Ethanol Inc. Isn't Going to Take it Anymore!

America’s corn-ethanol companies are tired of being kicked around. Maligned for using corn as fuel while the world goes hungry, beaten down in the financial markets, threatened by falling gas prices — now, they are fighting back.

How? By forming a “moral purpose organization.”

That’s how Jeff Broin, CEO of ethanol producer POET, described a new trade organization called Growth Energy to the Des Moines Register. Growth Energy is lashing out against critics of corn ethanol by buying ad space in the New York Times and issuing “policy briefs” (bulky pdf files peppered with Excel graphs).

In other words, it’s a full-on PR offensive. Which might have had some impact if public relations hadn’t been all but dashed as the ethanol industry’s problems have come to light. An aggressive PR front might have helped corn ethanol a year ago. Now the realities facing it are much more substantial, and much more daunting.

The latest evidence of that came from Pacific Ethanol, perhaps best known for being embraced and then rejected by Bill Gates’ retirement fund. Only a week after ethanol giant VeraSun declared bankruptcy, Pacific Ethanol saw its stock drop below $1 a share on a larger-than-expected loss.

If you had any money invested in either of those companies, you are probably not moved by the mutual mudslinging that has erupted between Growth Energy and the Grocery Manufacturers Association over whether corn is best used as a child-obesity formula or a costly and inefficient substitute for $2.50 a gallon gas. That may be the core concern for Growth Energy, but few others share it.

Growth Energy is advocating for more ethanol to be blended into gasoline — as much as 20 percent from the current ratio of 10 percent. That idea might win over supporters in Washington, providing some support for ethanol makers in what is shaping up to be a tougher year in 2009.

But it won’t go very far in addressing the deeper problems facing corn ethanol: Slack long-term demand and an unforgiving financial climate for capital-intensive industries. Not to mention the fact that cellulose is a more compelling source of ethanol — financially and socially — than corn. Transitioning to cellulose offers ethanol a more persuasive moral purpose than a simple PR offensive.

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