(Posted by Jeffrey Pieters in The Post-Bulletin, Rochester on February 3, 2010)

After a taking its licks the past couple of years, the ethanol industry hopes for better things in 2010.

"2008 was a very challenging year. 2009 was somewhat challenging, too," said Richard Eichstadt, general manager of the POET Biorefining Plant in Preston.

"We're looking forward to the future here," he said.

At the Preston plant, which produces 46 million gallons of ethanol a year, as across the nation, supply exceeded demand in recent years.

That was largely the result of a rush to build new plants. Since 2001, the number of U.S. biorefineries already standing or under construction more than tripled, from from 54 to 170.

Production capacity increased to 10.6 billion gallons from about 1.75 billion.

The Preston plant illustrates a typical plant's growth. It started as a 12-million-gallon-a-year plant when it opened in 1998. Through a series of expansion projects, it increased its output to the current 46 million gallons.

The Preston plant is small by comparison to many of the newer plants across the United States, Eichstadt said.

It is one of two ethanol refineries in southeastern Minnesota. The other one, in Claremont, has a 42 million gallon production capacity.

A proposed ethanol plant in Eyota would produce 55 million gallons. A new plant, in Janesville, Minn., has a capacity of 110 million gallons, and was recently bought by a coalition of farmer groups. The plant was completed in 2008 but sat unused for a year because of the financial troubles of its previous owner, VeraSun Energy Corp. It became a symbol of the ethanol slump, but it recently started operation.

The ethanol industry is pinning its hopes on a number of factors for a turnaround in coming years.

The industry is lobbying the federal government to increase mandated ethanol blend in U.S. gasoline from the current 10 percent to 15 percent or 20 percent.

The industry also hopes to open new markets for ethanol in Europe, which produces and uses relatively little ethanol. The United States and Brazil are far and away the largest ethanol-producing countries in the world.

Ethanol is "the only liquid fuel available now that addresses a number of our national concerns right now," including foreign oil dependence, emissions, and economic development, Eichstadt said.

"I think most of us would prefer spending our money on fuel that is domestic," he said.

The Preston plant buys commodities and supplies locally, to the greatest extent possible, he said.

The plant uses about 15.3 million bushels of corn per year — "probably comparable to all the corn from Fillmore County," Eichstadt said — and it's used to produce not only fuel, but animal feed and liquid carbon dioxide, used in food processing and beverage manufacturing.

The plant's majority ownership are local farmers. POET, based in Sioux Falls, S.D., is the management company. It oversees a network of 26 plants.

One of those, in Scotland, S.D., is testing a process to make cellulosic ethanol — from corn stover rather than the kernels.

POET's plant in Emmitsburg, Iowa, is gearing up to make 31.25 million gallons per year of cellulosic ethanol.