or oxygenates, which add oxygen to fuel and reduce pollution in exhaust.

New Jersey grain growers look to ethanol

 With MTBE on the way out, ethanol is the only commercially available alternative, says John Urbanchuk, executive vice president of AUA Consultants, Moorestown, N.J. He was hired last year by the New Jersey Farm Bureau (NJFB) to do an economic feasiblity study on building an ethanol distillery. Urbanchuk says that farmers looking for options to incease their income must consider ethanol production. Corn is the largest grain crop in New Jersey. Normally, Garden State farmers produce about 9 million bushels of grain, enough to make a New Jersey ethanol plant a viable option, he reports. Currently, New Jersey corn is shipped mainly to Maryland and Delaware for chicken feed, according John Rigolizzo, a farmer and president of the NJFB. He says that Farm Buereau's preliminary evaluation shows this ethanol option to be a timely alternative and that it could lead to a larger effort toward renewable fuel prjects in New Jersey. Farmers currently pay 25 to 50 cents a bushel in transportation costs for corn that fetches only $1.25 a bushel. Sales for ethanol would bring in aabout 15 to 25 cents more per bushel, according to the AUA study. With those economics in mind, the possibility of building an ethanol plant has a growing number of farmers willing to commit a percentage of their corn crop to cash in on the fuel additive. The Farm Bureau is looking for investments from about 400 farmers, who would form a cooperative to produce ethanol. A share in the plant ould cost 12,500, and farmers would be asked to sell corn to the plant at market prices. Even the most skeptical farmers are asking for shares, and they're excited by the prospect of tapping into the bio-fuels trend, Rigolizzo says. What got him to endorse the idea was two years of invesstigation into the making of ethanol fuel from grains and visits to ethanol plants. Rigolizzo also paid attention to the economic study by AUA, completed last December, and to the comments between Farm Bureau representatives and the New Jersey Petroleum Council earlier this year. The NJFB directors then toured dry mill and wet mill ethanol plants both owned by Archer-Deaniels-Midland in Decatur, Ill., and Peoria, ILL., before beginning a series of farmer information meetings this past spring In addition to creating a new market, local ethanol prduction would mean corn farmers would not plant tomatoes and garden crops. Giving grain farmers an alternative to tomatoes and other truck-crop markets will help keep prices for these other New jersey-grown crops from being driven down by an increase in supplies, Rigolizzo says.

Washington co-op to invest $122 million

 Plans were recently unveiled to build a barley-wheat ethanol plant in Moses Lake, Wash. Pacific Rim Ethanol LLC would use fermented barley and wheat to produce 40 million gallons of ethanol a year. Rizville warehouse Co., a 1,100 member farmer coopeative, will invest in the $122 million venture being led by Doug MacKenzie, who helped set up Commercial Alcohols, Canada's leading ethanol producers. MacKenzie, Pacific Rim's President and CEO, heads up the effort to secure funds from corporations and individuals througout the western United States via a public offering of shares in the plant. According to MacKenzie, "the offering is receiving a very high degree of interst," including an initial $1 million grant for a low-interest loan from the Community Economic Revitalization Board for the City of Moses Lake. "This commitment to our project at the local community level makes clear just how important this plant will be to the region." The loan will provide for infrastructure development to support the ethanol plant. "In addition to creating an enhanced marekt for local grain growers, ethanol is a non-polluting renewable fuel source that can significantly increase the burning efficiency fo gasoline, effectively reducing the emission of greenhouse grases. There really isn't a downside to ethanol," says MacKenzie. The plant could use up to 60 percent of Washington's barley crop, about 4 million bushels of wheat per year. Adding to the positive oulook for success, the Pacific Rim plant will act as a giant distillery. "We'll produce alcohol for spirits such as vodka and gin, indutrial-grade alcohol, vital wheat gluten, a grain protein used in baking, and a high-grade component for cattle feed, in addition to ethanol, says MacKenzie. "Basically, 99.9 percent of what goes into this plant will come out in usable consumer products. That means no waste, and no pollution." Moses Lake was the site chosen for the plant, based upoin a unique combination of factors. "This location is basically equi-distant from the key markets for ethanol distribution," says Mackenzie. "seattle, Portland and Spokane are all potentially important markets for the consumption of ethanol and many of the other products the plant will produce. That will reduce costs for sunsumers because freight costs will be minimized simply because we're closer to the point of purchase." MacKenzie also cites the availability of grain, inexpensive energy and a good interstate highway, pllus the availability of land, all as key reasons for selecting the site. "Moses Lake may be the best place in North America for a project like this to succeed." Pacific Rim Ethanol LLC is continuing to hold meetings around the state to build interest and support for the project. Agreements with suppliers and business partners are also in the works, with details to be released in the near future. In 1985, Washington produced 1.2 million acres of barley. But demand, especially from overseas buyers, has dropped, leading to decreased production. Last year, only 490,000 acres of Washington barley were harvested. A new ethanol plant brings hope to the shrinking barley industry. The rural economy of the area would benefit from 500 construction jobs, the plant would employ at least 70 and there would be new markets for locally grown grain. Most of the ethanol consumed in the region currently comes from the Midwest or overseas. Corn from the Midwest is used to produce 850 million gallons of ethanol per year. Yet ethanol plants in other regions are not deterring Midwestern farmers from expanding their operations.

Minnesota ethanol plant expanding

 In Minnesota, Ethanol 2000 began adding to its capacity last year. The limited liability partnerhip was formed by Southwest Minnesota Agrifuels Cooperative (SMAC) and Borin Enterprises, Inc. It owns and operates a dry mill ethanol plant. The initial plant construction cost $19 million. Twenty eight new jobs were created and the economic impact generated was estimated at $7.5 million annually. Though the combined efforst of Borin Management and the Ethanol 2000 operations team, the plant exceeded expectations. Corn use is up to about 5.5 million bushels per year and ethanol production is at about 135 percent of design capacity. Initial production began on June 20, 1997, and the first break-even month was July 1997. the first six months of operation in 1997 yielded a value added (net profit) of 62 cents per bushel of corn delivered to the plant. Following a detailed feasibility study a year ago, the decision was made to expand the existing ethanol plant to a capacity of 27.5 million gallons per year. Current production is 15 million gallons per year, even though the plant was designed with an 11-million-gallon capacity. The expanded facillity should come on line by August, even though the contractor has had trouble finding construction workers due to the strong economy and low unemployment across most of the Upper Midwest. When expanded, Ethanol 2000 will employ 35 people. The direct economic benefit to rural southwest Minnesota should increase to $15 million annually, co-op leaders report. Those kinds of results are fueling more attention by other Corn Belt farmers and their cooperatives. Farmers have lived through 18 months of volatile prices swings for just about everything except beef cattle and organic products.

Co-op invests $9 million in Illinois plant

 Amid those swings, 412 northern Illinois and southern Wisconsin farmers invested $9 million in equity to form the Adkins Energy Cooperative. However, organizers had hoped to raise $16 million, so the new-generation cooperative took on five partners in a limited liability corporation. Those partners include Pearl City, Ill. Elevator Cooperative; Nicor Energy solutions, Naperville, Ill.; Williams Energy, Decature, Ill.; PSI, Memphis, Tenn.; and Delta-T, Williamsburg, Va. According to Jim Graham of Nicor, everyone is getting anxious over construction of the new ethanol plant slated for a yet-unamed site. At one point, the co-op board wanted to explore sites in Wisconsin after that state's legislature passed an ethanol subsidy and communities offered economic development incentives. But Graham believes the board and its parters will end up staying with their original plans to build a dry mill ethanol plant in northern Illinois. Plans call for the plant to make 30 million gallons of ethanol, process more than 11.5 million bushels of corn and cost approximately $68 million dollars to build. Already Adkins Energy has talked with Northern Illinos Gas to construct a co-generation facility that will supply all the energy needs of the ethanol plant, saving an estimated $1.7 million per year. "Securing financing has been a big issue for us over the past two years," Graham explains. "Farmers have been very receptive to forming a new-generation cooperative and they've stuck by our plans during some pretty tough times in the agricultural community. We're just all anxious to get started, and I think we'll be able to start digging soon because we've found a financial institution that will back us".

Governors see ethanol value

 There are 58 ethanol plants in 19 states and six new plants in five states nearly ready to begin production. Twenty more plants in 16 states are in the planning stages. These plants are all grain-to-ethanol facilities. There are also 12 plants in the planning stages that would use organic material left after products such as sweet potatoes, rice straw or forest waste are processed. Another proponent trying to educate the public and Congress about ethanol is the GEC. Governors from 22 states and Puerto Rico plus representatives from Canada, Mexico, Sweden and Brazil comprise the GEC membership. Its goal is "to increase the use of ethanol-based fuels, to decrease the nation's dependence on imported energy resources, improve the environment and stimulate the national economy." A coalition study estimates the ethanol industry in the United States could produce 3.5 billion gallons of ethanol per year by 2004. In his remarks to the National Conference on Ethanol Policy and Marketing in San Francisco, GEC chair and Iowa Governor Tom Vilsack said that when ethanol production reaches that volume, 47,800 jobs will have been created, many in areas where job creation is difficult. Bob Slaughter, general counsel for the National Petrochemical and Refiners Association, cautioned the ethanol industry not to promise too much regarding the extra volume it can deliver quickly. "Supplying American consumers' transportation needs is a tough business," Slaughter said during the USDA Agricultural Outlook Forum 2000. "Consumers want adequate supplies, affordable prices and they expect to see environmental improvements in facilities and products at the same time." Some of the biggest assets the ethanol industry has are its enthusiasm, the need for a safe fuel additive, public support and political support, he says. Jensen believes demand for ethanol will rise. At the USDA Agricultural Outlook Forum, he said, "Today, there are no fewer than 22 farmer owned cooperatives with more than 800,000 members producing in excess of 450 million gallons of ethanol annually. The total farmer investment in these facilities exceeds $1 billion. Farmer-owned cooperatives have been the fastest growing segment of the fuel ethanol industry." In addition to increasing job opportunities in rural areas, ACE says ethanol production can result in cleaner air, increased energy security through domestic production and better prices for corn and other farm commodities.

Impact on food supply

 But some wonder how much better crop prices would be with a strong ethanol industry, and at what cost to the food supply. Currently, the ethanol industry uses about 5 percent of the nation's corn crop. This would increase if ethanol production and sales increase. Still, in nearly every year the corn supply outstrips demand. Whether or not the corn necessary for increased production of ethanol would use more than the surplus portion of the crop is hard to predict. Many factors, including the amount of land in production and increased yields, will affect the answer.

Some people worry that the increased production of ethanol could hurt the nation's food supply or limit the supply of corn available to feed the hungry around the world. Last year, American farmers produced 9.4 billion bushels of corn, yet only about 525 million bushels were used for ethanol production. That's only about 5 percent, and the ethanol proponents explain that only the starch portion of the corn is converted to ethanol. The by-porducts are still available for other uses such as distiller's dried grain, a high protein animal feed. Higher corn prices paid to farmers as a result of demand from ethanol plants will vary depending on climate, acres in production and yeilds. During the most recent Commodity Classic (the combined convention of the National Corn Growers Association and the American Soybean Association), Jensen told the media that, "USDA indicates that ethanol coould successfully replace MTBE nationwide by 2004 with negligible effect on gasoline prices and no disruption in supply. This would more than double the size of the ethanol market, consuming an additional 600 million bushels of corn annually and adding approximately 35 cents to the value of every bushel grown in the United States."

Two milling processes

 Two types of milling processes can be used to produce ethanol: dry milling or wet milling. The wet milling process producers by-products that include sweeteners, corn oil and gluten feed and gluten meal. The dry milling process produces dried distillers grains and corn meal as by-products. Gluten meal, gluten feed and dried distillers grains are rich in protein, nutrients, fat and minerals with readily available sugars, lactic acid and other short-chain fatty acids. They are in demand as livestock feed and their availability could free up unprocessed corn for other uses. Corn meal, sweetners, oil and other by-products are also in high demand by food processors.
Ethanol production would not withdraw these products from the market. Rather, it would add value to the rest of the corn. Many ethanol producers even capture the carbon dioxide emissions from processing and sell them to the beverage industry. Ethanol production is a showcase for efficent use of a raw product, proponents say. They believe that turning corn into ethanol takes a $2 bushel of corn and turns it into $3 worth of fuel and $1 worth of feed.

Environmental impacts

 But wouldn't putting more land into corn have negative effects on soil and water conservation? Corn is not the only raw material that can be used to produce ethanol. In fact, there are ethanol-producing plants using by-products from other processes. Sugar beets, potatoes, brewing wastes and cheese whey are examples of by-products that have been successfully used in ethanol production. Cellulose materials including grasses, trees and waste paper have been used to produce ethanol. While these processes were too expensive to be profitable in the past, new technologies and research into cellulose-based materials are increasing their viability.
Switchgrass is also being studied as a fuel source. The tall, fibrous grass once covered the American prairies. It held the soil in fierce winds and created the rich land pioneers turned into America's breadbasket. Switchgrass can be grown on marginal land in many weather conditions. The grasses live for 20 years or more and, because they are harvested with dry matter and not nutrition as the goal, harvesting takes place only once a year. This yearly harvest saves on labor, fuel and machinery costs. The machinery is the same used to harvest feed forages. Yields vary, but Alabama test plots yielded 15 tons of dry matter per acre. Despite these advantages, the cost of converting switchgrass into an alternative to coal fire energy production has not been price-competitive. However, if the switchgrass is first converted to ethanol and the by-product then burned to produce electricity, the future for switchgrass as a bio-based fuel source brightens, some Alabama researchers say. Switchgrass has other qualities as an alternative to row crops. The root system extends almost as far down into the subsoil as the stems reach to the air. Switchgrass traps carbon in its roots, drawing it out of the air and restoring it to the soil. This has some switchgrass enthusiasts declaring it as a fuel that can also clean the air. Switchgrass is very adaptable and researchers are working to develop strains that need very little chemical fertilizer and will produce the most cellulose. Wildlife ecologists are pleased at the prospect of seeing row crop fields converted to switchgrass. Despite it's still being a monoculture, a field of switchgrass benefits wildlife, especially birds. If cutting and harvesting are left until August, the fields can provide excellent nesting and chick-rearing environments. The success of switchgrass and other bio-based fuel sources will depend on how policymakers see the future. President Clinton has called for a three-fold increase in the use of bio-fuels and bio-based products by 2010. Combined with Congress' interest in promoting value-added industries, expansion of the bio-based fuel industry looks promising. Still, bio-based fuels are more expensive than fossil fuels to produce. The keys will be what government incentives are available to keep the new industry growing and whether the public is committed to environmentally friendly forms of fuel after gasoline prices drop.

Missouri's first ethanol plants will have major impact on region's rural economy

 Fred Stemme, Director of Communications
Missouri Corn Merchandising Council

For the first time, Missouri corn groups will be able to ship their crop to an ethanol plant in their own state. the new ethanol plant in Macon is owned and operated as North-east Missouri Grain Processors (NEMOGP), a new-generation farmer cooperative. It will process approximately 6 million bushels of corn annually to produce 15 million gallons of ethanol. In addition, the plant will produce over 100 million pounds of dry distiller's grain, a high-quality livestock feed. The ethanol plant will benefit not only its members, but the economy of the entire area. The plant will generate an estimated $31 million in annual economic activity and create 28 full-time jobs. The co-op's 311 farmer-owners invested $5.6 million in the project, which cost $23.5 million to build. Seed money to start NEMOGP was provided by teh Missouri Corn Merchandising Council, Missouri rural electric cooperatives and others. USDA Rural Development provided technical assistance to help in forming the cooperative. The initial co-op organizational meeting was held in Shelbina, MO., in December 1994, which launched a six-year effort to open the plant. The membership drive was held from June 1997 to November 1999. Groundbreaking was held in Macon, Mo., during April 1999, with the grand-opening Arpil 29, 2000.

Photo courtesy NEMOGP cooperative









At press time for this magazine, USDA Rrural Development had just approved a $10 million loan guarantee to buy machinery for what will be Missouri's second ethanol plant, being built in Graig by a subsidairy of the Golden Triagle Energy Cooperative Inc. This dry-mill plant will produce 14 million gallons of ethanol and consume 5 million bushels of corn each year. The plant will also produce dried distillers grans soluble (a livestock feed supplement). Co-op members are required to deliver 400 bushels of corn for each $1,000 of membership interest (the minimum investment for membership is 5,000 bushels). Additional corn will be purchased on the open market. The grand opening events for the Macon plant were the first in Missouri not only for an ethanol plant, but also for a new-generation, farmer-owned, value-added cooperative. Approximately 1,500 people attended the events held at the NEMOGP ethanol plant east of Macon. "This is a gigantic step forward for Missouri agriculture. The importance of this ethanol plant to Missouri corn farmers is highlighted by the list of special guests joining us for the event", said Gary Marshall, Missouri Corn Growers Association CEO. Guests included Senator Kit Bond, Senator John Ashcroft, Governor mel Carnahan, House Speaker Steve Gaw, House Agriculture Chairman Sam Leake and House Environment and Energy Charimand Gary Wiggins.

Tax incentives necessary

 The move to eliminate MTBE from fuels has spurred some lobbyists to call for the end to oxygenated fuels rather than a switch to the more environmentally friendly ethanol. This call has friends among those who see the lower taxed ethanol as a threat to transportation programs. Tn his remarks at the Outlook Forum, Slaughter touched on the idea that draining hundreds of millions of dollars out of the highway trust fund is not a way to make friends in the rest of the fuel industry. Ethanol has a federal gasoline excise tax exemption of $0.054 per gallon. The exemption was to expire this year. While movement is afoot to extend it to 2007, the future is uncertain. Without that exemption, ethanol will have a tougher time being a competitively priced fuel additive.' The petroleum industry has called this a huge special interest subsidy, but ethanol proponents point out that the oil depletion allowance and the money spent each year to protect access to Middle Eastern oil more than make up for the gas excise tax exemption. Two thirds of the world's known oil reserves are located in the Persian Gulf. By 2010, analysts believe that more than 75 percent of the world's petroleum needs will be met by Middle Eastern nations that make up the world's most politically volatile region. In a 1998 poll and article about the future of ethanol published by ACE, 83 percent of American voters said they fear the United States remains extremely vulnerable to an energy crisis at the behest of foreign oil suppliers. Eight out of 10 voters believe the nation's dependence on foreign oil is a serious threat to the economy, jobs and standards of living. Seven out of 10 polled were equally concerned about environmental threats. And eight out of 10 voters favored increasing the use of renewable transportation fuels such as ethanol to reduce oil dependency. Research and development in the bio-based fuel field is growing and the results are exciting. The Renewable Fuels Association, the trade association of the domestic ethanol industry, published a report outlining some areas of research using ethanol not as a fuel additive, but as the main source of fuel.

The E85 alternative

 In order to comply with the Energy Policy Act of 1992 (EP Act), many operators of vehicle fleets are choosing flexible fuel vehicles (FFVs) that can operate on 85 percent ethanol (E85), gasoline, or any combination of the two fuels in the same tank. The Chippewa Valley Ethanol Co. (CVEC) and Swift Co-op Oil have opened Minnesota's first E85 pump in the Benson Cenex station. John Curruth, chairman of the CVEC board is driving a flexible-fuel Ford Ranger pick-up truck that allows him to use E85, a 10 percent ethanol blend or a mix of the two. Oxygen sensors and computer chips sense what is in the tank and adjust the combustion system to fit the fuel blend. The technology for this may have come from university students who take part in the E85 Challenge. Each year, Argonne National Laboratory Transportation and Technology Research and Development Center sponsors the "Ethanol Vehicle Challenge." The laboratory and General Motors make a vehicle available to interested universities around the country. Student teams then modify the vehicle to run on E85. The teams are judged on factors such as on-road fuel economy, cold-start performance, driveability, sound, acceleration, and hill climb/trailer pull performance. In May, the student teams and their advisors meet at the General Motors Corporation's Milford Proving Grounds in Michigan to test their vehicles.

Ethanol plants, such as this AGP facility, could see increased demand as MTBE is replaced with ethanol.
Photo courtesy AGP.









Today, there are a variety of flexible fuel vehicles available both to fleet managers and the public, at either the same cost or less than the cost of a conventionally fueled vehicle. The U.S. Postal Service recently purchased 10,000 FFVs. Coordinating the distribution of FFVs and fueling stations to make E85 available is tricky, but will be well worth the effort. E85 has possibilities beyond FFVs and one of them is the fuel cell designed vehicle. A fuel cell vehicle is an alternative to the internal combustion engine. Epyx Corporation, working with the U.S. Department of Energy, has designed a fuel cell reformer capable of converting ethanol on-board the vehicle into hydrogen, which is used to power a fuel cell and generate electricity. "Ethanol provides higher efficiencies, fewer emissions and better performance than other fuel sources, including gasoline," said Jeffrey Bentley, chief operating officer of Epyx. These vehicles could radically redesign the shape of automobiles since they will not need room for an engine and the fuel cells take up nominal room.

OxyDiesel

 Research is aimed at finding a perfect blend of ethanol and diesel fuel that will reduce exhaust. If a blend can be formulated that provides a market equal to the 12 percent market penetration ethanol currently has in the gasoline market, there would be a need for an additional 485 million gallons of ethanol a year. Work is also ongoing to develop ethanol fuels and fuel additives for the aviation industry. Slaughter encouraged members of the ethanol industry to trust market indicators and feels the future for ethanol is good. In Wisconsin, this perspective resulted in legislation being considered that will open the door to an ethanol production facility. Jensen's South Dakota facility has strong support among banks and the Farm Credit System. Research into new fuel sources and improved methods of refining, formulating and transporting these new fuels is on-going at universities, governmental laboratories and trade associations. Automobile manufacturers are introducing vehicles ready to accept the new fuels. There is great opportunity for farmer co-ops to get involved. Jensen adds, "The 20th century was the century of oil. Who knows what the 21 st century will be? It will look different. We want to make sure that farmer owned, fuel-producing businesses are a part of the new century."

Editor's note: Mary Farrell-Stieve is an Upper Midwest agricultural writer and public relations professional.