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April 21, 2012

 

US corn ethanol industry to flatten out
 

 

US corn ethanol industry will plateau at an annual output of 15 billion gallons (56.8 billion litres) beginning 2012, marking the end of a seven-year growth spurt that saw its corn purchases grow by an average 500 million bushels a year.

 

Corn-based ethanol's dream days are over, says the chief economist of the USDA, writes Tom Button for Grainews.

 

Speaking to agricultural economists in Ottawa last Thursday, USDA's Joseph Glauber predicted the corn ethanol industry will hold onto its gains, but further growth is against the odds.

 

The main reason, Glauber said, is that corn isn't anywhere near as efficient as feed stocks such as sugar at reducing greenhouse gas emissions.

 

Indeed, while a combination of US subsidies and regulations have the US transportation fuel sector on track to use a total 36 billion gallons (136.3 billion litres) of bio fuels by 2022, corn ethanol will only qualify for the bottom 15 billion gallons of the market, Glauber said.

 

In fact, corn ethanol sales might be even smaller than that. Lawmakers based their targets on a 150-billion gallon transportation fuel market. Because of the 2008 recession and the purchase of more fuel-efficient cars, the fuel market has actually shrunk at 132 billion gallons.

 

With the bulk of corn gasohol usage capped at a 10% ethanol blend, that puts a 13.2 billion gallon limit on the domestic market, Glauber said.

 

Current US Environmental Protection Agency (EPA) standards say corn ethanol could technically be used in blends of up to 15% in cars made in 2001 and later, but older cars still account for 25% of US gasoline sales, so gas stations are reluctant to switch their pumps.

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