Ethanol group takes new approach: Big River Resources remains optimistic about fuel's future

A coalition of U.S. ethanol supporters, Growth Energy, took a fresh approach Thursday to expand the market for the blended fuel, while hoping to reduce the nation's dependence on foreign oil. The group introduced the Fueling Freedom plan with the main goal of redirecting government subsidies for ethanol in order to give producers a more level playing field in the open market.

The Fueling Freedom plan calls for federal funds currently going to VEETC to be redirected to retailers (gas stations) as tax credits to install 200,000 blender pumps, and thus making ethanol-blended fuel more available to vehicle owners. VEETC (Volumetric Ethanol Excise Tax Credit) is the incentive for oil companies to blend ethanol, as they receive 5.1 cents per gallon of E10 fuel. That credit went into affect on Jan. 1, 2005.

The plan also asks Congress to divert other VEETC funds toward the installation of ethanol pipelines and making the product more available nationwide.

"We are confident that in a fair and open market, ethanol can and will compete successfully against oil," said Tom Buis, CEO of Growth Energy during a teleconference. "Creating that competitive market will save money for both taxpayers and motorists, since it takes the control out of the hands of Big Oil and puts it into the hands of the consumer."

The other primary element of the plan calls for all automobiles sold in the U.S. to be flex-fuel vehicles -- as many as 120 million.

"Ethanol is the only alternate fuel that can be produced in a sizable amount," Buis said.

Ethanol makes up 10 percent of the fuel sold in the nation.

"What the ethanol industry was faced with was whether the industry could supply enough to meet demand," said Ray Defenbaugh, CEO and president of Big River Resources in rural West Burlington. "We are overproducing now."

Big River Resources ships ethanol to the East Coast, West Coast and the southeastern section of the country. But with ethanol producers exceeding demand in the U.S., due largely to lack availability at certain gas station franchises, they are forced to sell excess ethanol overseas. Big River Resources sells ethanol in Europe and recently began shipping fuel to Brazil where flex-fuel vehicles and infrastructure already exist in abundance.

If the goal of getting 200,000 blender pumps put into gas stations is achieved, then "auto manufacturers will feel more comfortable about putting the engines in," said Defenbaugh.

"More than ever this country is in need of an energy strategy," said Jim Nussle, a former Iowa Congressman who serves as a member on Growth Energy Advisory Board.

Growth Energy is urging Congress to make the Fueling Freedom plan part of the next energy bill and to see it accomplished over the next several years.

"We want a blender pump in every station and a flex fuel vehicle in every garage," said Jeff Broin, Growth Energy co-chairman. "We want to transition to an open market. It's better for our environment and our rural communities."

Defenbaugh addressed the benefits to rural communities. Not only are farmers receiving a better price for their corn these days, but companies working with ethanol plants also are benefitting.

With the U.S. importing 300 billion gallons of oil a year, Gen. Wesley K. Clark (Ret.), Growth Energy co-chairman, pointed to the security side of the issue. By producing more ethanol, the country can reduce its reliance on foreign oil.

"By creating an open fuel market, we can break OPEC's monopoly, improve our national security and create jobs here at home," said Clark.

"Our goal would be to attach the (Fueling Freedom) plan to the energy bill this year," Buis said. "It's going to take a few years to build up the infrastructure."

Buis stated the group has been sharing the idea with people in the industry, farm groups and policy makers.

"It's really important for a community such as Burlington," added Defenbaugh.

source: istockanalyst