Hazy future for ethanol

Plant fuel: Demand for farm-grown gasoline substitute clouded by costs, practicality concerns.

October 20, 2001

BUILDING AN ETHANOL alternative-fuel plant on Maryland's Eastern Shore may sound like a boon for local farmers and a benefit for U.S. energy independence.

But the long history of ethanol (an alcohol made from plants) has been one of high government subsidies and mandates, and higher consumer costs.

Its record on improving air quality, the reason most U.S. ethanol is produced, is also a hazy one of conflicting theories and studies.

Its promise as an effective substitute (or extender) for gasoline has not materialized. In wartime scarcity, alcohol motor fuel from grains and vegetables has been used. But the emergency measure never showed lasting practicality or acceptance.

The main use for 1.8 billion gallons of ethanol produced yearly by some 60 U.S. distilleries is as an oxygenate additive to gasoline designed to reduce air pollution. Projections of doubled domestic ethanol demand by 2005 are based on expanding government required use of ethanol in gasoline.

Yet California, with the strictest air quality rules in the nation, says that ethanol additive is not needed to reduce auto pollution. New fuel injection technologies and other gas blends can do the job as well as or better than the federally required ethanol oxygenate, its experienced experts agree.

Demand for energy alternatives to oil will spur dramatic new technologies. So will the drive to cut U.S. reliance on foreign sources for more than half its oil supply. But ethanol doesn't have a clear advantage as a substitute motor fuel, particularly in a cost-competitive market.

These are factors for Maryland grain producers to weigh before proceeding with plans for a $30 million ethanol plant, supplied by local barley farmers. Future energy technology, supplies and demand remain highly unpredictable.

Hefty price subsidies and shaky government mandates are hardly the basis for a viable long-term investment. Or for major agricultural commitments, as crop farmers struggle to find new ways to improve their economy.

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