Gen. Wesley Clark New Co-Chairman of Growth Energy

February 7th, 2009

Retired US Gen. Clark deploys to ethanol battlefield
By Roberta Rampton

(Reuters) – Retired U.S. Army General Wesley Clark will help lead the fight to boost the use of ethanol in the United States as co-chairman of Growth Energy, the ethanol trade group said Thursday.

Ethanol, an alternative fuel made mostly from corn in the United States, can help the United States lessen its dependence on oil imports and create jobs, Clark said.

“Microsoft is a great American success story, but so is ethanol,” Clark told reporters. “I'm awfully proud of it.”

Clark said he planned to counter criticism of ethanol from food makers and livestock groups — which have blamed it for higher food prices — and wants to reach out to environmental groups, who are also unenthusiastic about the corn-based fuel.

Clark, who ran unsuccessfully for the Democratic presidential nomination in 2004 and was touted as a possible vice presidential running mate for President Barack Obama, said he did not have immediate plans to meet Obama about ethanol.

Federal law requires use of 10.5 billion gallons of biofuels, expected to be ethanol, this year. The target rises to 12 billion gallons in 2010, and includes 100 million gallons of cellulosic ethanol, made from crop wastes, wood chips or non-food crops

Cellulosic ethanol is preferred by food and environmental groups, but currently costs more to make.

Corn-based ethanol companies have struggled to remain profitable amid volatile corn and oil prices. Some companies have filed for bankruptcy.

Almost 21 percent of U.S. ethanol capacity had been idled, producer Archer Daniels Midland Co (ADM.N: Quote, Profile, Research) has said, leaving capacity around 10.2 billion gallons per year.

To increase ethanol use, Growth Energy wants the government to boost the allowed blend rate of ethanol to gasoline from the current 10 percent maximum.

“The blend wall is a policy decision, and you can even think of it as kind of an arbitrary policy decision,” Clark said.

The U.S. Environmental Protection Agency needs to lift the blend rate to 15 or 20 percent by the end of 2009 in order for cellulosic ethanol development to stay on pace, said Jeff Broin, the chief executive of privately held Poet, the largest U.S. ethanol maker.

“If we don't move that blend wall soon, financing for these projects … is going to be impossible,” said Broin, whose company owns a plant making ethanol from corn cobs.

The maximum blend rate has capped demand for ethanol, led to lower prices, and hurt the industry, said Broin, who is co-chairman of Growth Energy with Clark.

“I really believe we'll emerge from this a stronger industry, and that some consolidation could be healthy,” Broin said, noting his company continued to look at plants owned by bankrupt producer VeraSun Energy Corp (VSUNQ.OB: Quote, Profile, Research) and others as acquisition opportunities.
(Editing by Walter Bagley)