U.S. Fuel Ethanol Industry Grows by 29% in 2005 - 2006 Forecast to Exceed

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). According to data extracted from Industrialinfo.com’s Ethanol Production Database, the 2005 calendar year ranks as the best ever for the burgeoning fuel ethanol industry and all indicators point to 2006 exceeding that figure. At the beginning of 2005 domestic production capacity was around 3.4 billion gallons annually, the highest ever on record. By the end of 2005, new and old producers had increased capacity by 29%, now approaching 4.4 billion gallons annually, and eclipsing previous year’s growth.

Currently, there are approximately 120 operational ethanol plants in North America versus 100 from the beginning of 2005. Roughly 22 new plants became operational in 2005, and eight plant expansions were completed. 2005 began with 23 plants under construction, and by year’s end, 50 new plants were under construction. It is also estimated that over $2 billion dollars in capital was spent on plant construction during 2005, with investors ranging from farmer coops, private industry, and existing industry players.

As of today, roughly 118 new plants are in various stages of pre-construction development from site study and fundraising; permitting and financing and design and detailed engineering phases. This year has the potential to blow the doors off all previous years, in terms of new construction and added capacity.

Jay Brunson, Industrialinfo.com’s Synthetic Fuels Production Manager adds, "An estimated 50 of the 118 plants in the pre-construction stage have a really good chance of beginning construction in 2006. And with an average capacity of 50 million gallons per year, and an average cost of $70 million to build, the industry has the potential to grow by another 2.5 billion in capacity and spend $3.5 billion in capital dollars to get there."

Looking into the new year, and dissecting the industry by geography, the potential for the largest concentration of new plant construction is in the Midwest where most of the corn is grown. However, development of fuel ethanol plants is not limited to the Corn Belt. There are 34 new plants in the pipeline for the Midwest followed by the Great Lakes region (31 plants), West Coast (14 plants), Rocky Mountains (12 plants), Southeast (10 plants), Northeast (6 plants) and the Mid-Atlantic (2 plants).

Click on the image at right to view a breakdown of these plants under development by market region

Now, with the Renewable Fuels Standard (RFS) that was signed into law on August 8, 2005, under the Energy Policy of 2005, requiring doubling the use of ethanol and biodiesel by the year 2012, the industry will continue to grow exponentially. Producers of ethanol and biodiesel will continue to build plants and investors are more secure in an industry that is sanctioned by the United States Government.

IIR's Ethanol Production Database provides a comprehensive outline of all current development activities in the emerging synthetic fuels market. This database covers 123 ethanol plants currently in operation and 234 plants under development. It also covers 17 operational biodiesel plants and 28 plants underdevelopment.

Industrial Information Resources (IIR) is a Marketing Information Service company that has been doing business for over 22 years. IIR is respected as the leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.