The Ethanol Solution

Could Corn-Based Fuel Help End America's Dependence On Imported Oil?

(CBS) 
The folks at the plant showed 60 Minutes how they do it: huge trucks filled with corn come into the plant every day and unload their cargo into what is, in reality, an industrial-sized distillery.

In a maze of pipes and tanks, corn, water and yeast are mixed and fermented into beer. Operators keep track of everything on computers.

"In 48 hours, each fermenter will make about 15 percent volume beer," Plant manager Scott Dorow explains. It's not stuff you want to drink. "It's non-filtered, and, but it's very sweet-smelling. And you can definitely tell it's beer."

Then, under high temperatures, the mixture is distilled in a giant version of an old-fashioned corn-liquor still. What emerges at the end is ethanol, which is nearly pure alcohol. Trucks carry it to a nearby railroad line. For the farmers who own the plant, ethanol is more than just a new way to make money.

"Ethanol has been one of the best-kept secrets that is out there. We know it’s a good product. We know it's good for the economy. We know it’s good for the environment," says Granzow.

And more and more people are seeing it that way. To meet rising demand, the plant will expand to double its capacity by next year. But the farmers who run the place are already thinking beyond that: to a new process of making ethanol from cellulose, instead of corn. This would be much cheaper, because cellulose is found in everything from prairie grass to agricultural waste to wood chips.

"And if that becomes economically viable I think our plant could be converted over to that way of producing ethanol, too," Meints explained.

Pine Lake isn’t unique - from New Jersey to California, about 300 ethanol plants are in operation, or on the drawing boards. By 2012, the government expects processors to make 7.5 billion gallons of ethanol a year. That’s only drop in the American oil bucket, since the country uses 140 billion gallons of gasoline a year.

But Professor Kammen at Berkeley says it's a good first step. "Ethanol provides a wonderful short-term option because we can use corn today to make it, and have significant savings in terms of off-setting gasoline, and modest savings on a greenhouse gas level," he says. "The big plus is it’s available today, so we could make this transition starting tomorrow, if we wanted."

Oil industry executives, taking heat from Congress over their multi-billion-dollar record profits, favor a different approach. They want to spend billions find to new sources of oil, which is more expensive to produce, instead of switching over to E85.

Red Cavaney, the head of the American Petroleum Institute, the oil industry’s trade association, says it’s not the oil and gas companies who are going to make the investment in order to sell E85.

He estimates it will cost up to $200,000 to bring E-85 to each station - and the people who own the stations, he says, would have to foot the bill.

But, while oil companies own only a fraction of the nation's gas stations, they have a huge influence over what's sold at most of them - and for how much.

"It's my understanding that the petroleum industry in general says "ethanol - fine," but not in favor or E85. Is that true?" Rather asked.

"No, that's not correct," Cavaney replied. "The six largest refiners said that they support the E85 in their facilities as long as the mixture arrives and meets the government specifications for that. But we must understand that the market is exceptionally limited."

Cavaney says that's because only 5 million of the country’s 133 million cars can use E85.

"If all the focus is on E85, you’re gambling on starting with a very small base and you’re gonna have to go very quick to get big volumes," Cavaney says.