The budding ethanol industry is surrounded by "biofuels hysteria" and may not deliver a predicted jobs bonanza, an economist warned as governments across North America scramble to gear up production.

Iowa State University researcher David Swenson, speaking at a conference on biofuels in Saskatoon this week, said the biofuels industry is plagued by more hype than fact.

Ethanol, produced when organic material such as corn, wheat, barley and hops ferments, is commonly used as an additive in gasoline.
(CBC)

Furthermore, some politicians — encouraged by inaccurate economic models — are vastly overestimating the job potential of ethanol plants, he warned.

Swenson, who has studied the issue extensively, noted that the U.S. National Corn Growers Association came out with a scenario that had one 190-million-litre ethanol plant creating 2,000 new jobs.

Swenson's projection was 150 jobs.

"In their process they would create a whole bunch of corn jobs. Well, they were already there, folks — you don't get to count it twice," he said.

Swenson said he is particularly concerned about what's happening in his own state, where there are 27 plants currently processing corn, mostly for ethanol, and more plants are either under construction, planned or proposed.

Swenson said he believes false expectations are fuelling the construction of these plants.

"It is biofuels hysteria down there," he said. "It's like a gold rush."

Sask. wants to produce 400M litres a year

Ethanol, which is produced when organic material such as corn, wheat, barley and hops ferments, has attracted increasing interest in recent years because it stems from renewable resources and creates fewer greenhouse-gas emissions.

The federal Conservative government announced a plan in May that would see all Canadian gasoline contain five per cent ethanol by 2010.

In Saskatchewan, high hopes are being pinned on ethanol as a job generator.

The provincial government wants to see 400 million litres a year produced, with most of it being blended with gasoline.

It has predicted there could be at least 450 jobs, plus spinoffs in the livestock industry and other industries.

Ethanol is produced when organic material — like wheat, barley and hops — ferments. The

Ethanol will create jobs, boost land values: proponent

Lionelle LaBelle, the president of the Saskatchewan Ethanol Development Council, agreed with some of Swenson's points, but said there are economic benefits to be had, including more jobs and increased land values.

"In Iowa over the last 10 years ,the actual increase in farmland values has been absolutely dramatic," LaBelle said.

Swenson warned that if the industry is going to grow, it should happen on the basis of accurate and unbiased information, not hype.

Ethanol projects booming across Canada

Saskatchewan isn't the only province where there have been recent million-dollar investments in bioenergy.

Alberta, for example, announced a $239-million program in early October that boosts the cash incentives for producers of ethanol, methane gas and electricity generated from waste.

In P.E.I., a new Charlottetown-based company announced plans for a $40-million ethanol plant in Georgetown that would use sugar beets to produce ethanol.

Suncor Energy Products Inc. opened the taps at the biggest ethanol plant in the country in July in St. Clair Township, near Sarnia, Ont. The $220-million plant will produce an estimated 200 million litres of ethanol a year using 20 million bushels of surplus corn.