Ethanol producers, ahead of the federally mandated schedule to produce 15 billion gallons of ethanol for use in U.S. vehicles by 2015, are lobbying the government to overturn the long-standing Environmental Protection Agency rule that limits ethanol/gasoline blends to 10% ethanol nationwide. Despite a recent ethanol downturn thanks to lower oil prices, officials with the Renewable Fuels Assn. say the industry could sell plenty of additional ethanol.

About 15% of the nation’s 171 ethanol plants have been idled recently due to the credit crunch, high corn prices and oil now trading around $50/ barrel compared to more than $140/barrel last year. Ethanol production is now more than 10 billion gallons/year, and RFA officials say there’s already 14 billion gallons annual capacity. Ethanol producers are also looking to expand into non-corn-based ethanol. Following last year’s big spike in food prices, ethanol producers were blamed for diverting food crops to fuel. A variety of feedstocks and technologies are now being researched to bring cellulosic (non-food) ethanol production costs down, and several demonstration plants around the U.S. are in various stages of design and construction.

Iowans Choose Ethanol

The Iowa Renewable Fuels Assn. (IRFA) recently touted Iowa Dept. of Revenue records that show in 2008 overall gasoline sales in the state were 75% E10 gas-ethanol blend, and 25% E0 unblended gasoline. The 75% in E10 gas sales matches an all-time high for Iowa that was set in 2005. Total gallons of gas sold were 1.2 billion gallons of E10 and 397 million gallons of E0.

Considering that in powerETblog’s local retail gas market one would have to drive all over the county to find an E0 pump in order to “choose” non-ethanol gasoline, the IRFA claiming Iowans “chose” E10 75% of the time may be a stretch. The organization also claims that with a typical savings at the pump of 10-13 cents per gallon, Iowa consumers saved between $120 and $155 million with E10 during 2008.

According to the IRFA, Iowa is the leader in renewable fuels production, operating 38 ethanol refineries with a combined annual capacity of more than 3 billion gallons.  There are five ethanol refineries under construction that will add nearly 700 million gallons of capacity.  In addition, Iowa has 14 biodiesel refineries with the capacity to produce more than 317 million gallons annually.  Two biodiesel refineries under construction or expansion will add 35 million gallons of annual capacity, and additional renewable fuels projects are under development.