Posted: 1:15 p.m. Monday, May 27, 2013
By David Shaffer
Minneapolis Star Tribune
Even if this fall’s harvest brings relief from high corn prices, the ethanol industry faces a long-term problem with demand for its fuel.
U.S. ethanol producers already have the capacity to supply roughly 10 percent of the nation’s motor-fuel needs. Unless drivers use more fuel — and the trend is the opposite — the industry has little room to grow domestically. Industry officials call it the “blend wall.”
One solution is to sell ethanol blends greater than 10 percent at the pump. The ethanol industry has been pushing 15 percent, or E15, blends for most U.S. vehicles. While the idea has won federal approval, it has gained only modest traction in the marketplace.
The oil industry opposes the shift and wants Congress to keep gas at E10. And the head of the American Automobile Association told Congress in February that the biofuel industry and federal government haven’t done enough to warn motorists about the dangers of pumping gasoline with higher ethanol blends into older cars and trucks.
Minnesota is the testing grounds for another strategy. Gevo Inc., which owns an ethanol plant in Luverne, Minn., is fine-tuning a process to ferment a higher-value alcohol called isobutanol and initially sell it to chemical companies for bioplastics and other products. Gevo has been beset by startup problems, patent disputes, losses and a low share price, but at least six securities analysts rate it as a stock to buy.