Ethanol producers are jockeying for a seat on the increasingly crowded bailout bandwagon. Just last Friday, the U.S. Department of Agriculture Secretary Ed Schafer addressed the plight of those poor, poor businessmen who got locked into the cost of corn this summer. Just like oil and natural gas, the current price is half of what it was at its peak. Fierce competition and the economic downturn are contributing to thinning of their ranks. Schafer claims that “the ethanol industry is too important to the nation to allow it to go into more financial difficulty.” The USDA is prepared to provide bailouts loans of up to $25m– an offer which sparked a backlash from livestock producers. They’ve been whiplashed by the price of corn, first as it shot up thanks to ethanol production, then by taking long positions and taking a hit as corn prices plummeted. As usual, the customer is going to get the shaft: don’t expect much of a price break on your E85 or pork bellies anytime soon.

Regular readers of this series will be familiar with the farrago of taxpayer-funded market distortions used to keep the E85 industry afloat. You’ll be familiar with the government “grants” bestowed upon gas station owners and fleet operators, to help them pay for the cost of offering 85 percent corn juice to customers who don’t seem to like it much, at all. So far, so patriotic (I guess). But here are a couple of new wrinkles, brought to you by Crains Business Detroit. First, Crains tells us that “The Michigan Energy Office has awarded a $125,000 grant for an Ypsilanti-based organization to offer incentives for service stations and public fleet owners to convert to ethanol. The Clean Energy Coalition will offer assistance covering half of the conversion costs to E85, up to $5,000 per site.” So government bureaucracy isn’t enough; MI needs a GM-supported non-profit to pay their own overheads with taxpayer money to dole out the dough. Sweet. And here’s another new one: “Under the program… Station and public fleet owners must commit to purchasing E85 for at least three years after receiving incentives.” So, even if the public [continues] to turn its back on “this increasingly requested fuel” (Michigan Department of Labor & Economic Growth Director Keith Cooley), the stations have to keep buying it? And put it where, exactly?

The New York Times reports that a casualty of lower oil and gas prices: interest in funding renewable energy projects. Among the Times’ laundry list of programs hurting for money: Tesla (duh), corn ethanol (hooray), other biofuels, and wind and solar power. The financial troubles are the consequence of a pretty simple financial concept – that there’s only so much money to go around. And we hear there’s a credit crunch in progress. So with gas and oil coming down in price, renewable energy isn’t where opportunistic investors want to be risking their somewhat-limited resources. The depressing part of the story is this all-too-obvious observation from Times writer Clifford Kraus:

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Judging by the frenetically ascending “Cost of War in Iraq” clock on MyruralAmerica.com, I think it’s safe to say the website is slightly to the left of center. Does it matter? I reckon themthereruralvoters are willing to cast their ballot for whomever will provide the biggest trough. To discern this distinction, Myruralamerica republishes advice from The Iowa Corn Growers Association. “It is not our job to tell you who you should vote for or what party you should follow,” said Gary Edwards, the ICGA Prez. “But it is our duty to stand up to promote the interests of Iowa corn growers, Iowa consumers, and their future.” Yes sirree Bob. I bet you know where they stand on the “environment” (The ICGA supports the continuation of the 45 cent per gallon blenders’ credit for ethanol, the 54 cent per gallon ethanol import tariff, the federal Renewable Fuels Standard, and other tax incentives for ethanol (such as E85) that will reduce prices at the pump for consumers) and crop subsidies ( the ICGA supports a safety net for farmers that is based on revenue and not price, which supports production and market demand. ICGA policy supports farm policy that is trade compliant and supports strong conservation programs that protect our environment. ICGA also supports a crop insurance program at rate levels sufficient to induce crop insurance and designed to avoid the need for disaster assistance). So, which presidential candidate gets the official nod?

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The Departments of Energy and Agriculture have released a new Biofuel Action Plan, designed to guide U.S. policy towards biofuel development. As Green Car Congress reports, the plan mandates improved oversight over biofuel development, especially in the area of sustainability. More importantly, it confirms that the market for E10 ethanol blends will be saturated in the next few years. Of course, mandated ethanol production levels aren’t dropping to reflect this. As a result, federal agencies are testing E15 and E20 blends, in hopes of proliferating them to soak-up surplus, federally-subsidized ethanol. Meanwhile, the United Nations has a new report out too. “Policy interventions, especially in the form of subsidies and mandated blending of biofuels with fossil fuels, are driving the rush to liquid biofuels,” notes the UN’s State of Food and Agriculture report. “However, many of the measures being implemented by both developed and developing countries have high economic, social and environmental costs.”And will the ethanol industry please stop bleating-on about saving Americans 10 cents a gallon at the pumps? The feds are giving them a .50 a gallon “blender’s credit.” So I reckon it’s costing us– even those of us who don’t use it– .40 a gallon.

I don’t know about you, but I wouldn’t include the name of a Honda minivan in the title of an event designed to promote E85. For one thing, the Odyssey can’t run on corn juice. For another, any student of Greek literature will tell you that the most famous of all Odysseys wasn’t the most efficient or sucessful of journeys for the majority of those involved. And God knows there’s a major intersection between potential E85 users and Greek scholars. I digress. This year’s biennial National Alternative Fuel Odyssey Day (NAFOD) is set for October third, when E85 stations around the country will bribe FlexFuel enabled consumers with prices low enough to make them forget (or remain oblivious to) the fact that corn juice is a far less energy-intensive fuel than drivers’ normal brew. And who’s behind this eco-boondoggle? Well, the org is headquartered at West Virginia University, but the website’s cagey about its benefactors. In North Dakota, domesticfuel.com reveals it’s “Cenex, Blue Flint Ethanol, General Motors Corporation, North Dakota Corn Growers Association, North Dakota Department of Commerce, North Dakota Ethanol Producers Association, National Ethanol Vehicle Coalition, US Department of Energy-Clean Cities and the American Lung Association of North Dakota.” Why do I think my taxes are in there, somewhere?

John Mizroch is, of course, pro-E85 to a fault. According to FarmWeek, the Department of Energy’s (DOE) Acting Assistant Secretary for Energy Efficiency and Renewable Energy told participants at a Indianapolis renewable energy conference that the nine billion gallons of ethanol “brought online to date” have saved consumers nationwide a “not-insignificant” 25 cents in per-gallon gasoline costs. And that’s just for starters. “I don’t personally believe it [corn-based ethanol] has added significantly to the price of food commodities. I think our industry could sustain up to the limits of the RFS.” (For those of you who don’t keep track of Uncle Sam’s every market distortion, that’s the federally-mandated 21b gallons of bio-fuels by 2022 Renewable Fuel Standard.) Yes, BUT– Mizroch admitted that DOE research now focuses on emerging fuel feedstocks, with “virtually no work in corn ethanol.” In other words, you got the ball rolling farmer John. We’ll take it from here. “Many of the players in the current industry are critical to the success of the future cellulosic, non-foodstock industry,” Mizroch asserted to FarmWeek. But not all or even most, we note. Well, not until the farm lobby gets involved, anyway.

Dave Niles over at the Ethanol Producer Magazine‘s Talking Stock, I mean Taking Stalks, I mean Taking Stock blog reports an E85 industry milestone: their 200th “commercial scale” production facility. OK, it’s not actually here yet. In fact, the corn-based ethanol industry is in the middle of a huge E85 glut, they’ve lost the PR war on the “food for fuel” debate (where even GM’s FlexFuel ads are talking-up [theoretical] cellulosic supplies), new facilities are on hold and planning permission for future plants faces stiff not to say stifling local opposition. To be fair, Niles does mention one of those dark clouds: “Eight small-scale plants remain offline primarily due to market conditions.”And while we’re blogging stalks, I mean stalking blogs, I mean talking blogs, J.D. Power and Associates Web Intelligence Division’s surveyed some 40m blog posts over the last six months (using the algorithm method). “The topics of ethanol and biofuels generate lower amounts of positive sentiment than other forms of alternative energy.” But that’s OK because “consumers indicate that they are skeptical of marketing efforts by oil companies that promote their efforts to pursue green and renewable energy sources.”

Original Autoblogger Reverend David Thomas over at Cars.com has been combing through HR 6899 (warning: 290 page pdf), a Democratic-sponsored energy bill passed last night by the House of Representatives. Included in the text: provisions for limited offshore and Alaskan drilling and oil shale field exploitation exploration. A provision starting on page 177 requires that gas stations owned by Big Oil companies each have at least one alternative fuel pump by 2018. There’s a carrot ($50k tax-credit) and stick ($100k penalty) for each station. Alt-fuels are defined as E85 (or even more ethanol), compressed natural gas (CNG), diesel (of at least 20 percent bio or other renewable source) and hydrogen. So, where to begin with this lobbyist and re-election friendly clause? We’ve already stated the reluctance of independent chains to fork out the $50k cost of installing E85 pumps. CNG and hydrogen face huge chicken-and-egg problems: you want to buy or lease a new vehicle right now? (How much above MSRP?) Honda will produce just 1500 CNG-inhaling Civic GX’s for MY2009, and forget about getting a Clarity FCX unless you already own won a pair of Golden Globes. Anyhow, ExxonMobil is planning to get out of the gas station business because it’s not profitable enough. If the bill becomes law, don’t be surprised if the other majors follow suit to avoid having to fork out millions. Big if: the bill has yet to be voted on by the Senate. President Bush has promised a veto in the bill’s current form, and it passed the House by a less than a 60 percent (veto-proof) majority.

Foodstock-based, first-gen biofuels are becoming increasingly unpopular. And so the European Union (EU) has cut– er, “modified” biofuel goals. Last year, the EU committed to increasing biofuel transport usage to ten percent by 2020. The International Herald-Tribune reports that the goal has been ratified, but a number of caveats have been added. The new plan calls for five percent of transport fuels to be derived from renewable sources by 2015, with at least a fifth of that amount from “new alternatives that do not compete with food production.” When biofuel usage hits ten percent in 2020, 40 percent of that amount will have to come from second-gen, non-foodstock fuels. That goal will be reviewed in 2014. Of course, these plans are worrying biofuel producers; they’re stepping-up a publicity campaign warning that “alternatives to biofuels like hydrogen and electricity – while they might help to reduce tailpipe pollution – still would require burning of fossil fuels to manufacture.” European biofuel producers are worried about the threat of American imports. U.S. farmers receive significant subsidies and incentives that make European exportation particularly appealing. A formal EU investigation is underway, considering punitive tariffs against American E85– unless the U.S. government removes biofuel incentives. Good luck with that.

Bloomberg has a tidy little article summing up the current state of play in the corn ethanol industry: game called on account of brain. Yes, not only are people beginning to realize that the “food for fuel” industry has its ethical “limitations” (food riots and rising prices at the supermarket will do that to a concept), but the realities of economics are giving gung-ho investors pause. As in, why should we put money into this boondoggle when there’s already tens of millions of gallons more production capacity than demand? (So much that E85 producers can’t get cheap corn, either.) The result: the end of the corn-based ethanol industry’s boom. And a big PR switch from “no one ever died defending a corn field” to talking about [non-existent] cellulosic-based E85. The Bloomberg piece ends with the revelation that even ADM’s man (gotta love that jet) is backing away from corn juice. “Asked whether Obama may reduce his support for corn-based ethanol as president, spokesman Tommy Vietor referred to an April speech in Indiana: ‘We have to recognize that corn-based ethanol is a transitional technology,” the candidate said then.” Oh wait… “An energy bill introduced by House Democrats Thursday would require all gas stations to add one alternative fuel E85 pump, a fuel of 85 percent ethanol,” The  Detroit News reports. “Currently, less than 2,000 of the nation’s 185,000 gas stations have an E85 pump.” And why is that, then?

No, obviously. Nor anyone else, apparently. Now that GM is spending more time trying to sell the HUMMER brand than the HUMMER brand’s products, there’s not much on the product news front. But there is something. “The iconic HUMMER H2 is known for going where no other four wheel drive will venture,” a GM press release proclaims [via Huliq News]. “The model breaks new boundaries for 2009 with standard E85 Flexpower capability on every H2 sold, making it the only model of its kind with can run on E85 ethanol.” Now there’s a claim. And just in case you thought boasting that your planet-killer poster child can run on a corn-based bio-fuel boondoggle that even tree-hugger’s have scorned, GM PR wants you to know… nothing much. About that, anyway. “Ethanol is an alcohol which can be distilled from a number of sources, ranging from renewable crops such as sugar cane, to biomass or waste materials. Particular emphasis is being paid to the need to utilize sources that do not affect the price of third-world food commodities. For example, GM is the leading automotive investor in developing E85 ethanol made from waste wood collected as part of forest wildfire prevention programmes. Undergrowth and dead trees that would otherwise be burned are converted into the ethanol.” Oh, OK, then. But GM is now trying to play-up the “E85 is cleaner for the air” arguement, which has never been properly verified. “In addition to reducing dependence on non-renewable petroleum resources, E85 ethanol helps to reduce greenhouse gas emissions and can reduce smog-forming carbon exhaust emissions.” H2 reucing greenhouse gasses? Talk about beating a dead horse.

Hey! Here’s an idea! While we wait for the whole country to switch to E85 (and Mexicans to renew their tortilla riots), let’s double the percentage of ethanol in “normal” U.S. gasoline from 10 percent (E10) to twenty percent (E20). Sounds great! You know; if you’re an ethanol producer. And that’s as good a description as any for the majority of the people who read Ethanol Producer (EP) magazine. In the none-too-subtly titled “Overcoming E20’s Objections,” the September issue of that august journal identifies ground zero in the campaign to increase gasoline’s ethanol content by 100 percent. “In 2005, Minnesota passed unprecedented legislation requiring that the state’s fuel consist of at least 20 percent ethanol by 2013. The state already enforces an E10 mandate and is home to more than 300 E85 fueling stations. To raise total fuel consumption to a level of 20 percent, the state has two choices—consume enough E85 to total 20 percent of all fuel consumed or convince the U.S. EPA to grant a waiver to the Clean Air Act and allow E20 to be used in all gasoline.” Can you guess which way they’re going? To that end, The Gopher (It) state is already researching E20’s effects on ethanol industry profits auto engines. To scribe Kris Bevill’s credit, problems are identified– plastic corrosion, catalytic converter temperature increases, lost mpgs– before the expected coat of gloss is applied. Bottom line? “As far as the national initiative is concerned, we’ve started the ball rolling in that direction,” “marketing specialist” for the Minnesota Department of Agriculture Mark Groschen told EP. “If it didn’t happen until 2015, well that would still be progress wouldn’t it? If we got 15 percent instead of 20 percent—15 is more than 10. We’re just trying to make progress.”

“Meanwhile, American business is taking seriously your concern about the cost of gasoline. General Motors is one of our sponsors. We are proud and honored that they are a sponsor of this program.

Everybody’s out there flapping their gums — Thomas Friedman, all these other people who don’t know what they’re talking about. General Motors is doing things, designing terrific cars, crossovers, trucks, SUVs, that use alternative fuels, different ways to power their vehicles. They even have the Escalade hybrid out there now to go along with the Tahoe hybrid, and they’re working on all kinds of different technologies that will help you use less gasoline. One of the alternatives they’re using is flex-fuel cars that use biofuels like ethanol if you want them, and they’re making them if you want them. They have four million of these flex-fuel vehicles on the road, across the globe, and they’re committed to building even more. GM has more modeled that are capable of running on E85 ethanol than any other manufacturer. The Buick Lucerne — that’s the one we’re getting next to tool around here — is one of the cars running on E85. General Motors, they respond to your concerns. They don’t tell you you’re stupid. You can see all their cars at RushLimbaugh.com. “