The decline of the ethanol fad?

[wordsmythe]

CJOnline / The Topeka Capital-Journal - Plant development halted

Plant development halted

Cargill suspends $200 million ethanol facility until market changes

By Michael Hooper
The Capital-Journal
Published Tuesday, February 26, 2008
Cargill has suspended development of a $200 million ethanol plant near Topeka because of difficult market conditions, a Cargill official said Monday.
"The economics are not at a point where we see fit to move forward," Cargill spokesman Bill Brady said. "The economics are not where they were a year and a half ago."

When asked how long the suspension could last, he said, "Unless market conditions turn around, we have to remain suspended."

He declined to describe the factors contributing to poor market conditions, but an economist told The Capital-Journal last week that escalating grain prices were making it difficult for ethanol plants to make a profit.

Corn, used to make ethanol, is at a record-high price at about $5 a bushel, and the cost to build an ethanol plant has doubled in the past five years.

Jay O'Neil, senior agricultural economist with the International Grains Program at Kansas State University, said the $5 per bushel corn is putting a squeeze on ethanol plant profit margins.

If the high corn prices continue, he said, margins will be negative.
"The ethanol industry has fallen on more competitive and difficult times," O'Neil said. "They are going to struggle. You will see a consolidation in this process. Some will go out of business."

A year ago, Emerald Renewable Energy, a subsidiary of Cargill, proposed building a $200 million ethanol plant on a 300-acre site near N.W. Landon Road and US-24 highway, northwest of Topeka. The plant would produce 100 million gallons of ethanol per year. The Topeka site was one of four ethanol plants proposed for construction by Emerald.

Regarding the other three plants proposed in states outside Kansas, Brady said, "no decision has been made. Difficult market conditions are industry wide. We're in the process of making some tough decisions."
The decision to suspend the Topeka project was made "very recently," he said.
Cargill had sought state permits for the Topeka ethanol plant, but was suspending its permit process, Brady said.

Brady said the decision to suspend the Topeka project had nothing to do with Topeka or the state. He said the economic development officials in Topeka were "terrific."

Doug Kinsinger, president and chief executive officer of the Greater Topeka Chamber of Commerce and Go Topeka, said Go Topeka contributed $50,000 to secure options for land for the project.

If the project doesn't go forward, he said, Go Topeka would be out $50,000.

"That first $50,000 was at risk to get a $200 million investment," Kinsinger said. "We still may get it."

Kinsinger said he wasn't necessarily surprised to hear about the suspension because market conditions have changed. The first he heard of the suspension was a telephone call from The Capital-Journal on Monday afternoon.

Opponents of the project cheered news of the suspension.
"That is great news," said Richard Johnson, 3636 N.W. Huxman, a leading opponent of the ethanol plant. "That is absolutely wonderful."

However, he said, he remains "guarded" about the project because of Cargill's use of the word, "suspended."

Johnson said opponents have collected 1,500 signatures from people opposed to the ethanol plant.

They oppose the project because of pollution, traffic, the smell, dust, noise, depreciation of property and depletion of groundwater.

Johnson said ethanol production was raising food prices because it has cut into the supply of corn, which is used in numerous food products.

"Pollution would be far reaching beyond the site," Johnson said. "The site is a secondary flood zone. An accident would spill into Solider Creek and the Kansas River."

[Bubba]

Speaking of ethanol, I got this in a Kiplinger's newsletter in my email.

An ethanol flood is nearing. By next year, a slew of new plants
will lift annual output to about 13 billion gallons. That’s more
than can be used as E85 in flexfuel vehicles on the road and as E10,
the 10% ethanol-gasoline blend approved by EPA for conventional engines.
Prices will plunge further, and profits will disappear for makers.
Expect the feds to face pressure to speed up market development...
building infrastructure and helping get ethanol into more of the country
and/or letting blends with over 10% ethanol in them be used in all cars.

Adding to ethanol producers’ woes: Stubbornly high corn prices.
Farmers are likely to plant fewer corn acres this year than last,
lured by superhigh soybean prices to switch some acres to that crop.

[Bubba]

Also, I wonder if Dodge City/Ford county Fire Departments know about this! It sounds like extra costs to taxpayers for the fire departments to be prepared for the coming ethanol plants in this county.

Ethanol fuels fire concerns
A little-recognized risk: Fires require special firefighting foam

full story - Ethanol fuels fire concerns - Environment - MSNBC.com