Ethanol 'on the move' in U.S.

DES MOINES, Iowa — With new ethanol and biodiesel plants going online monthly and increasing demand for the homegrown fuel additives, transportation companies are scurrying to provide the needed trains, trucks and storage tanks to keep up with the rapidly growing industry.

The fuel additive industry is growing from regional to national distribution, driven by a federal renewable fuels standard beginning in 2006 that is expected to double the use of ethanol and biodiesel by 2012.

The transportation system must keep up to move the raw materials to processing plants and ship the fuel from the Corn Belt to markets around the country.

"There is a challenge, and there will be a challenge as both of these products begin to get more use outside of the middle section of the country," said Scott Weiser, president of the Iowa Motor Truck Association, a trade group. "Several members of our congressional delegation have indicated there needs to be a focus on those issues of infrastructure and transportation if and when we are going to serve the rest of the nation."

Several states offer tax incentives or funding for development and promotion of ethanol and biodiesel. They include Florida, New York, Illinois, Idaho, Delaware and Arkansas. In New York, for example, E85 fuel, an ethanol blend, is exempt from state sales taxes, and the state requires government agencies to use E85 when possible. Other states, including Georgia and Colorado, also require state agencies to use biofuels.

In addition to motor fuels, trends such as the growing use of biodiesel as a home heating oil in New England, and some Western states could cause demand for biofuel to grow even more dramatically, said Grant Kimberley, a spokesman for the Iowa Soybean Association.

And as demand grows, so do the needs for an improved transportation network.

"It already is a challenge with just transporting the normal products the railroads transport," Kimberley said. "We'll have to be moving more and more renewable fuels that way unless we figure out ways to send this stuff through petroleum pipelines."

Iowa, the nation's leading ethanol producer, has plants that can produce more than a billion gallons of ethanol a year and plans are under way to nearly double that, according to the Iowa Corn Growers Association.

The state also recently edged out Texas as the leading biodiesel manufacturer, with the capacity to make 131 million gallons and expansion plans to add as much as 250 million gallons, Kimberley said.