Friday, August 8, 2008

Ethanol Mandates to Biopetroleum

A couple of interesting things to talk about today. The first is that the US EPA has denied Texas Governor Rick Perry's request to cut the ethanol mandate in half this year. Perry's request came at a time when corn prices skyrocketed to over $7 per bushel and put a squeeze on livestock farmers, particularly located in Texas. However, now that corn has dropped off its previous high prices, the EPA denied the request. This is the right move because the ethanol mandate, created by Congress to set a goal of 9 billion gallons of ethanol produced by 2008 and 11.1 billion gallons produced for 2009, is just that, a goal. Since the US is already very close to the 9 billion gallon per year mark necessary to satisfy the 2008 standard, cutting it would not significantly affect the production of ethanol or the prices for the feedstocks that go into it. At the same time the EPA, in its ruling, stated that it found sufficient corn to satisfy the 9 billion gallon level for 2008. In the end, I fear that Perry's clamor for a cut in the ethanol mandate comes in an election cycle where politicians look to satisfy some of the discord among their base -- in this case, the cattle farmers. While the situation for livestock farmers isn't desirable, the path that Rick Perry took to try to alleviate the problem wouldn't have solved anything -- a more efficient method would be to increase the price of fed cattle on the CBOT (Chicago Board of Trade) in order to give these farmers a fair prices.
The entire article above leads into the importance of the next piece of news since corn-based ethanol is emerging as the bridge to a whole new generation of biofuels. A group of researchers in China have developed a way to convert sunflower shells (biomass) into liquid petroleum. Although the fuel has several contaminates that make it impossible to go directly into fueling a car engine, the researchers are working hard in developing the methods needed to "upgrade" the fuel. For those of you familiar with Fischer-Tropsch, this method is very similar in converting biomass into liquid alkanes. However, it effectively eliminates many of the organic acids that resulted in corrosion and decay of the fuel when stored over time. The excitement about this new method is that while it may not be a simple way to convert biomass directly into a liquid transportation fuel, it can be built in small scales, which would allow it to be taken to a farm of other location and used to convert the low energy-dense biomass into a higher density liquid. This liquid could then be transported to the large "biofuel-refinery" where the fuel is converted chemically or biologically into the appropriate fuel (ethanol, butanol, gasoline...). For this reason, this new method is very exciting and we will probably hear more from this group in the future.
For more complete details on the "deoxy-liquefaction" technique, go to


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