Blog Post

Credit Crunch Killing Ethanol Plant Plans

We worried last week that the credit crunch would hurt cleantech, and especially ethanol. Now this week there are two more additions to our ethanol death watch map, Visions Fuels in Iowa and Oklahoma Sustainable Energy, embedded below. In both cases the financial crisis on Wall Street was blamed for drying up investments.

View Larger Map
The capital-intensive business of ethanol production is getting hit hard as project financing slows to a trickle, and we expect to add more pins to our map. This could be the end for Vision Fuels, which announced today it had to cancel its Des Moines plant and lose a nearly $1 million deposit. Vision Fuels had originally planned on building three plants but abandoned plans for the two other plants in July.

Unfortunately, it’s not as if the developers who moved earlier and got funding before the collapse are fairing much better. Record corn prices and tumbling oil prices are squeezing already thin margins for grain-ethanol producers. Citigroup thinks three-quarters of all U.S. ethanol plants are at risk of closing.

In a separate twist, nepotism, conflict-of-interest laws and Missouri state politics have stalled incentives for an ethanol plant in Missouri.

2 Responses to “Credit Crunch Killing Ethanol Plant Plans”

  1. J Lovshe

    GM ‘s sudden stewardship of the environment is simply a way to continue to make gas guzzlers thanks to E85 an extremely inefficient fuel. The CAFE standards call for all car companies to achieve an average MPG for all vehicles. I believe the most recent number is 27 MPG. Well if you make the biggest money off of 10 miles per gallon SUV’s you would hate to say good bye to them wouldn’t you?
    The CAFE standards has a loophole, that being that an E85 vehicle operating on E85 miles per gallon are ONLY figured against the actual amount of gasoline in the blend (15%) if you divide 100% fuel by 15% gasoline you get the multiplier to the mpg (666) therefore a gas guzzling 10 MPG SUV is given credit for 66.6 MPG. If you sell one SUV like this you can have 5 vehicles only achieving 20 MPG and this gas guzzling SUV and you average more than 27 MPG overall while not one of their vehicles really met the standard.
    GM is not the only one taking advantage of this free ride Ford and Chrysler are too. The big three are heading down the toilet and this is just their hands clinging to the rim.