|Nationwide demand for E10 would outstrip US production capacity. Click to enlarge.|
Archer Daniels Midland (ADM) is preparing to double the size of its capital spending on a range of projects, including ethanol and biodiesel expansion, coal co-generation and bio-degradable plastic.
Speaking at the Deutsche Bank Global Retail and Consumer Conference in Paris, ADM CEO Patricia Woertz said that the company will spend between $3.5 to $4 billion over the next two to three years, doubling its capital expenditures from the last three years.
With about 25% market share, ADM is currently the largest producer of ethanol in the US. The company is already adding 550 million gallons per year of new ethanol production capacity that will be online by 2008.
Ethanol demand in the US could far exceed the amount mandated by the federal Renewable Fuel Standard, Woertz said, noting that a nationwide demand for E10 would be about double current and announced production capacity. She noted that ADM is not basing its capex plans on such a surge in demand, but did note the distinct possibility of such an increase, assuming that the price for ethanol drops below that of gasoline.
ADM’s four primary crops are corn, oilseeds, cocoa and wheat. Although it has announced no plans in this direction, the company is watching the production of ethanol from sugar cane, according to Woertz.
Questioned about the prospects for the US dropping its $0.54/gallon tariff on imported ethanol, Woertz said that she thinks that action unlikely.
Both political parties are more aligned on this subject than almost any other one, and that is to support a renewable fuels industry in the US, so even though there has been a fair amount of talks it doesn’t seem like there is interest in removing those tariffs at the moment.
ADM has been partnering with Metabolix to commercialize the Metabolix proprietary PHA (polyhydroxalkanoate) technology. The plant will have an initial annual capacity of 50,000 tons per year.
The PHA plastics are produced using a fully biological fermentation process that converts agricultural raw materials such as corn sugar into a versatile range of plastics that offer durability in use but are compostable in both hot and cold compost and are bio-degraded even in the marine environment.