New ethanol mandate brings challenges

President Bush signed into law a new energy policy Wednesday that, among other things, will increase fuel efficiency standards for cars and trucks to 35 mpg, by 2020, and will phase out incandescent light bulbs.

But the part of the new energy law that got the Midwest's attention is the ethanol mandate.

By the year 2022, the new law says the U.S. must produce 36 billion gallons of ethanol - five times as much ethanol as the country produces today. It's big boost for farmers and rural economies.

But is the new policy, which is popular in both political parties, practical?

Getting to 36 billion gallons of ethanol means 15 billion gallons will come from corn. That's twice as much corn as ethanol plants are using now.

The other 21 billion gallons will come from so-called "cellulosic" sources, such as grass, wood, or a number of other materials.

Experts say cellulosic ethanol potentially could reduce greenhouse gasses by much bigger numbers than corn.

But as of today, not a single drop of cellulosic ethanol is being produced commercially in the United States.

University of Minnesota research fellow Doug Tiffany said the government will most likely have to expand ethanol subsidies to support the huge increase in production.

"I think some of the subsidies will have to be reformulated so that they favor the processes that use cellulose," he said.

How much will that cost taxpayers? Tiffany said numbers like $100 billion, or higher, are realistic.

"These numbers are not impossible with respect to the kind of magnitudes that are mentioned in this bill," he said.

And then there's the question of what to do with all of that ethanol.

Supply already is growing faster than demand, and Tiffany said many states don't have the technology, like Minnesota does, to mix ethanol with gas and put a 10 percent blend of ethanol into every pump.

"So there are some adjustments that have to be made to accept all this new ethanol into the market," he said.

There also are environmental concerns that come with ramped up ethanol production, because it takes so much water to produce ethanol (an average of about 4 gallons of water for every one gallon of ethanol), and because the vast majority of ethanol plants are powered by fossil fuels.

That said, lawmakers praised the new energy policy as one that could cut America's dependence on oil by 20 percent.

By Scott Goldberg, KARE 11 News

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