Farming for Fuel
Ethanol,
once thought to be the least viable of renewable energy sources, is now
taken very seriously. Currently, there are 106 ethanol plants operating
around the United States, with a combined capacity of 5.1 billion
gallons, according to Renewable Fuels Association. The interest in
ethanol has been driven, in part, by cost. Today, according to Credit
Suisse First Boston's energy group, it costs $2.60 to make a gallon of
gasoline with crude oil priced at $70 per barrel. At that same price,
it costs half that amount to produce a barrel of ethanol.
The
U.S. farm community, particularly in the Midwest, will be a great
beneficiary in the increased use and production of ethanol and other
biofuels. "Many agriculture-related industries are benefiting from the
increased revenue," says Ken Lemke, an economist with NPPD. "One of the
things that we like about renewable energy, especially in Nebraska, is
that it has had the ability to bring these additional revenues to
smaller communities."
And the revenue is impressive. Corn, which
is the basic ingredient in ethanol, has been historically set around
$2.00-$2.50 per bushel since the 1970s. With the increased demand for
ethanol, a bushel of corn could rise to more than $3.00 per bushel,
putting an additional $9 billion in farmers' pockets. And biofuels and
wind investment could create more than 250,000 jobs within the next 10
years, mostly in non-urban areas.
These revenues are not lost on
the farming community, according to Hanson. "The farmer is starting to
look at their land as not just something that creates crops for food,"
he says. "As more farmers become aware of the potential for [growing
renewable energy], you'll start to see more diversification of farm
income." Landis agrees. "You are going to see a rebirth of the smaller
rural communities," he says. "There is an almost `dot-com' boom in half
of Iowa's small towns because they are building ethanol plants all over
the place."
The Future of Renewable Energy
For
those companies thinking about switching part of their energy
consumption to green power, Hanson recommends talking with companies
that have already done so. "It doesn't hurt to have someone come in and
help you think through some of your options in terms of available
resources," he says. He also reminds companies that finding a renewable
energy opportunity is all about location, location, location; and he
advises asking questions: What is the energy demand for your facility?
Is it power or heat? Do you need power in the daytime or the nighttime?
"You
are more likely to consider a sun project in Arizona than in
Minnesota," says Hanson. "You are more likely to consider a wind
project in the Great Plains or Texas, rather than in Georgia.
California is a great place because you have good solar incentives and
high electricity rates."
According to Durbin, many think a
multipronged approach will be the most viable way to provide the energy
we will need in the future: "We are always going to have a need for
coal-fired and nuclear power plants that provide baseload energy, so
it's all about balance."
Hanson also sees companies not only
consuming, but generating energy in the future. "They will install
solar panels and generate electricity that they send back to the grid,"
he says. "And they'll make money doing it. That's where we are
heading." In the end, he feels it is going to take the commitment of
the government to move us along a truly viable renewable energy path.
"We can solve our energy problems, but will we? Answering that will
take a lot of political will."
