COLUMBUS - The chairman of the Renewable Fuels Association is enthusiastic about the long-term prospects of the ethanol industry, despite public policy challenges that lie ahead.
Chuck Woodside, speaking to Nebraska Public Power District's board of directors Friday, said producers of the corn-based fuel are seeing the highest gross margins since 2009, as well as bolstered interest in international use.
"I think there were a lot of balance sheets repaired in the industry within the last 12 months," said Woodside, who is also CEO of KAAPA Ethanol in Minden, a 60 million-gallon ethanol plant.
According to Woodside, the U.S. had already exported 640 million gallons of ethanol through August of this year, mainly to Brazil, Canada and Europe. Those exports, produced at more than 200 ethanol plants nationwide, surpassed the total for all of 2010.
In contrast, U.S. ethanol imports stood at just 7 million gallons through June, Woodside said, largely because rising sugar prices have decreased the fuel's production in Brazil.
Although the U.S. leads the world in ethanol production, at 13.9 billion gallons annually, Woodside said the country currently has about 664 million gallons of unused capacity.
Bumping up that production could be a challenge.
"The ethanol industry has an opposition that is well organized and well funded," said Woodside.
Earlier this year, the Environmental Protection Agency approved E15 - a mix of 15 percent ethanol and 85 percent gasoline - for use in all vehicles manufactured since 2001. Integration of E15 would give ethanol an additional 5 percent share of the total gasoline market and likely lead to an increased production demand, according to Woodside.
However, the EPA's decision was met with opposition from automakers and others, and still faces many hurdles before making its way to filling stations across the country.
"I don't anticipate large amounts of E15 being sold until sometime in mid-2012," Woodside said.
Another shock to the industry will come at the end of this year when the 45-cent-per-gallon blender's credit expires.
The Volumetric Ethanol Excise Tax Credit, which pays refiners for blending ethanol with gasoline, was instituted as a way to boost ethanol production.
Woodside said its demise doesn't mean ethanol can't compete with other fuel sources and may not necessarily lead to higher prices at the pump.
"I think we can still compete in that type of environment," he said.
Woodside said ethanol continues to be the cheapest motor fuel available and should remain a profitable choice for refiners looking to meet high octane standards.
Other legislation such as the Renewable Fuels Standard has also helped the industry.
The standard calls for 36 billion gallons of annual renewable fuels use by 2022, with 15 billion gallons of that amount coming from corn-based ethanol.
States like Nebraska, the nation's second-leading ethanol producer, are poised to meet this demand moving forward, Woodside said.