Ethanol industry sees second wave of expansion
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BY ART HOVEY / Lincoln Journal Star
Three decades ago, a fresh face from the ranks of Nebraska Wesleyan University graduates abandoned a brief career fling in mental health at the Lincoln Regional Center and signed on with an industry many people thought needed a reality check of its own.
Ethanol seemed trapped between its childhood and adolescence in 1976 as Todd Sneller and his communications degree arrived at an alphabet-soup agency called the Nebraska Agricultural Products Industrial Utilization Committee.
Back then, with the state still almost 10 years away from its first commercial-scale ethanol plant, it was hard to separate the forward thinkers from the fast-buck artists and the scientifically sound ideas from the off-the-wall variety.
Not to say there wasn’t already a sense of urgency about energy 30 years ago.
Jimmy Carter was in the White House and dealing with an oil embargo by donning a cardigan sweater and encouraging everybody to dial down their thermostats.
Corky Jones of Brownville was on the edge of an agricultural uprising that would put him in a tractorcade bound for Washington, D.C.
And Sneller, early in his tenure as an ethanol advocate, beheld George Boucher, one of Jones’ brethren in the American Agriculture Movement, at the top of a three-step ladder near Ravenna in his trademark 10-gallon cowboy hat. Boucher was dipping an electric drill and its attached paint-mixing blade into a big barrel filled with renewable fuel ingredients — grain, water and yeast.
“He was trying to stir this thing,” Sneller said, “and I remember thinking, ‘This just ain’t going to work.’”
It was a humble enough beginning, and the future boss at the Nebraska Ethanol Board had no trouble staying humble.
“I spent a lot of winter days where I went, literally, to every county meeting where there had been an invitation to come and speak.”
Sneller would hang in there for the next 30 years. He would move from the back roads to the national stage in promoting a grain-energy cause. He would watch ethanol turn into an absolute economic-development gusher.
Not far from where Boucher conducted one of many early exercises in ethanol futility, a Spanish company called Abengoa is building an ethanol plant expected to cost at least $100 million and produce 88 million gallons per year.
From the east end of Nebraska to the west, from north to south, plants under construction and plants scheduled for construction add up to billions of dollars in new investment.
At 54, Sneller sums up his three-decade career as a trip from novelty to commercial reality.
Jones, a former national president of the American Agriculture Movement and a preacher of ethanol virtues to the tractorcade troops, says “Amen.”
“I think the big steps and the small steps we were taking back then are finally going to pay off,” he said. “You can’t hand the winning reins to anybody any better than Todd Sneller, because he led the charge and he’s still leading it.”
n n n
Not all the early steps were in a forward direction.
Sneller estimated he had looked at as many as 50 on-farm ethanol production systems by 1985.
“Not one of those is in operation today.”
The state’s first commercial-scale ethanol plant, built without financial backing from the ethanol board by a California savings and loan company, went bankrupt not long after it began operations as ADC-1 at Hastings in 1985.
Later in the decade, the ethanol board watched its investment war chest — much of it provided from a checkoff fee when farmers sold corn, grain sorghum and wheat — swell past $20 million. But the same board members looked at each other and often lapsed into silence as they listened to a series of not necessarily convincing investment pitches from dozens of prospects.
“Many of those people were enamored with the concept of building an ethanol plant,” Sneller said, “but they were often ill-equipped for executing that.”
Erv Friehe of McCook witnessed some of ethanol’s early travails as an 18-year member of the Nebraska Wheat Board and as one of the initial appointees to a state agricultural products committee in the 1960s.
Members of the committee went to Brazil, at one point, to examine its success in making ethanol out of sugar cane and powering cars on pure ethanol.
“We tried to sneak a carburetor out,” said Friehe, now 82, “but we didn’t get away with that.”
Back home, a Mazda car used to promote the wisdom of filling up with 10 percent ethanol blends developed a checkered reputation.
“On a good hot day,” said Friehe, “the damn thing would vapor lock. But it wasn’t the fault of the ethanol.”
n n n
Not until the early 1990s would Nebraskans who had spent years wandering in the ethanol wilderness develop much of a sense of direction in matching promotion with production.
That’s when, for the sake of breaking out of infrastructure frustrations, the Nebraska Legislature decided to drop an incentive that offered drivers a price discount of a few pennies per gallon at the pump.
They replaced it with a fuel tax credit of 20 cents per gallon payable to people who produced ethanol.
In that same time frame, the first President Bush signed amendments to the Clean Air Act and came to Lincoln to check out the chances for success of American Eagle Fuels.
American Eagle was making an ethanol derivative called ETBE, which was meant to help hold down on carbon monoxide pollution, in Denver, Minneapolis-St. Paul and other major population centers.
The ethanol board was excited enough about the project to invest $490,000 in it. But the cash outlay near the town of Eagle fell short of bonanza proportions.
“It generated some revenue,” Sneller said. “It created an opportunity. But never to a scale.”
Other things of scale, however, started to happen: A Minnesota Corn Processors plant at Columbus, a Cargill plant at Blair, and more.
Now, in 2005 and 2006, a second wave of ethanol expansion has been created with another coalescing of circumstances.
n Greater efficiency in converting raw energy to ethanol energy.
n The embracing of ethanol as a clean-air solution in California.
n The 2005 passage of a renewable fuels mandate by Congress.
Not everybody who championed ethanol success in Nebraska was around to see it.
Ralph O’Connor, Grafton farmer and longtime chairman of the Ethanol Board, is dead. So is Bill Scheller, a chemical engineering professor at the University of Nebraska-Lincoln and a technical adviser to the board.
Bill Wells, the American Eagle executive who shared photo opportunities with President Bush, moved on to Australian ethanol efforts.
Todd Sneller has been around to see it all. At this stage, he feels gratified. He’s delighted.
And he has listened as the tone of skepticism about ethanol has changed.
To be sure, ethanol arguments still rage. But earlier claims that meaningful numbers of plants would never be built have given way to claims they’re being built too fast.
Sneller disputed the first conclusion, and he disputes the second.
“It’s not going to be at the expense of agriculture,” he said. “It’s not going to be at the expense of the environment. I think it’s going to be sustainable, because it’s going to be done in an orderly manner.”
Reach Art Hovey at (402) 523-4949 or ahovey@alltel.net.
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