"Ethanol Not Forgotten, but Electricity Captures Center Stage at Detroit Auto Show" Green Car Advisor

Ethanol Not Forgotten, but Electricity Captures Center Stage at Detroit Auto Show

GM Still a Big Backer, Even If Not as Publicly as in Past Years

By Dale Buss, Contributor

Of all the contrasts between this year's Detroit auto show and last year's -- most created by the intervening global economic melt-down and resulting car sales crash -- perhaps none is more striking than what happened to ethanol.

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Ethanol-capable vehicles such as GM's flex-fuel Yukon were common at last year's Detroit auto show, not so common this year.
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At the North American International Auto Show here a year ago, ethanol and ethanol-burning vehicles were the belles of the ball. Ethanol was promoted at almost every major automaker's press conferences and cropped up in interview after interview. Ethanol-using vehicles were everywhere.

This year, it's almost impossible to find mention of ethanol anywhere out on the 700,000-square foot auto show floor at Cobo Hall.

The talk has all been of electrification of the transportation system, electric vehicles, batteries for electric vehicles, and ventures to develop and build better batteries.

But ethanol hasn't gone away -- it is just lying low.

At least one automaker remains bullish on the long-term prospects for the fuel, especially the cellulosic variety.

"We just reached 3.5 million ethanol-power vehicles on the road in the U.S. and have more than 5 million globally," Mary Beth Stanek, General Motors Corp.'s director of energy and environment policy and commercialization, told Green Car Advisor.

"We are still on track for 50 percent of our new vehicles to be flex-fuel-capable by 2012."

The automaker still sees ethanol as a relatively quick and easy was to help reduce oil consumption and, possibly, oil prices.

GM Chairman and CEO Rick Wagoner kicked off last year's auto show with a high-profile announcement of the automaker's investment in Coskata, a cellulosic-ethanol startup in Warrenville, Illinois.

GM also featured a handful of E-85 flex-fuel SUVs and trucks in its exhibit, and other manufacturers, including Ford and Toyota, paid their own homage to the fuel, which is largely produced from corn in the U.S.

Troubled Times

As they were singing the alternative fuel's praises, gasoline prices were hovering around $3 a gallon, and would spike to more than $4 a gallon in July.

Since then, corn-based ethanol has taken a big hit in the perception of automakers, policymakers and the general public because of its impact on the environment and the pressure it puts on food prices.

Some big corn-ethanol producers have tanked, and gasoline prices have plunged again, making today's ethanol output economically uncompetitive.

"The industry got upside-down," Stanek said. "Most retailers are selling [ethanol] at a loss. But we're still seeing stations adding E-85 pumps for the time when this turns around. We're just not making a big deal of opening any new stations with ethanol at the moment."

And many once-promising cellulosic ventures have yet to scale up production -- and face the same credit-crunch induced funding limitations as other nascent industries.

Electric Mojo

A few years ago there were a lot of "insurance policies" in the effort to protect the U.S. against gasoline price hikes and shortages, said Jim Farley, Ford's executive vice president of marketing communication. Among them: ethanol and hydrogen fuel cells.

"But now the mojo is behind electrification" technologies, Farley said.

Gasoline prices are expected to rise again, though, as economies recover.

So while battery-electric powertrains are all the rage at the 2009 auto show, Stanek noted that ethanol still enjoys the huge advantage of being a vehicle-ready fuel today.

And for the long run, GM continues to work with gasoline retailers to build up the ethanol-delivery infrastructure.

GM is partnering with the National Governors Association to help expand E-85 infrastructure n 10 states this year, focusing on multi-state projects such as the I-65 Biofuels Corridor that runs about 900 miles from Lake Michigan in Indiana to the Gulf of Mexico in Alabama.

Expecting Big Returns

GM remains bullish in regard to its cellulosic-ethanol investments, Stanek said.

For one thing, she said, some key members of the incoming Obama administration are big supporters of developing the technology (the President-elect is from Illinois, a major corn-producing state).

That means there are prospects for biofuels-development subsidies in Obama's expected massive "stimulus" program later this year; the fact that corn-ethanol subsidies now are politically endangered actually could end up being a boon to the cellulosic variety.

Stanek said the heavy development of an ethanol-delivery infrastructure based on corn-derived fuel would end up helping commercialization of cellulosic ethanol as it reaches volume production.

Eventually, she said, Coskata or some other producer will prove the feasibility of localized production and distribution of cellulosic ethanol in a particular metro market, which then could serve as a template for infrastructure across the country.

Good Bets

GM's believes its ethanol bets are sound, Stanek said.

Coskata is on the leading edge in the race to commercialize production and still expects to begin delivering small amounts of fuel to GM's proving grounds in Milford, Michigan, later this year.

Biofuels Digest recently named Coskata No. 1 on its list of the top 50 biofuels startups, assessed per their prospects.

And though Mascoma -- another ethanol company with substantial GM backing -- recently trimmed employment, it also has pulled ahead its planned commercial startup at an operation in Michigan to 2011 from 2012. Mascoma already is making ethanol at its pilot plant in Rome, N.Y.

"There's a theme to every auto show," Stanek said of emphasis on electric vehicle and absence of ethanol promotion at the 2009 Detroit show.

"Last year, it was new-business development around ethanol. This year, it's batteries. But our work with Coskata and Mascoma actually has been amplified."