US ethanol industry booming, despite criticism

US ethanol industry booming, despite criticism

NEW YORK: Blamed for a spike in food prices, its environmental benefits increasing disputed, ethanol production nonetheless is booming in the United States, where factories are multiplying to keep up with demand.

The number of ethanol factories operating in the country has nearly tripled, from 50 in 1999 to 134 today. And 77 plants are under construction, according to the Renewable Fuels Association, an ethanol industry trade organisation.

Ethanol production, which amounted to only one billion gallons (3.7 billion litres) in 2005, has already surpassed the 2012 target of 7.5 billion gallons and is expected to reach 10 billion gallons in 2009, the US Department of Agriculture (USDA) says.

"As long as oil prices stay higher, demand for ethanol will increase," Sam Cotdill, a manager at Cass County Amaizing Energy, an ethanol producer in Iowa, told in a phone interview.

In a drive to reduce dependence on foreign oil, the US government is providing subsidies and tax breaks to encourage the production of corn-based ethanol, which is being blended by law into gasoline.

Benefiting are the producers of corn, the main US grain crop and source of 97 percent of the US-made ethanol, biofuel refiners.
The US government wants production to reach 36 billion gallons by 2022.

The result: 14 per cent of the US corn crop is now dedicated to ethanol production and that is expected to rise to 30 per cent in 2009-2010, the USDA says.