General Wesley Clark Goes to Battle for Ethanol

April 28th, 2009

General Wesley Clark Goes to Battle for Ethanol Industry
“It is a national-security issue,” he says

by Greg Burns
The Chicago Tribune

The flag is flying at half mast for America's ethanol business, but that won't stop producers from trying to wrap themselves up in it.

This once-hot industry is in the midst of a financial meltdown. It's also facing a regulatory challenge in, of all places, environmentally friendly California. So who can blame it for trying to fan a little patriotic fervor?

The cavalry has arrived in the form of Wesley Clark, ex-four-star general, NATO supreme allied commander and Democratic presidential candidate. As the front man for a recently formed industry advocacy group, he is ethanol's newest hero. And in the Obama administration, he has found a friendly ear. In California, however, he has trouble being heard.

A proposal before the California Air Resources Board poses one of the biggest risks ever for ethanol brewed from corn — which accounts for the vast majority of today's domestic supply.

California is expected to adopt a new carbon standard that takes into account the indirect use of land in producing fuel. That would boost the greenhouse gases attributed to corn ethanol, making it a less green alternative. Other states could follow California's lead.

The ethanol lobby is struggling to defuse the threat. Clark is a bridge to common ground with those more concerned about America's reliance on foreign oil than its corn growers.

With his military credentials, Clark is a walking reminder of ethanol's potential for reducing dependence on energy from the Mideast. “It is a national-security issue,” he said in an interview. “That's why I'm in it.”

On Thursday, with hearings under way, Clark's Growth Energy advocacy group said the California plan “has the potential to accelerate or freeze America's drive towards energy independence.”

Yet ethanol's most immediate problem is financial.

Across the Corn Belt, biofuel plants are losing money. A bunch of these overgrown distilleries stand idle or half-built in rural hamlets that just a couple of years ago saw them as the ticket to economic revitalization. Meantime, Valero Energy Corp. and other bargain hunters sift through bankrupt assets, paying dimes on the dollar for the choice bits.

Volatile commodity prices “caught ethanol plants mostly with their pants down,” noted Rick Kment, biofuels analyst at research firm DTN. That has scared away investments, and pushed back commercial development of ethanol from municipal waste, switch grass and other raw materials.

Federal mandates require more ethanol from various sources in the future, and no one's sure how that will happen. Naturally, Clark has a fix in mind. To hear him tell it, ethanol's problems have little to do with supply and demand, over-investment or the mechanics of profit and loss. Rather, he said, bureaucratic rules have artificially constrained the market.

“It's a Washington problem,” Clark said. So he's got a Washington solution: Push the present 10 percent limit on ethanol in gasoline blends to as high as 15 percent.

That proposal elicits a groan from Big Food, Big Oil, Big Auto, Big Environment and practically everybody else who doesn't grow grain.

But Clark figures that if ethanol can get through these hard times with a little forbearance from Washington and Sacramento, it will pay dividends. “Everybody expects it to boom again,” he said. “This is the way it works in this industry.”