“I can’t tell you what’s going to happen in the next year, but I can tell you that the situation has changed drastically in the last six months,” said Charles “Shorty” Whittington, the president of Integrity Biofuels, Indiana’s first soy biofuels plant located in Morristown, east of Indianapolis. Whittington is also one of four vice presidents of the American Trucking Association and a member of the National Biodiesel Board. He talks like a good ol’ boy, but he’s really a policy wonk with a seemingly encyclopedic knowledge of the global ramifications of how we produce and consume energy.
Whittington was one of three speakers to address a group of business leaders at a morning program presented by the Business and Technology Group of law firm Barnes & Thornburg on Dec. 8.
Whittington was joined on the dais by Indiana’s agriculture director, Andy Miller.
“This is an exciting time in agriculture,” Miller said, adding that “ag and energy are intersecting in a big way.”
Miller said that Indiana was late to the game in terms of developing a corn-based ethanol industry. The state had just one operating plant in January of 2005, the year he was appointed to be Indiana’s first agriculture director by Gov. Mitch Daniels. But there are now 17 plants up and running, what Miller called “our fair share,” with more on the way. The state, he said, was on track to reach its goal of deriving 25 percent of its energy from agricultural products by 2025.
The impetus for this rapid embrace of ag-based energy comes from the federal government’s determination that the country’s national security depends on weaning ourselves from foreign oil. The result has been what Miller characterized as a collision between two massive industries — agriculture and petroleum — and what appears to be the emergence of a new, farm-based economic reality.
Miller said that ethanol plants are currently returning investment in nine to 18 months, causing some observers to call this the “dot corn” economy. Miller said that $2.5 billion of new capitol has been invested in rural Indiana in the past 18 months alone.
But Miller added that converting corn to ethanol is not a “silver bullet” that can solve our energy problems. “There are lots of unanswered questions,” he said, due largely to the fact that alternative, ag-based fuels have opened the door to what amounts to “a massive change in the market.” Miller emphasized that we have to look at ag-based fuels as part of a larger, comprehensive energy equation driven by the country’s national security needs and including many factors, of which environmental impact is only one.
For his part, Whittington stressed that energy policies need to be developed with a long view in mind. He pointed out that people began developing ethanol, a corn-based fuel intended for cars, 20 years ago, whereas biodiesel, a soy-based fuel for trucks, is still “going through growing pains.” It will take time and trial-and-error experimentation, he said, for us to figure out how best to produce and market biodiesel fuel. “We’re building a foundation,” Whittington said, “a change in how we do business.
“We’re spoiled in the U.S.,” observed Whittington, who added that U.S. citizens consume 339 units of energy compared to 32 units in China and 17 in Brazil. “Are we going to pay for it?” he asked, referring to this imbalance in global supply and demand. “Yes, we’re going to pay for it — now or later.”
The dot corn economy is also creating a new political dynamic in Washington, D.C., according to Whittington, who said that now there are three parties vying for power: Democrats, Republicans and farmers, as ag-based fuels are providing agribusiness with a new lease on political influence.
Andy Miller cautioned against being swept up by what he called “irrational exuberance,” noting that he wouldn’t be surprised to see the building of more ethanol plants than we probably need. But he also said that the state has plenty of corn to serve a variety of needs — from meeting demands for alternative fuel to feeding livestock and trading with Asia — and that “We have confidence that the market will take care of this.”
The bottom line? The drive for energy independence is creating a greater sense of economic optimism than rural Indiana has experienced in generations. What’s more, this situation has the capacity to fundamentally change economic dynamics on a global scale. As Miller put it: “Things are changing faster than we can imagine.”