Congress gives lift to makers of ethanol in tax bill

Congress could fuel expansion of the nation's ethanol industry, a top official of the Missouri Corn Growers Association said Friday.

The House of Representatives on Thursday passed the America Jobs Creation Act of 2004, which includes provisions that would benefit ethanol manufacturers, said Fred Stemme, communications and marketing director of the corn growers association in Jefferson City.

The measure would provide a new excise tax credit to refiners who blend ethanol fuel, he said. That would encourage greater use of E-85 fuel, a blend of 85 percent ethanol and 15 percent unleaded gasoline, Stemme said from his Jefferson City office.

In addition, the legislation would improve an ethanol tax credit for small ethanol plants by allowing farmer-owned cooperatives to allow their member farmers to make use of the tax credits, he said.

The U.S. Senate is expected to pass similar legislation, he said.

Stemme's optimism comes even as the developer of a proposed ethanol plant in Cape Girardeau still hasn't secured financing for his venture nearly a year after the project won the endorsement of the Cape Girardeau County Industrial Development Authority.

The development authority's action gave developer Phil Danforth of Leawood, Kan., legal permission to have a financial firm market $250 million in industrial bonds to investors to finance construction of a 40-million-gallon-a-year ethanol plant and a related 15-megawatt power plant on land in the Nash Road industrial park.

Mitch Robinson, director of the Cape Girardeau Area Magnet industrial recruitment association, said Friday that Danforth continues to seek investors.

"He is hoping to use a venture capital firm out of St. Louis," Robinson said.

Robinson said he remains optimistic that Danforth's Renewable Power venture will secure the needed capital.

There's a market for ethanol, Robinson said. "It is not an issue of selling it. It is just getting the plant up and going," he said.

Ethanol plants use corn to produce grain alcohol, which can be added to gasoline to make a cleaner-burning fuel.

Americans increasingly want to be less dependent on Middle East oil. That will spur more interest in alternative fuels such as ethanol, Robinson said.

Legislation, such as that passed by the House, can only help, he said.

But Stemme said the tax credit for small ethanol plants would only apply to those farmer-owned ventures that produce less than 30 million gallons of ethanol annually.

Danforth's proposed Cape Girardeau plant would be too large, and it isn't set up as a farmers' cooperative, Stemme said.

Still, any increased demand for the corn-based fuel could encourage development of new ethanol plants including the Cape Girardeau project proposed by Danforth and one being considered by farmers in the Malden, Mo., area, Stemme said.

Danforth has proposed building a $58 million ethanol plant at Cape Girardeau that would create 35 to 40 permanent jobs and use an estimated 15 million bushels of corn annually.

The ethanol industry is relatively new to Missouri, Stemme said. The first ethanol plant in the state opened four years ago.

Missouri now has two operating ethanol plants, one in Macon in northeast Missouri and the other in Craig in the northwest part of the state. The two farmer cooperatives combined use about 24 million bushels of corn annually and produce over 60 million gallons of ethanol.

A third plant, another farmer-owned cooperative, is under construction at Malta Bend, Mo., in Saline County.

Danforth also has proposed building an ethanol plant in Saline County, a project he has talked about for more than three years. In December, he purchased a 28.8-acre tract of land from the city of Marshall, Mo. That project too depends on securing financing, Robinson said.

mbliss@semissourian.com

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