Roadmap to Sustained Ethanol

TOMORROW'S FUEL Roadmap to Sustained Ethanol CHICAGO - In his State of the Union Address earlier this year, President Bush introduced the Advanced Energy Initiative, which seeks to reduce our national dependence on imported oil by accelerating the development of domestic, renewable alternatives to gasoline and diesel fuels. Since then, federal agencies, in conjunction with universities and private industry, have been evaluating viable alternate sources for ethanol beyond corn.  In 2005, corn was the single largest crop in the United States. Total U.S. ethanol production was 3.9 billion gallons, with 97 percent coming from corn. Today, 97 ethanol conversion plants produce 4.5 billion gallons. For a Midwest farmer with 1,500 acres, the U.S. Department of Agriculture (DOA) notes that a 5- to 10-cent per bushel premium for corn destined for ethanol plants translates to a $9,000 to $18,000 increase in farm income that would otherwise not have been possible.  In contrast, 61 percent of the world's ethanol supply is from non-corn, sugar-to-ethanol sources. Although there are no sugar-to-ethanol plants in the United States, it has been recognized that without the development of other viable feedstock sources, corn can only supply a small portion of the nation's ethanol needs in the years ahead, even if all of the arable land in the nation was planted with corn. The knock on corn-based ethanol While corn-based ethanol may be viewed as a boon to Midwest farmers, it has recently come under criticism from other states, federal agencies, researchers and advocates. "I argue good science cannot compete with politics and big money," says Cornell University's David Pimentel. He asserts ethanol is much less efficient that other fuels, and he maintains that ethanol production from corn uses more energy in production than it yields in use when all inputs are considered. He also argues that the huge subsidies given to ethanol mask the real costs of building supply and infrastructure.  The American Coalition For Ethanol (ACE), an ethanol advocacy group, says that corn-based ethanol yields net thermal energy that is cost-competitive with other mainstream fuels. Yet in its own documents, ACE says ethanol yields 76,300 BTUs per gallon, compared to 128,450 BTUs for diesel, 116,890 BTUs for gasoline and 84,950 BTUs for liquid propane gas. Those Top 3 fuel sources beat ethanol's efficiency by 68, 53 and 11 percent respectively. As a result, ethanol is packaged with gasoline (E85) to mitigate some of the efficiency gap. "Ethanol has been oversold as a clean fuel," says Frank O'Donnell, a clean air advocate in Washington. "There is growing evidence that when used in the summer with reformulated gasoline, ethanol actually creates more smog and fine-particle soot."  The U.S. Environmental Protection Agency (EPA) has recently cited a number of ethanol plants as being major sources of volatile organic compounds, particulate matter, sulfur dioxide and nitrous oxides. The Agency is on record as saying the problem is common to most, if not all ethanol plants. In addition, as corn-producing acres increase, so does the use of fertilizers and pesticides, threatening groundwater. "Ethanol really doesn't do anything for fuel anymore," says Jerry Martin, a spokesman for the California Air Resources Board (CARB), which conducted its own draft study in 2005. The study argues that ethanol-blended fuels turn into vapors more easily. These vapors escape from fuel tanks and lines, resulting in an increase in hydrocarbon emissions. Additionally, it adds oxides of nitrogen (NOx), which contribute to both smog and fine-particle pollution. CARB also found that ethanol blends resulted in significantly higher permeation of emissions into the soft components of a vehicle's fuel system, and that permeation levels increase with higher summer temperatures. Besides economics and politics, social questions are involved as well. One is the concern that the ethanol premium that farmers realize from growing corn diverts a growing portion of a traditional food crop to the energy market. Second, the premium could be sufficient to entice farmers to change their crops to corn from other food crops. Third, the increased allocation of acres to corn for ethanol leads to increases in food and feed costs. Proponents suggest these are simply short-term effects, until corn-based ethanol finds some price equilibrium. Other critics say that the distribution costs from ethanol plants to gasoline refineries for blending add an unnecessary cost burden to consumers. In addition, new pending emissions regulations, as well as fuel innovations and new vehicle technology - including ultra-low sulfur diesel, particulate filters and various exhaust aftertreatment systems - are removing much of the emissions concerns previously associated traditional fuels.Sweetening the pot One alternate source for producing ethanol is using readily available sugar feedstocks. This month, the U.S. Department of Agriculture (USDA) and Louisiana State University released "The Economic Feasibility Of Ethanol Production From Sugar In The United States." The study analyzes availability and costs of using a number of feedstocks yielding sugars that can be readily used to produce ethanol. These include sugar cane juice, sugar beet juice, cane/beet molasses, raw sugar and refined sugar.  The attraction for sugar as a source lies in the combination of commodity prices, processing costs, available supply, ethanol conversion factors and ultimately, the net cost per gallon of ethanol produced from them. Sugar-based Ethanol Production FactorsCommodityMarket Price of CommodityEthanol Conversion Factor (gallons of ethanol/ ton)NetCost/ Gallon of Ethanol ProducedCorn - wet milled*$2.16 per bushel94.64$1.03Corn - dry milled*$2.16 per bushel98.21$1.05Sugar Cane$39.15 per ton19.50$2.40Sugar Beets$28.90 per ton24.80$2.35Cane/Beet Molasses$63 per ton69.40$1.27Raw Sugar$422 per ton135.40$3.48Refined Sugar$509 per ton141.00$3.97*Feedstock costs for U.S. corn wet and dry milling are net feedstock costs; feedstock costs for U.S. sugarcane and sugar beets are gross feedstock costs.
(Table source: USDA)

The USDA study concludes that today, with current ethanol market prices in the $4 per gallon range, all five sugar feedstocks could be used to produce ethanol at a cost-effective price. In particular, molasses, a byproduct of sugar production from cane and beets, was the most economical sugar feedstock for ethanol production at a cost of $1.27 per gallon of ethanol, and it is capable of competing with corn.

Over the long-term, the study also concludes that as the nation's ethanol supply ramps up, ethanol market prices are expected to fall below current levels. The USDA's chief economist, Keith Collins, notes that the price of ethanol futures for 2007 is at $2.50 per gallon. With the exception of domestic corn and molasses, this drop in ethanol prices would make other sugar feedstocks uneconomical. This conclusion will provide economic and policy guidance in funding the production of ethanol going forward.

The study also demonstrates the role that the available supply of a dominant feedstock can play in a country. In Brazil, where sugar cane is the most abundant source, the net cost of ethanol produced from sugar cane is $0.91 per gallon. In Europe, where sugar beets are the dominant feedstock source, the net cost of ethanol produced from sugar beets is $2.89 per gallon. 

Within the United States, next to corn, molasses leads the way at a net cost of $1.27 per gallon of ethanol. The challenge with molasses, the USDA notes, is logistical - getting enough molasses at central production plants to minimize distribution costs. 

In the years ahead, market prices for pure ethanol, as well as commodity feedstocks, will influence which mix of feedstocks is used. But, the USDA says, the future market prices for gasoline will be the key factor: A lowering of gasoline prices lessens the merit of ethanol production, whereas an increase in gasoline prices can drive ethanol production and use forward. 

The growing trend to fiber An even more abundant domestic source of feedstocks exists in the form of cellulosic biomass - the fibrous, woody, and generally inedible portions of plant matter. These relatively new energy crops (E-crops) - including wood chips, cane stocks, poplar and switchgrass - provide an alternative to conventional energy sources that can dramatically impact national economic growth, national energy security and environmental goals.  Unlike sugar feedstocks, cellulosic biomass doesn't readily transform into sugars to then produce ethanol. Biomass is composed of sugars, but they are locked in complex polymer composites, created by nature to resist biological and/or chemical degradation. The key to energizing a new biofuel industry based on E-crops, researchers say, is to find ways that break down the cellulose into usable sugars.  But with the knowledge and tools, plants specifically designed for industrial processing to biofuel can be developed concurrently with new biology-based treatment and conversion methods. Cellulosic biomass is an attractive energy feedstock for the future because it is an abundant, domestic, renewable source that can be converted to liquid transportation fuels.Optimizing E-crops Responding to the Advanced Energy Initiative, the U.S. Department of Energy (DOE) set a goal of displacing 30 percent of 2004 transportation fuel consumption with biofuels by 2030. The roadmap to sustained ethanol production was released in the 'Agency's "Breaking The Biological Barriers To Cellulosic Ethanol" report.