Ethanol could be key to Iowans on the fence

In May, the U.S. House overwhelmingly rejected Bush's veto of a $289 billion farm bill that created separate incentives for corn-based ethanol and cellulosic biofuels. The bill established a 45-cent-per-gallon tax credit for ethanol refineries, a 6-cent drop from the previous incentive.

Iowa leads the nation's biofuel output, providing 31% of all U.S. ethanol with 28 refineries, according to a January report by John Urbanchuk, director of LECG, a financial analysis firm. Iowa has 14 ethanol plants under construction, which will boost production by nearly 70%, the report states.

In Iowa, ethanol also generated $2.9 billion in household income in 2007, generated more than 96,000 jobs since its creation and increased the gross domestic product by 10%, the report says.

Farmers can thank ethanol for the market's high corn prices as the harvest season nears, says Bruce Babcock, director of Iowa State University's Center for Agricultural and Rural Development. Corn prices on Thursday rose to $4.40 per bushel, according to the Chicago Board of Trade. Prices last year at this time hovered at about $3.50 per bushel, board records show.

Babcock says Iowans also could benefit from the development of cellulosic ethanol, a biofuel derived from wood, grasses and non-edible parts of plants. The refineries already exist to process the material, he says, but the technology to produce that kind of ethanol likely needs five to 10 more years to develop.

Schulte reports for The Des Moines Register.

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