A March report by an ethanol advocacy group has shown that increasing the ethanol blend in gasoline from 10 to 15 percent could create and support more than 136,000 new jobs and inject $24.4 billion into the nation's economy annually.

The study, funded by Growth Energy and conducted by the Windmill Group with help from North Dakota State scientists, examined the direct and secondary impact on jobs and the economy of increasing the ethanol cap from 10 to 15 percent, which has been imposed by the United State Environmental Protection Agency for the last 30 years.

The study found that six billion more gallons of ethanol production capacity would be need to be built to meet the increased demand, resulting in the construction and operation of 60, 100 million gallon per year ethanol plants. The construction of these plants would have a one-time economic impact of $36.8 billion and create roughly 26,000 construction-related jobs. Current ethanol production is estimated at 10.3 billion gallons per year, with another 4 billion gallons per year of production capacity currently offline, under construction or in expansion, according to the study.

"What many thought would take us until 2012 to accomplish, we completed in 2008, which resulted in a supply/demand issue," said Randy Schneider, president of the North Dakota Ethanol Producers Association. "Taking (the cap) up to E15 will give us an opportunity to sell more product in the state and spend less money exporting out of the state. Right now, it costs 25 cents per gallon to load on the rail and export it to other parts of the U.S."

"The ethanol industry is under considerable financial stress because ethanol, unlike oil, is held to less than 10 percent of the market," said Roger Johnson, former agriculture commissioner for the state and currently the president of the National Farmers Union. "Now is the time to move forward by increasing the base fuel blend to 15 or 20 percent ethanol."

Agricultural commissioners from 10 states who signed a letter in March urging President Obama to consider lifting the ban said the 10 percent cap was based on 1970s science, outdated technology and antiquated fuel system designs. They added that counties like Brazil have had successes of using blends between 20 and 100 percent for many years.

In 2007, the Energy Independence and Security Act mandated utilization of 36 billion gallons of ethanol, a feat the group said would be nearly impossible to do with the current 10 percent cap.

"Simply put, there is a government rule contradicting a government law," they said in the letter. "American ethanol production has nearly reached 10 percent saturation. We must move to a base blend of 15 or 20 percent in 2009 to continue growing this vital industry."

According to the Energy Information Administration, the Renewable Fuels Mandate of the Energy Independence and Security Act of 2007 requires "the use of 36 billion gallons of ethanol per year by 2020, with corn ethanol limited to 15 billion gallons. Any other ethanol or biodiesel may be used to fulfill the balance of the mandate, but the balance must include 16 billion gallons per year of cellulosic ethanol by 2022 and 5 billion gallons per year of biodiesel by 2012."

Mirroring his predecessor's stance, Agriculture Commissioner Doug Goehring said in a May 1 op-ed, "if the EPA does not approve the use of higher ethanol blends, innovation may be stifled for the next generation biofuels, like cellulosic ethanol. If the federal government continues to artificially limit ethanol's use, it will destroy any incentive for innovation and stop cellulosic ethanol development before it even has a chance to get off the ground." He added that lifting the blending limit in North Dakota could create $130 million in economic activity and nearly 2,400 jobs.

Two North Dakota State University faculty members, Nancy Hudor, a research scientist and Larry Leisitritz, professor of agribusiness and applied economics, conducted a study using an existing corn ethanol plant to estimate the economic impact the increase could have on the state.

The researchers found that the 50 million gallon per year corn ethanol plant had a direct employment impact of 40 workers and an economic impact of $16.8 million, but when combined with secondary impacts, the total contribution to the state was more than 500 jobs in various sectors of industry and $45.8 million annually.

The same study compared traditional ethanol production to that of the emerging cellulosic ethanol production sector and found that "the cellulosic plant has direct economic impacts that are more than three times those of corn-based plants, with nearly twice as many direct employees, five times the number of secondary workers, and double the construction cost." But due to the undeveloped state of technology for lignocellulosic biomass conversion, the study cautions that the findings should be considered tentative.

"It's prudent to take baby steps considering the number of forces at work here rather than taking giant leaps," Schneider said. "At some point in time I assume we will be looking at going from E15 to E20, but we don't want to create a problem in the marketplace that we could have to deal with for a long time. We need to be mindful of sound science and economics to drive this decision-making process."

With the EPA having nearly seven months before delivering its decision, Schneider said the earliest consumers would see the E15 fuel, if passed, would be 2010.

"Significant infrastructure and blending facilities exist its just a matter of turning a dial so the market could react rather quickly to a higher blend," Schneider said.

But it will not be easy.

Schneider said various groups have blamed the ethanol industry over the years for problems ranging from the destructions of the Brazilian rainforest, to food shortages to higher consumer food prices, and will come to speak out against allowing the ethanol increase when the EPA holds their forums.

"We don't know who will submit challenges or why, but those will have to be addressed which will slow the process down," Schnieder said. "The ethanol industry needs to be ready for everything from A to Z and have rebuttals based on sound science backed by studies and let the facts speak for themselves."