US corn-based ethanol output may peak in 5 years

By Chris Baltimore

WASHINGTON (Reuters) - There is a limit to the amount of ethanol fuel that can come from the U.S. corn crop, which the nation could hit in the next five years, a top U.S. Energy Department official said on Wednesday.

"I do believe there is a natural ceiling to corn," Andy Karsner, assistant secretary for energy efficiency and renewable energy at the U.S. Energy Department, said at the Reuters Global Biofuel Summit in Washington.

Karsner said he did not know when U.S. supplies of corn-based ethanol would top out. But if current growth rates continue "we will find that ceiling in the next half decade," he said.

A boom in demand for ethanol has pushed corn prices to their highest level in about a decade and shrunk the U.S. corn surplus to their lowest levels since the 1996-1997 crop cycle.

Biorefineries produced about 5 billion gallons of ethanol last year, well on the way to the U.S. target of using at least 7.5 billion gallons of renewable fuels annually by 2012.

U.S. policymakers should consider expanding that mandate, Karsner said. "We shouldn't stick to the timetable because we are ahead of it," he said.

There are a variety of proposals in the U.S. Congress that looks to expand the mandate by up to 60 billion gallons a year by 2030, taking advantage of unconventional cellulose-based ethanol supplies from organic materials like wood chips.

Energy Department figures, which Karsner called conservative, estimate the upper range of U.S. corn-based ethanol supplies at about 12.8 billion gallons.  Continued...