Idaho ethanol plans plagued by competition costs
Monday, January 28, 2008 5:19 PM PST
TWIN FALLS (AP) — Idaho-grown corn that is supposed to end up as ethanol in the fuel tanks of cars is instead winding up in the stomachs of cows.
And that is part of the reason why ethanol production in southern Idaho is struggling to get off the ground.
What was once hyped as a regional ethanol boom could be headed for bust, some say.
The future seemed much brighter just a year ago, when plans for two Cassia County ethanol plants were announced by Renova Energy, a London-based company with offices in Boise, and Pacific Ethanol, a California business.
The facilities would be the state’s first commercial fuel-grade ethanol facilities, and company officials lauded the economic benefits of 70 new jobs.
They touted the environmental benefits of 70 million gallons of environmentally friendly fuel that could be produced at the plants each year. Agriculture specialists were excited about diversifying the southern Idaho agriculture market to include more corn.
Last year, U.S. farmers planted the most corn in a season since 1944, up 12 percent from just the year before, according to the U.S. Department of Agriculture. In Idaho, farmers planted an estimated 300,000 acres, almost 100,000 acres more than four years ago. But much of that Idaho corn won’t reach an ethanol plant. It becomes feed for cows.
Ethanol production from corn simply may not be economical because livestock producers — particularly in Idaho’s growing dairy industry — are willing to pay more for corn than ethanol plants can afford, The Times-News of Twin Falls reported Sunday.
‘‘The guys in the livestock industry are going to pay what they’re going to pay,’’ said Steve Hines, a University of Idaho crop specialist who recently finished a report on biofuels in the Magic Valley. ‘‘There are just not a lot of incentives for farmers to change what they’re doing now.’’
Traditional Magic Valley crops such as wheat and barley are selling for near record prices, which also keeps farmers from switching to corn that could support the ethanol plants, he said. Corn is also a water-intense crop which isn’t attractive to farmers struggling through a drought and water crisis, or have money invested in equipment for other crops, hines said. The two commercial ethanol plants being built in southern Idaho are among 134 plants scattered across 26 states, with 77 more facilities under expansion or construction, according to the Renewable Fuels Association, a biofuels advocacy group. Much of the growth can be attributed to heavy government subsidies for ethanol producers, which are expected to be extended in the farm bill currently before Congress, and to oil companies’ willingness to form long-term deals with ethanol producers.
Competition has caused financial problems within the ethanol industry, including Pacific and Renova.
Pacific halted construction of an ethanol plant in December near Calipatria, Calif. Renova recently stopped trading its stock on the London stock exchange for three weeks, prompting local contractors to walk off the job site near Heyburn.
The company resumed trading this month, but workers haven’t returned.
Politicians are still trying to sort out the repercussions of the ethanol boom.
U.S. Rep. Mike Simpson, R-Idaho, said he’s concerned with the effects on trade and the environmental consequences of ethanol.
A recent federal report warns that increased nitrogen application could threaten groundwater quality.
The Idaho Department of Environmental Quality lists the Magic Valley as a high priority area for current groundwater pollution due to nitrogen that could be from fertilizer runoff.
Ethanol supporters say more corn takes greenhouse gases out of the atmosphere, but skeptics say the fuel it takes to grow and ship more corn negates the deductions.
That depends, Simpson said.
Despite those concerns, Simpson still sees a bright future for the biofuel in Idaho.
‘‘I’ve been a supporter of ethanol, and I think it should be used more widely,’’ he said. ‘‘And Idaho could be a center of production for it.’’
Neil Koehler, Pacific’s president and CEO, agrees.
His company’s plant is scheduled to be finished before the end of summer, and workers for the plant already have been hired.
‘‘We’re still really excited about ethanol in Idaho,’’ he said. ‘‘We’re on the final lap of finishing the plant, and we’re still going strong.’’
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Information from: The Times-News, http://www.magicvalley.com
