A strategy brief on US ethanol markets and policy

Hester is the author of numerous articles published in Oil and Gas Journal, Estey Centre Journal, and the Journal of Canadian Petroleum Technology; as well as chapters in edited volumes; and is a frequent contributor to a variety of newspapers including The Globe and Mail and the Calgary Herald. [...] Given that estimates for the 2001-2005 period are not available, a "back of the envelope" calculation was made by multiplying the total ethanol production of 13.9 billion gallons by the tax credit of $0.51 to arrive at the rough figure of $7 billion. [...] Informed estimates are that ethanol plant costs of US$100 million have almost doubled in the last two years.10 In the absence of an existing pipeline gathering and transportation infrastructure, part of the expense is attributed to the need to build appropriate rail transportation terminals in each plant. [...] A comprehensive discussion of these two plants can be found in a recently published article by Chad Hart and Miguel Carriquiry.14 The Road Ahead Central to the issues facing policymakers and producers are the projections for 2007/2008 and 2008/2009 increases in ethanol production and the associated impact this would have on the acreage dedicated to the corn harvest. [...] Worthy of note are the efforts of Vinod Koshla, the founder of Sun MicroSytems, now turned venture capitalist and the nation's number one advocate for ethanol, especially cellulosic ethanol.24 There is plenty of evidence that the increased funding can bring cellulosic ethanol to markets in less than the ten years most scientists believe is feasible.