Renzo Pipoli and I last week visited an under contruction ethanol plant, Louisiana Green Fuels, just east of Lake Charles. It is unusual in that it is one of the first fuel ethanol "biorefineries" (what a word) to be constructed outside the Midwest, and it is the first in the US to use sugar as a feedstock, not corn.
Sugar should theortetically have better economics than corn. For one it is easier to grow, that is, it uses less pesticides and fertilizers. The waste from the processing of sugar is burned in a boiler to generate steam that runs a power generator. According to the operators, the plant will ultimately sell power back to the grid.
Currently operable is a sugar processing plant, which takes raw sugar and turns it into a liquid, which is then processed into ethanol. The ethanol plant itself is slated to be finished in late 2008.
The sugar mill was purchased from a South African company; the ethanol plant will be from an Indian Company; the owners of the whole thing are Colombian!
All this is fine, but, when we talked to them, the reason they asked us to visit, is that they have no idea how they are going to market their product. After we talked a while they did express confidence that the US Government would increase the RFS demand for ethanol -- the mandate -- beyond what it is now if there were ever an oversupply of ethanol.
Just like with corn ethanol, the hand of the government is everywhere. My question: Is there a free market anywhere? The oil markets to me seem to be largely free. Am I naive to think there shoud be a free market.
Both ethanol and sugar plants are profitable now without government subsidies...
Leave a comment