Ethanol Rollercoaster

A couple of posts ago I tried to map out the net profitability of an ethanol plant in the United States. I try not to get bogged down in numbers and details so that people can quickly read and get the most out of what I have to say. I found a very good and succinct picture that I'd like to show that illustrates the point I was making even better.

http://ethanolproducer.com/article.jsp?article_id=3635

This graph, from DTN's ethanol page, reflects the tight economics of an ethanol plant. Even though there have been several months particularly this past summer in which net profits have been very good, the situation has taken a turn for the worst. This really isn't a reflection on ethanol, or an inability to compete with $100 a barrel ethanol, rather it is a reflection of the changing economy that is now coupled to the swings of the oil and energy markets. I wanted touch on this idea again because of what happened this past week on the Chicago Board of Trade (CBOT) -- corn prices reached $4.95 per bushel. This is a reflection of investors moving to secure enough acres to satisfy the varying demands of corn, soybeans, and other agricultural products. This is not to blame one single industry for the shortfalls -- even this past year as acreage became tight the United States exported record amounts of corn and soybeans to China, so there is definitely supplies to feed people in the future. The problem isn't necessarily a shortage of any one grain, but at $4.95 per bushel, corn becomes an increasingly expensive feedstock for an ethanol plant trying to get by on tight earnings. This situation might result in a slight pullback or consolidation in the industry to try to absorb these potential loses if the price of corn doesn't recede.

What this information proves is that researchers need to continue to work hard in moving from an ethanol industry dependant on corn, towards one that can use multiple feedstocks based on their costs -- wood chips, switchgrass, and even corn all combined into a single effort to balance our need for fuel and other end products.

Ford 'Escapes' Traditional Establishment

One thing I can't stand is when people close off their minds and concentrate on one aspect of a problem and end up totally ignoring the real solution. Often, the solution involves several key factors that come together to solve the problem. In moving towards energy independence or GHG emission cuts there is not one reasonable scientist, engineer, or other intelligent civilian that would tell you there is one single solution. While a concise vision of our transportation fuels future will allow for the appropriate infrastructure to be built, there should be absolutely no competition between hybrids and flex fuel vehicles -- they are both extremely important components to build a successful renewable fuels fleet in the United States.

So what really gets me is car companies seemingly refusing to incorporate two fuel-saving technologies into one car. This is why Ford's announcement that they had built an E85 capable hybrid Escape back in January of last year was such a great step away from the status quo. As a personal note, I actually got to see this car in person and was very impressed with its size and design. What's more is that, when powered by 85% ethanol and with the benefits of the hybrid drive train, the car can get 40% more gas mileage (12mpg more) than regular escape models and emits 25% less GHGs from its tailpipe than hybrid escape models (this is on top of the carbon capture accomplished by the corn used to make the ethanol). Although Ford doesn't plan on mass producing these vehicles until a better E85 infrastructure is created in the United States, it is great that one of the companies is joining two important components of our renewable fuels industry.

As a final thought, and something that I would like to write about in the future, Ford is leading the way in a third technology. It's something I touched on a few days ago in my post on turbocharging engines run on E85. Ford seems to have the first model of this technology, known as Ecoboost, which will be placed in their 2008 Lincoln. According to Ford, the Ecoboost's turbocharging engine can run on E85 (although it doesn't have to), and results in a V4 having the same power as a V6 and a V6 having the same power as a V8. All this while accomplishing 20% better fuel mileage. With the cost savings in the system, Ford says that the initial cost of purchasing a car with Ecoboost will be recouped within 2 and a half years. This might not sound great but when compared to how long the average hybrid takes to recoup the up-front costs (12 years) the Ecoboost may be able to penetrate developing markets such as China or India much faster than hybrid vehicles.

Ultimately, we need to see a vehicle created with hybrid technology, as well as an Ecoboost engine in the United States. I think the vast increase in fuel economy and the ability for American to pay up-front in order to receive benefits later on will allow the car to be a success here in the States. Hopefully Ford and the auto industry will respond to the fact that consumers want a solution.

http://media.ford.com/article_display.cfm?article_id=22474

Ethanol OK According to EPA

The Environmental Protection Agency (EPA) released a study on tracking emissions data and fuel use from 1995 to 2005 across the United States. The goal was to monitor US gasoline while ethanol phased out MTBE. In conjunction with this phase-out, the report also monitored the effect of mandatory reductions of sulfur in reformulated gasoline (RFG). The conclusions of the report is that as ethanol was phased into a 10% blend in gasoline between 1995 and 2005, tailpipe toxic emissions dropped 4.7% and harmful, smog forming nitrogen oxide (NOx) emissions decreased 5.7%. This is encouraging because previous calculations on ethanol use pointed towards a drop in GHG emissions but a wash on the amount of NOx emissions compared to regular gasoline. This is not due to a component of the ethanol in the gas tank, but rather a reflection on the volatile organic compounds (VOCs) released at the ethanol plant when drying the dried distillers grains (DDGS). So the net NOx emissions from growing the corn, refining the sugars into ethanol, and then emitting them from the car is approximately the same as gasoline. However, what the EPA's study shows is that although scientists must continue to study ways of reducing or capturing VOCs at the ethanol plant (which is going on right now), the use of ethanol has significantly reduced air pollutants and smog in populated areas. The study also found that MTBE replacement by ethanol has had a profound effect on ground water contamination. This study is encouraging since one of the most important things in developing a new industry, such as ethanol, is to make sure that the costs don't outweigh the benefits. This isn't just in relation to energy, or gasoline usage, but we also must take care not to have harmful environmental outcomes that would make ethanol less beneficial than gasoline. With this EPA study, it looks like ethanol is on the right track and further development at the ethanol plant level, will make this product even better to the air and water we depend on.

To view the report in its entirety, please follow the link:
http://yosemite.epa.gov/opa/admpress.nsf/d0cf6618525a9efb85257359003fb69d/0a599cb6f1360cbd852573c50054e64e!OpenDocument

Switchgrass Surpasses Expectations

After Congress' announcement that we would have a new RFS (renewable fuels standard) set at 36 billion gallons of ethanol, the need to push hard towards the next generation of plant derived ethanol became increasingly more important. Although corn has been an excellent stepping stone to establish the market and infrastructure for a renewable fuels industry, the need to create ethanol from other biomass sources is needed if we are to stabilize the tug-of-war going on for acreage in the heart of the midwest. One solution is to grow non-grain plants in climates not suitable to corn or soybeans, thus by-passing the potential problems of using too much fertile land for energy rather than food. Switchgrass, a tall perennial grass, has been looked at as a potential replacement because of its ability to grow in areas with lower rainfall totals, lower fertilizer inputs, and its ability to provide a low-erosion habitat for wildlife.


Ken Vogel, a USDA scientist working with the University of Nebraska has just completed a 5 year study looking into the ability for switchgrass to act as a cellulosic biomass feedstock for ethanol. As Vogel points out, the successful renewable fuel substitute should "1) have superior environmental benefits, 2) be economically competitive, 3) have meaningful supplies to meet energy demands, and 4) have a positive NEV" or (Net Energy Value). One of the desires to conduct his farm-scale study was to see if there would be a difference in the values found in real-world situations versus those found on tiny (5 square-meter) test plots.


In fact, Vogel and his team found that the values were even better when applied to their farm scale plots -- mainly because the values did not correlate on a strictly linear level when scaled up. For example, the point out that diesel input values will remain constant for many aspects of the grow of switchgrass, no matter what scale the switchgrass is grown on. What they found was that switchgrass decreased GHG (greenhouse gas) emissions an average of 94% over gasoline, and in some cases neared 100%. Furthermore, the NEV was positive -- approximately 700% was the final ratio indicating that the energy of the final product was more than 7 times the total energy needed to grow the crop. These results seem to qualify Vogel's four criteria to a successful renewable fuels feedstock. One hurtle remains in the development of switchgrass, however, and that is the development of efficient and inexpensive technologies to extract the energy into the production of ethanol. While some plants are capable of using saccharification and hydrolysis to release sugars in the switchgrass, this is very energy intensive and yields slightly less ethanol per acre than corn. However, once the technologies from the ethanol plant's perspective is found, it will be good to have this kind of research to point agriculturalists in the right direction as to what sorts of crops to grow.





To read the article by Vogel et. al in its entirety, go to http://www.pnas.org/cgi/reprint/0704767105v1





Here is a picture from the report showing the farms 10 farms used in the study and their relatively low soil moisture content.

Vogel et. al 2007

Ethanol Infrastructure

The ethanol industry got a large boost today as Magellan Blending announced plans to build blending terminals in its home state of Oklahoma, as well as Georgia and Delaware. This is important to the ethanol industry because of the relatively few terminals capable of blending ethanol due to the high upfront investment needed to build the blending station so that the exact blend (either E10 or E85) can be made. Not only is this important for simply the logistical nature of storing and blending ethanol into gasoline, but it also allows for cheaper prices in ethanol to occur. This is because ethanol lacks a nationwide pipeline like the one gasoline has, which necessitates the use of trains to hail the ethanol to its destination. The problem isn't the train, which can be very efficient and relatively cheap when hauling 100 cars of ethanol, but most blending stations that exist now don't have the capability to accept the train because they don't have any tracks. This creates the need to haul the ethanol by truck, making the process more inefficient and more costly to the consumer. The Magellan station will be able to accept rail ethanol and so should be able to streamline the process of getting ethanol ready to run in your car.

Just for fun I've included a couple of pictures showing ethanol blending stations and equipment below.

http://www.eureferendum.blogspot.com

http://www.macdesigninc.com/images/Mdi_Micro_Blend.JPG

Japanese Ethanol

Approaching the Group of Eight summit in Hokkaido, Japan, that was to be a time to discuss the next step forward in combating global warming, the Japanese government was dealt a serious setback. The Daily Yomiuri, one of Japan's premier newspapers, is reporting that the Japanese government's plans to blend 3% ethanol into the gasoline sold on a sugar cane rich island in the Southern part of Japan has fallen through. Evidently, Miyakojima is situated in the Okinawa Islands in extreme southern Japan and has a large amount of sugar cane, which is able to grow well on the tropical island. The government wanted to blend 3% ethanol into the 19 gasoline stations on the island to help offset some of the greenhouse gases seen as contributing to global warming. However, the Petroleum Association of Japan stepped in and was able to convince Nippon Oil Corporation, the owner of 16 of the 19 gas stations on the island, to refuse to blend ethanol into their gasoline. Because of the staunch opposition from the oil industry, the government was forced to give up plans on the island for the time being.

Japan does have a problem -- because of its size and population density, biofuels simply will not work using conventional cellulosic materials on the island. That is why technologies such as electric hybrids or ethanol derived from municipal wastes are in such high demand. They simply must move towards the ideas that might cost more than the plant-derived materials the United States or Brazil can use, because they have too. Either way, I guess we better hope that the Group of Eight nations have a better plan to move forward on preventing GHG emissions at their summit because, if left up to the Petroleum Association of Japan, the Japanese will continue to drive on regular gasoline.

To follow up with the original article, follow this link to the Daily Yomiuri:

http://www.yomiuri.co.jp/dy/business/20080106TDY02313.htm

Below is a map of the Japanese Islands (Okinawa in the lower left hand corner), and the prefecture of Okinawa pictured with Miyako Island shown.

http://www.unitedplanet.org/quest/images/countrymap/map_japan.jpg

http://en.wikipedia.org/wiki/Image:Miyakojima_in_Okinawa_Map.gif