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State goals spook ethanol industry

Paul Snyder
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A law is no better than a wish when forcing an increase in ethanol production to stimulate demand and construction of new plants, according to biofuels company leaders.

In fact, making companies exceed demand for their products could kill the ethanol producers lawmakers are trying to encourage, said Gary Kramer, president and general manager of Monroe-based Badger State Ethanol.

“You saw it a lot in the past year or two,” he said. “The demand went down, and a lot of companies had to scale down or declare bankruptcy.”

Thankfully, Kramer said, the ethanol market has stabilized. But the state is asking for trouble if it rushes companies toward building new plants or expanding existing ones, he said.

Kramer and Bob Sather, chairman of Stanley-based Ace Ethanol LLC, said Wisconsin’s nine ethanol plants have the capacity to meet the state’s demands.

But state Sen. Pat Kreitlow, D-Chippewa Falls, wants more than a balance between supply and demand. He said Wisconsin cannot afford to lose out in the burgeoning biofuels market, and the state needs ethanol production targets to show Wisconsin’s commitment.

Kreitlow is a co-sponsor of a comprehensive bill that would increase the state’s investment in biofuels. The Senate Committee on Rural Issues, Biofuels and Information Technology held a joint hearing with the Assembly Committee on Renewable Energy and Rural Affairs on Wednesday to take public testimony on the bill.

One part of the bill directs the Wisconsin Department of Agriculture, Trade and Consumer Protection to set and assess annual goals for ethanol production in the state.

But Scott Manley, environmental policy director for Wisconsin Manufacturers & Commerce, called the provision as good as an ethanol production mandate that could damage a market in no need of such requirements.

According to the Wisconsin Office of Energy Independence, ethanol production and consumption has grown annually since 2002, while gasoline consumption has either remained level or dropped.

This happened without state-mandated ethanol production goals, Manley said.

Kreitlow said the DATCP directive is not a mandate. Rather, he said, the bill requires legislative oversight of the goals and has opportunities to back away from those targets if they not feasible.

“It’s wrong for anyone to make it seem like this is market infringement,” he said.

But bickering in Madison over mandates and legislative oversight will not make people want to buy more ethanol, Sather said.

“If anything, establishing those goals might have a slight positive effect on production in the state because we still have the capacity to increase production,” he said. “But it’s not going to create a robust demand in the state.”

And there’s almost no way, Sather said, to predict future ethanol demand because the market is so tied to the oil and corn industries.

Although Kreitlow and other bill supporters insist it opens the door for new construction and job creation in the biofuels market, Sather said he doesn’t think another plant needs to be built in Wisconsin for a long time.

“They can set a level of commitment, and that’s nice and something to build from,” he said, “but it’s still a commitment on paper.”

One comment

  1. It’s real simple. On every gas pump in the state, you must have one 87 octane of gas with no ethanol and one 87 octane with ethanol. The third would be a premium grade as is now. No subsidies on either one, market pricing prevails. Let the people decide what they want…..what a concept?! This will never happen, because Ethanol would die. Few consumers would use this poison, if they had the choice. Politics don’t give us that choice, but wouldn’t it be fun to see what would happen?

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