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Is it the key to Indiana's future?

Laura McPhee

The majority of the ethanol in the U.S. is made from corn, but it can also be produced from other feedstocks such as soybeans, wheat, barley or potatoes.

Twice in the past year Indianapolis residents had the opportunity to attend events at which former President Bill Clinton was the guest speaker. On each occasion, the crowd reacted enthusiastically when he spoke of America’s environmental and economic need to utilize and invest in alternative sources of energy. It’s not surprising that Clinton and his supporters rally around the cry for increased wind, solar and water power as a replacement for oil and coal. Nor is it surprising that this demographic champions the use of alternative energy as fuel for America’s automobile obsession. What is surprising, however, is the near silence of environmentalists that has greeted Republican Gov. Mitch Daniels’ consistent and innovative efforts towards decreasing America’s dependency on non-renewable energy through bio-fuel technology and usage here in Indiana. Why aren’t the same people who cheered the environmental policies of President Clinton, both in and out of office, doing the same for Gov. Daniels? Historically, those on the right have not been overly concerned with the environment or finding alternative sources of energy to alleviate America’s astronomical consumption of oil. Those who are skeptical of the barrage of Republicans praising bio-fuel technology, production and consumption are wise to have their doubts. But things have changed in recent years as a combination of government subsidies, tax incentives, high oil prices and threats of terrorism have created a booming demand for both ethanol and bio-diesel fuels. This is particularly true in Indiana, where lawmakers at every level are now championing the state as the country’s most illustrious bio-fuel producer. Daniels has taken the most aggressive steps towards increasing Indiana’s participation in the alternative fuel market. Since becoming governor in January of 2005, Daniels has orchestrated a series of projects that will result in Indiana becoming the leading producer of bio-fuels in the country. “It’s been a hectic year of dramatic progress in renewable fuels development in our state,” the governor said last month at the announcement of the new Louis-Dreyfus bio-diesel plant to be built in Northern Indiana. “In just one year, we’re growing from one alternative fuels plant to nine, with more to come.” Daniels made his remarks in Washington, D.C., as part of a new national campaign called “25 x 25.” The slogan represents the group’s goal of having 25 percent of America’s energy consumption coming from alternative fuel sources by the year 2025. Currently, these sources make up less than 4 percent of America’s energy mix.

Nearly 8 billion chickens, 2 billion turkeys, 35 million cows and 100 million pigs are slaughtered and processed each year in the United States.

Lofty goals The “25 x 25” coalition is a partnership between some of America’s most prominent agricultural and business interests, as well as an impressive roster of politicians like Newt Gingrich, Tom Daschle and Mitch Daniels aiming to replace the dependence on foreign oil with energy “from America’s working lands” in the form of ethanol and bio-diesel. The current strategy is to roll out “25 x 25” in three stages. The first phase, already underway, is to get 50 percent of the members of Congress to agree, in principle, to the goal of the coalition with the help of senators like Indiana’s Richard Lugar. The second phase, also underway, is to get state legislatures to endorse the principles of the plan. Both of these phases will give strength to the third part of the plan: drafting detailed, binding national legislation that would put the “25 x 25” plan into action. While critics of the plan appreciate the goal of “25 x 25,” it is the emphasis on spending that concerns those who would rather see an emphasis on conservation. None of the proposed measures included in “25 x 25” call for mandatory usage of bio-fuel. Nor do they call for automobile or fuel manufacturers to make bio-fuel cost effective to produce and affordable to buy. Instead, the overwhelming majority of the emphasis with “25 x 25” is to spur business investment and economic development — particularly in America’s agricultural belt. The group admits to having little allegiance to environmental groups or being overly preoccupied with environmental concerns. According to “25 x 25” Communications Director Kalee Kreider, “Its beating heart is with agricultural groups, not environmentalists.” But should it matter whose interest Daniels ultimately has at heart if the outcome is favorable to both the environment and the economy? If “going green” with bio-fuels really is good for the environment and the economy then the simple answer, it seems, is no. But like so many other political issues, the answer depends on what you ask, whom you ask and what your definition of “good” is. The pay-off According to Daniels and Lt. Gov. Becky Skillman, a vibrant bio-fuels industry in Indiana is the future success of the state’s economy. “We are being aggressive in bringing cutting-edge agri-business to Indiana,” Skillman said recently at one of her many press conferences that have focused on bio-fuel. “The benefits will be seen in our state’s large and small, rural and urban communities.” The facts seem to support her claims. In the last year, six new ethanol plants and three new bio-diesel plants have announced construction in the state, creating 375 new jobs and putting at least $7.6 million into the pockets of Indiana farmers. These plants represent an investment of more than $600 million and will pay $9 million per plant in annual taxes at full production, according to the Governor’s Office. Indiana’s pace of rapid growth in bio-fuel took a major step forward in March with the announcement that Louis Dreyfus Agriculture plans to build the world’s largest bio-diesel plant near Claypool, Ind. When completed, the plant will produce more than 80 million gallons of bio-diesel fuel annually from Indiana soybeans. This is welcome news to Indiana’s 28,000 farmers who produce more than 200 million bushels of soybeans each year, and an increased demand is expected to raise prices of corn by as much as 25 cents a bushel in some areas. The Louis Dreyfus facility will purchase and process nearly 50 million bushels of soybeans annually; in addition, the plant will create nearly 100 new jobs. Mean Green Bio-Fuels is another company that has announced plans to build a processing plant in Indiana. When completed, the facility will produce 30 million gallons of bio-diesel from animal waste and waste from ethanol facilities. Like the Louis Dreyfus plant, the Mean Green facility is expected to create 100 new jobs. And like the motives of “25 x 25,” Mean Green’s investment is “not only about helping the environment.” According to CEO Kevin Kreisler, “It is about reducing America’s dependence on foreign oil, re-energizing American agriculture and creating substantial wealth — both for shareholders and for the local economies in the cities and states we select for construction of our bio-diesel facilities.”

Bio-fuels: the basics 1. Bio-fuel is any renewable source of energy derived from bio-mass — living organisms or their byproducts. The two most common types of bio-mass used as fuel in the U.S. are ethanol and bio-diesel. 2. Using domestic crops as bio-fuel adds to the local economy, particularly in the agricultural sector, and helps reduce the importation of oil. 3. Bio-fuels could displace nearly 8 million barrels of oil a day by 2050, roughly equivalent to the current daily demand for gasoline in the U.S., without putting any additional acres under cultivation or displacing food production. 4. Bio-fuels can reduce the emissions of fine particulates and toxic air pollutants created from gasoline burning engines by as much as 90 percent. 5. Ethanol is an alcohol-based fuel produced by fermenting and distilling starch crops that have been converted into simple sugars. The majority of the ethanol in the U.S. is made from corn, but it can also be produced from other feedstocks such as soybeans, wheat, barley or potatoes. 6. All gasoline vehicles made after 1980 are capable of operating on gasoline/ethanol blends with up to 10 percent ethanol with no modifications. 7. Indiana currently has fewer than 40 stations that sell ethanol. The only station in Indianapolis selling E85 fuel is Phillips 66 at 2210 Kentucky Ave. For a complete list of ethanol stations in Indiana, visit www.e85fuel.com. 8. Bio-diesel is a broad and general description of fuel made from vegetable oils and animal fat. It is the ultimate in recycling, as bio-diesel is essentially made from waste product that would otherwise be discarded. 9. Every vehicle that has a diesel engine can use bio-diesel fuel, up to 100 percent, with no modification. 10. Nearly 70 stations in the state sell bio-diesel fuel. In Indianapolis, bio-diesel is available at Crystal Flash at 7751 S. Meridian St.; in Noblesville at Energy PLUS 24 at 16222 Allisonville Road; and in Carmel at Crystal Flash at 545 S. Rangeline Road. For a complete list of bio-diesel stations in Indiana, visit www.biodiesel.org.

Of serious concern is the amount and type of energy expended to actually produce the bio-fuel either in ethanol or bio-diesel facilities.

The pay-out While some argue that there are no downsides to a bio-fueled economy, others point out that the real pork in bio-fuel legislation has nothing to do with animal waste. Rather, it reflects the on-going trend of business-friendly politicians to lavish tax credits and incentives on the industries that lobby the hardest. At the close of this year’s General Assembly, Daniels signed a new bio-fuel tax incentive providing up to $20 million in cash and credits for manufacturers of bio-diesel and ethanol. It also gave a 1 cent per gallon credit on retail gas tax for school districts, farmers and other bio-diesel users who have fuel delivered. Daniels also authorized the “economic development incentives” given to lure the Louis Dreyfus plant to Indiana, including $95,000 in training grants, $135,000 in infrastructure assistance and more than $5 million in tax credits. There are good reasons why state and federal governments have switched from subsidizing American farmers to not grow crops, to subsidizing bio-fuel manufacturers who will buy their crops. For years, the subsidizing of American agriculture has created false markets and higher prices for crops around the world — a practice other companies and international organizations would like to see cease as soon as possible. The World Trade Organization is negotiating highly contentious rules that American farmers fear could considerably constrain U.S. subsidies for agriculture in the near future. At the federal level, a tax credit of $2 billion over nine years has been allocated for industries producing alternative-fuel sources — using an uncommon definition that classifies both refined coal and waste incineration as alternative fuel sources. This waste incineration includes not just the burning of residential and business garbage, but the burning of animal waste. The same bill also allocates $77 million in tax credits for manufacturers of ethanol. In sharp contrast, little is being done to actually require the usage of bio-fuel by consumers and few (if any) tax credits or incentives are available for consumers of bio-fuel for use in their personal vehicles. To make matters even worse, nearly every car in America could already be using a blend of bio-diesel or ethanol and petroleum, and most of the drivers of over 4 million vehicles built specifically to operate on ethanol don’t even know their automobile has such capabilities. (See sidebars on “Who can use ethanol?” and “How flexible is your fuel?”) A whole lot of good While there are pessimists in every crowd, most environmentalists overwhelmingly agree that the use of bio-fuel is better than the use of fossil fuel, and thus ultimately better for the environment and us. Both ethanol and bio-diesel are made from renewable energy sources, unlike coal, oil and natural gas, and though there is some debate over the long-term sustainability of bio-fuels as a viable energy resource, there is little risk of depleting the Earth’s corn or soybean capabilities. In most cases, it takes only six months to harvest a substantial crop of fuel, and a 2004 report, “Growing Energy,” concluded that bio-fuels such as ethanol and bio-diesel could displace nearly 8 million barrels of oil a day by 2050, roughly equivalent to the current daily demand for gasoline in the U.S., without putting any additional acres under cultivation or displacing food production. In addition to not depleting the Earth’s natural resources, bio-fuels decrease the amount of carbon dioxide and toxic pollutants released into the atmosphere when replacing gasoline, coal and oil. Bio-fuels are biodegradable, non-toxic and essentially free of sulfur and aromatics in their pure form. Ethanol has numerous benefits over the use of petroleum in vehicles. It reduces levels of carbon monoxide and other toxic air pollutants; and because the biomass used for ethanol absorbs carbon dioxide (CO2) when it is grown, ethanol adds no net CO2 to the atmosphere. It can be used to boost the octane in gasoline to prevent engine knocking, and it increases gasoline’s lubricity. Since ethanol can be produced locally, it has the potential to add to the local economy, particularly in the agricultural sector, and help reduce the importation of oil.

Who can use ethanol? All gasoline vehicles made after 1980 are capable of operating on gasoline/ethanol blends with up to 10 percent ethanol with no modifications. In fact, some states require the seasonal or year-round use of up to 10 percent ethanol as an oxygenate additive to gasoline to mitigate air pollution. Every automobile that runs on gasoline can use E10, a mixture of 10 percent ethanol and 90 percent petroleum, though the low blend is not classified as alternative fuel. E85 and blends with even higher concentrations of ethanol, E95, for example, qualify as alternative fuels under the Energy Policy Act of 1992. Vehicles that run on E85 or higher are called flexible fuel vehicles (FFVs) and are offered by several vehicle manufacturers. A flexible fueled vehicle has a single fuel tank, fuel system and engine. The vehicle is designed to run on unleaded gasoline and an alcohol fuel (usually ethanol) mixture. The engine and fuel system in a flex-fuel vehicle must be adapted slightly to run on alcohol fuels because they are corrosive. There must also be a special sensor in the fuel line to analyze the fuel mixture and control the fuel injection and timing to adjust for different fuel compositions. —LM

In addition to many of the same benefits as ethanol, bio-diesel fuel is also the ultimate in recycling. Currently, the most popular method for creating bio-diesel is the chemical transformation of vegetable oil. But a burgeoning industry has discovered a way to be prudent and profitable with a tremendous amount of waste. A primary source of bio-diesel has come from the waste created in turning crops such as corn and soybeans into ethanol. The parts of the plant not used in the process had previously been discarded. But new technology has allowed entrepreneurs to squeeze the oils and extracts from the waste and create more fuel. Meat processing plants have also become an abundant source of raw material used to create bio-diesel. Nearly 8 billion chickens, 2 billion turkeys, 35 million cows and 100 million pigs are slaughtered and processed each year in the United States. The USDA requires these facilities to use large volumes of clean water to continuously rinse and clean the meat as it is cut and packaged. The derivative wastewater from the slaughterhouses contains high levels of protein and fat that becomes a concentrated sludge. The poultry industry alone generates in excess of 2.5 billion pounds, or more than 63,000 tanker loads, per year of waste that is traditionally discarded. Converting the animal fat in the sludge to bio-diesel fuel reduces the amount of waste by more than 80 percent. And some bad While bio-fuels themselves are natural and renewable sources of energy with little or no toxicity, their consumption and production are not quite as environmentally friendly. Depending on the gasoline blend, bio-fuels may raise levels of nitrogen oxides produced as gasoline emissions. Most vehicles that use bio-fuel are running on a mixture of ethanol or bio-diesel with petroleum. In most cases, the amount of bio-fuel is quite small and not nearly as beneficial as it is in its pure forms. Of serious concern is the amount and type of energy expended to actually produce the bio-fuel either in ethanol or bio-diesel facilities. Many ethanol refineries, for example, are burning as much as 300 tons of coal a day to turn corn into ethanol. This trend is expected to increase as coal is a much cheaper source of heat energy than natural gas and raises the profit margins even higher. And with the emphasis on getting rich, there seems to be little effort on the part of state or federal governments to put an end to the environmental oxymoron created when bio-fuel is manufactured using coal. In addition to the continued depletion of a non-renewable energy source to create a renewable energy source, burning coal releases particulates, especially mercury, and other pollutants into the atmosphere, thereby increasing air pollution to create a fuel that decreases air pollution. There are also legitimate concerns about the increased amount of resources — pesticides, fertilizers, water, gasoline — that would be used to grow and harvest the increased acreage. The increased soil and water contaminants could pose serious risks for communities where the bio-fuel industry places an emphasis on quantity over quality. Concern of large conglomerate farming corporations displacing smaller farms is also of great concern if the industry becomes as profitable as expected. There is also the question of whether or not using crop food sources to fuel America’s SUV fetish at a time when people in other parts of the word are dying from starvation is an ethical thing to do. This is particularly relevant in places like Haiti and parts of India and Africa where malnourished and impoverished workers are harvesting crops to be used as bio-fuel in other parts of the world. And, by some reports, many tropical nations are now racing to cut down their remaining slivers of rain forests in order to plant palm tree plantations for palm oil that can then be converted to bio-diesel.

What do environmentalists want? According to the Hoosier Environmental Council, Indiana is making strides in the utilization of renewable energy sources, but there is a lot more that could be done to improve the environment and the economy of our state. Here are the 2006 HEC recommendations for State Energy Policy: Recommendation: Indiana should enact a renewable portfolio standard, which would require that a certain percentage of Indiana’s energy come from renewable energy sources such as wind, solar and bio-mass. Benefits: The use of renewable energy sources would reduce pollution in the state by providing cleaner sources of energy, and would spur economic growth by creating demand for the development of new industries to supply the renewable energy. Background: Twenty-one states and the District of Columbia have enacted standards requiring a percentage of their energy supply come from renewable energy. This includes states that are heavily reliant on coal as a primary energy source such as Illinois, Montana, Pennsylvania and Texas. What exactly is defined as renewable energy varies from state to state, but can include wind, solar and bio-mass sources. Bio-mass: Indiana has made good strides in the promotion of bio-fuels such as ethanol and bio-diesel. There are other potential sources of energy from bio-mass that have not been looked at by the state. Native grasses such as switch grass could provide an abundant source of energy with a greater net energy gain than grain crops. The state should examine what other potential bio-fuel resources exist beyond ethanol and bio-diesel, and develop ways to promote them. Wind: Wind power is the fastest growing source of electricity in the U.S. and across the world. Advances in wind turbine technology made over the last 20 years is making wind power increasingly efficient, affordable and reliable, and it is now competitive in price to electricity generated from new coal plants. While Indiana does not have the wind resources of the Great Plains states, newly revised wind maps based on advances in wind turbine technology show that there are potential areas for the development of wind power. Solar: Photovoltaic cells, which convert sunlight into energy, are ideal for creating power at the time it is most critically needed, in those peak hours in the summer when air conditioners are being heavily used. Photovoltaic cells now come in a wide variety of sizes and arrays that can be used to help homeowners, businesses and government buildings meet their electricity needs, especially in those key peak hours, and lower their utility bills. —LM

A compromise It should come as no surprise that politicians of any party might see “going green” as an economic metaphor rather than an environmental one, and there is nothing inherently wrong with doing so. Given that assumption, the responsibility to actually use bio-fuel and reduce the amount of environmental fatigue and depletion of natural resources seems to fall much more heavily on those of us with car keys than it does those in elected office. Ultimately, any effort to reduce our dependency on non-renewable energy is a good one, and all incentives to use alternative energy help achieve the goal of conservation and good global citizenship. Many environmentalists seem to agree. In a recent Wall Street Journal article, Sierra Club President Carl Pope spoke about the recent interests in bio-fuels and the political advantages of having agricultural interests adding pressure to politicians who never seemed much interested in alternative energy until recently. “The environmental chorus was never big enough to sing this song,” according to Pope. “We needed a bigger chorus, so now we’ve added a bass section.”

How flexible is your fuel? Over 4 million flexible-fuel vehicles (those that can run on a gasoline/ethanol blend of E85 or higher) are currently operated on the road in America, although a 2002 study found that less than 1 percent of fuel consumed by these vehicles is ethanol — primarily because most owners did not know theirs was a flex-fuel vehicle. The following is a partial list of flexible-fuel vehicles. For more information on identifying a flex-fuel vehicle go to www.e85fuel.com. Daimler Chrysler 2006 All Dodge Durangos 2004-’06 4.7L All Dodge Ram Pickup 1500 Series 2003-’06 2.7L All Stratus & Sebring Sedans 2003, 2006 3.3L All Dodge Cargo Minivans 1998-’03, 2006 3.3L All Dodge Minivans 1998-’03, 2006 3.3L All Plymouth Minivans 1998-’03, 2006 3.3L All Chrysler Minivans Ford 2006 All Crown Vic, Mercury Marquis, Lincoln Town Car, & F-150s 2002-’05 4.0L Select Explorers 1999-’06 3.0L Select Taurus LX, SE, & SES Sedans 2001-’03 3.0L Select Ranger Supercab 2WD Pickups 1999-’00 3.0L Select Ranger 2WD & 4WD Pickups General Motors 2006 All Impalas 2006 All Monte Carlos 2005-’06 5.3L Select Avalanches 2002-’06 5.3L Select Suburbans, Tahoes, Yukons & Yukon XLs 2002-’06 5.3L Select Sierra & Silverado Pickups 2000-’02 2.2L All Chevrolet S-10s & GMC Sonoma 2WD Pickups Mazda 1999, 2001-’02 3.0L All Mazda B3000 Pickups Mercedes-Benz 2005 2.6L All C240 Luxury Sedans & Wagons 2003-’05 3.2L All C320 Sport Sedans & Wagons Mercury 2002-’05 Select Mountaineers 2000-’05 3.0L Select Sables —LM

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