Saturday, January 19, 2008

Ethanol from Rice

A few posts ago I mentioned the state of the Japanese ethanol industry, or lack thereof, but a recent article in Reuters caught my eye and I'd like to take a second to give you an update on what is going on with ethanol in Japan. Although biofuels are not and will never be a major factor in Japanese gasoline, because of the small land area and low biomass potential, the Japanese government is not totally turning its back on the fuel. The fact that Japan must import nearly all of its petroleum necessitates a keen desire to leave no stone unturned. And so the Japanese government is going to pay half of the $15 million dollars to construct an ethanol plant in Niigata Japan under the control of the National Federation of Agriculture Cooperative Associations (or Zen-noh in Japanese). For those of you familiar with ethanol economics, you may quickly realize that $15 million dollars for an ethanol plant is a real steal. Well, the answer is yes and no. The reason this plant's capital costs are so reasonable has a lot to do with the fact that, when finished in March 2009, will only be able to churn out 220,000 gallons of ethanol per year. Compare that with some of the smallest ethanol plants around the Midwest with the capability of producing at least 30 million gallons of ethanol per year and you can see that the Japanese are not expecting to change the face of their automotive industry with the plant.

The idea behind a small biofuels plant is to allow the biomass waste from Japanese extensive rice crop to be used in a constructive way to try and offset Japan's thirst for automotive fuels (Japan is third, in gasoline fuels consumption behind the US and China, at 15.8 billion gallons per year). Forth if you count the state of California. But back to the ethanol plant, another reason for the ethanol plant is that low profitability in Japan's rice fields due to cheaper imports cutting out their bottom line has forced many farmers into the major cities leaving behind abandoned fields. The Niigata plant hopes to take advantage by planting non-edible rice that has a higher conversion ratio into ethanol to be used in their plant. The Japanese government is also sponsoring two other small (3.3 million gallon per year) ethanol plants to be built in the Northern Japanese island of Hokkaido using the same rice to ethanol concept.

If all works out by 2009, I guess this just might legitimize the term "rice-burner" used so often in the United States.

Below is a beautiful picture of the Western suburbs of Tokyo with Mt. Fuji just visible on the horizon.

Picture courtesy of:

For the original article from Reuters, follow the link below:

Friday, January 18, 2008

Best Land in the World

As the numbers come in for 2007, it looks like land values for farms in Iowa will set a new record. The average acre of farmland in Iowa increased 22% in value over the past year alone ($705) to reach a new average high of $3,908, according to Iowa State University extension economist Michael Duffy. Although it still isn't as high as the price adjusted for inflation from 1979, the increase is substantial. Duffy attributes the 1979 farm price increase to a surge in demand for grains and soybeans from the Soviet Union and points out that a similar phenomenon is occurring today. The increase in demand for ethanol along with a surge in demand from China has made this fertile land all that more desirable. While increased assessed land prices will surely mean higher taxes for the individual farmers along with rent prices, it has caused the net worth of farmers from across the Midwest to increase dramatically. Duffy adds that although areas such as rural Illinois have seen land investors come in, the most recent trend is for local farmers to reinvest this new net worth in more land to expand their operations and keep a majority of the farmland locally owned. Let's keep it that way.

For more information check out:

Wednesday, January 16, 2008

Oil From Corn

Researchers at Iowa State University have announced that they are working towards a method to extract oil from corn during the ethanol production process to make biodiesel. Tong Wang is working on this method that would allow for the production of ethanol at the same rate, but would extract the oils from the corn during the early stages of fermentation so that the oil could be used for a co-product; biodiesel. The idea is that during the treatment of corn that is to be fermented, oil is released some of it remains associated with the solid material leftover from fermentation that become dried distillers grains (DDGS). According to Wang, this extra oil in the DDGS is bad for cattle and can lead to swine putting on softer fatty tissue that is undesirable in the meat. In this way, Wang could down two birds with one stone if he is successful in eliminating excess oil from DDGS and is able to make money off of the oil by producing biodiesel.

Wang and Iowa State University are working with FEC Solutions, a Des Moines based energy company that specializes in the research and implementation of technologies for ethanol and/or biodiesel plants. Currently a lot of research going on in the United States related to ethanol has to do with the idea of valuable co-product generation in order to boost revenue. Co-products can involve anything produced of value during the production of ethanol and include DDGS, biodiesel, carbon dioxide (for use in the beverage industry), starch, and high-fructose corn syrup. Typically ethanol plants are divided into two categories -- 'wet mill' and 'dry mill' ethanol plants. The definition of a dry mill ethanol plant, which is by far the most numerous type, is a plant that take dry corn and grinds it into flour. The flour is then used in the fermentation process to make ethanol and DDGS are the solid co-product. A wet mill ethanol plant separates several products from the corn in a liquid phase that results in co-products such as starch, high-fructose corn syrup, protein, and of course ethanol and DDGS. Although a wet mill ethanol plant would sound like the way to go for most companies, the capital costs in building a wet mill ethanol plant are much higher than a dry mill plant because of the intricacies in separating the various valuable products. For this reason, even if a wet mill plant would be profitable after selling its coproducts, it is too costly for most people to acquire the number of investor willing to take a risk in such a plant. This is why currently in the United States only around 1% to 2% of the total ethanol plants are wet mill plants.

My personal comments are that what Wang is doing at Iowa State University is a good idea. The search for new markets is what drove entrepreneurs to ethanol in the first place and it could result in a large boost for ethanol producers. However if he doesn't develop a system that can be used in existing ethanol plants or in a way that will avoid large capital costs, the idea will have trouble getting off the ground -- particularly in the current situation where new investors are hard to come by for new ethanol plants.

Railroad Renaissance

7.6 billion gallons is a large volume to try and distribute throughout the United States. As the ethanol industry continues to grow, allowing product to be efficiently transported will allow prices to come down and more people access to ethanol. In the absence of a dedicated pipeline, ethanol has relied on the railroads to load large 'unit trains' capable of hauling up to 3.25 million gallons of ethanol at a time in the 100-plus rail cars. According to Reuters, nearly 75% of the ethanol plants currently producing ethanol in the United States have the ability to load these large trains at their site. However, very few rail terminals at major hubs (such as in California or Florida) have the ability to unload these massive trains. The benchmark seems to be that for efficient transportation, all 100 cars should be unloaded in approximately 24 hours so that the train can remain active. Years of neglect have resulted in an outdated railroad that has a much smaller capacity than it had even in the 1980's.

Ethanol may be the kick that the railroads need to boost profits and update their services. Since the latest RFS passed the Congress mandating increased use of ethanol, industries such as the rail industry have been able to plan more investments because of the guaranteed increase in ethanol production. Union Pacific's vice president Paul Hammes was quoted by Reuters as saying that they will move to significantly increase the ability of terminals to accept unit trains full of ethanol in the next few years. Hopefully this will allow for a general renewal of the freight-railroad market in the United States and maybe even, with a lot of investment, the ability for railroads to provide better stand-alone passenger rail service that won't be affected by freight cars tying up the lines.

Here is a neat picture of an ethanol unit train entering Kansas City:

Below you will find a link to the original article by Reuters:

Monday, January 14, 2008

Futuristic Automobiles

Following the Detroit auto show, where it seemed like every car marker was bending over backwards to create the next step in 'clean energy,' I wanted to know exactly what the current trends are in car manufacturing. Below is a chart from the Department of Energy, released Dec. 2007, and can be found at:

The above graph is a great representation of the current trends in the United States, in terms of what type of car is being produced. Keep in mind that my personal point of view is that one car should combine several 'green' qualities to qualify as the car to bring us into the future. However this chart only shows the distinct types by number of models sold. Although it is no surprise that hybrid and E85 flex fuel vehicles (FFVs) are on the increase, pure electric vehicles and compressed natural gas (CNG) vehicles have been reduced over the past 3 years to almost zero models offered. Pure electric vehicles, also known as battery electric vehicles (BEVs), are cars run only on electricity by plugging the car into an outlet, something that isn't catching on quite yet. CNG, something that I never thought was a great idea, is probably suffering from a strong increase in natural gas prices and so the idea of fueling a car on natural gas has become less appealing.

Finally, as I've stated in earlier posts, while hybrid/E85 vehicles are a great way to go towards conserving gasoline usage and using less imported fuels, BEVs are not the way to go at this point. To underscore this point, there is a succinct graph from Michigan State University that highlights a common misconception among consumers -- 'that electricity is a very clean and efficient fuel, much more so than ethanol or gasoline.'

As the graph clearly shows, the amount of fossil energy (non-renewable energy such as coal or gasoline), compared to the amount of energy that comes out is astounding. Not only does it take more fossil energy in the form of petroleum to produce gasoline, but electricity is only about half as efficient! Before people jump all over this post with comments I want to clearly point out that this is a snapshot in time -- numbers change and things become more efficient. Let's just make sure we continue to monitor the facts so that we all can make the correct decisions in the future.

Electrical Switchgrass?

Although most of my posts are centered directly around the production of biofuels, a slight foray into a closely related topic never hurts. Recently I was asked about an energy company's goal of co-firing their electricity generating plant with coal and switchgrass. After a little digging, I found that the Chariton Valley Energy Cooperative -- a locally owned utility in Eastern Iowa, was testing out how replacing 10% of the coal with switchgrass would have on electricity production and emissions of gases. For a little more background, Chariton Valley is running this project under the control of Alliant Energy, which serves most of the Eastern Iowa area.
Chariton Valley ran its tests at its plant in Chillicothe, Iowa with continuous biomass (switchgrass) burn for 1,675 hours to collect data (approximately 2 months). In this amount of time 15,647 tons of switchgrass was burned, eliminating the need for 12,060 tons of coal. The reason that these two numbers differ reflects the lower energy density of switchgrass (approximately 23% that of coal). In other words, according to Heller et. al, adding 10% biomass to cofire with coal will only result in an increase of 8.9% in total energy delivered. However, there was some good news from the study. The Department of Energy, which monitored the pilot-project, recorded that the power station had a drop of 62 tons of sulfur dioxide and 50,800 tons of carbon dioxide from the plant when using 10% biomass, which is a drop of approximately 10% in both emissions categories.
That was the good news, here's the bad news. According to Chariton Valley's own website, electrical companies might be able to pay farmers $45 per ton of switchgrass produced (emphasis on might be able). One acre of land will produce approximately 11.5 tons of switchgrass (or a $517.5 value). Keep in mind that the ability for Chariton Valley to purchase switchgrass at $45 per ton is in part due to the ability to produce 'renewable energy credits' that can be used to sell to other companies as a carbon-offset program. (This test run produced 19,600 credits for the company). But back to switchgrass... if you are a farmer making $517.5 per acre on switchgrass and corn, let's say is $4.00 per bushel, (even though it is more like $4.80 per bushel right now), you might want to go over the economics real quick. If a farmer can get 180 bushels of corn per acre in a good year, that would be a value of $864 per acre shattering the $517.5 per acre price for switchgrass.
I regret that the value of an agricultural product rarely if ever reflects the intangible benefits it provides -- such as a better habitat for the environment, less soil runoff, or a decreased need for nitrogen fertilizer inputs. If these categories were factored into the price, switchgrass would probably win hands down, but they don't. And because of this, switchgrass is definitely a losing proposition for farmers in the very fertile region of Eastern Iowa. Hopefully this technology can be used in states where switchgrass might be the only option for sustained plant growth such as Western Nebraska, but until prices can go above $45 per ton for switchgrass, the farmer will be losing money by switching entire fields to the tall prairie grass.

To review my sources or get more information, follow the links below:
"Corn Prices." Chicago Board of Trade. 14 Jan. 2008. 14 Jan. 2008 .
"Economic Benefits." Chariton Valley Biomass Project. 14 Jan. 2008 .

Heller, Martin C., and Timothy A. Volk. "Life Cycle Energy and Environmental Benefits of Generating Electricity From Willow Biomass." Journal of Renewable Energy (2003). 14 Jan. 2008

"State Energy Program: Iowa Utility Mixes Switchgrass with Coal in Cofiring Test." Department of Energy. 7 June 2007. 14 Jan. 2008 .

Sunday, January 13, 2008

GM Gasification

Announcements coming out of the Detroit Auto-show today are not only focused on innovation as far as the car's engine is concerned. General Motors, who along with Ford are emerging at the forefront to push for more ethanol use in the United States, has announced the purchase of part of cellulosic ethanol technology pioneer Coskata Inc. This company, based in Naperville Illinois, is pioneering a gasification technology where cellulosic biomass (encompassing nearly any kind of plant material) is turned into carbon monoxide and carbon dioxide gas. This gas stream is then fed into a reactor where special microorganisms are able to grow on the gas and produce ethanol. According to Coskata, the patented microorganisms have already been made and initial ethanol production will begin in 2011. Independent research done at Argonne National Laboratory has revealed that this process of gasification using Coskata's bacteria is able to produce ethanol using only 1 gallon of water per gallon of ethanol produced (compared to the 3 to 1 water to ethanol ratio currently realized). Furthermore, current ethanol production results in 1.6 times the energy in ethanol compared to the energy input necessary while this new technology yields 7.7 times the energy. These kinds of gains in energy and water responsibility are great news for Coskata, GM, and all the other researchers striving to bring some form of this technology into being a reality. And it doesn't hurt that this new technology allows for ethanol production to cost approximately $1 per gallon!
GM is quoted as saying that the impetus for investing in companies such as Coskata came after the most recent Renewable Fuels Standard (RFS) passed by Congress that let the automakers know that ethanol is here to stay. Hopefully this "trickle-down effect" will continue past companies such as GM and Ford, who are finally beginning to take the lead in establishing new automobile technology, and finally begin to affect the gas station and the consumer. Both GM and Ford have lamented this week that until more gas stations are equipped to handle E85, the concept cars that could provide such a breakthrough towards efficient ethanol use will not come into being. Currently only 1,400 out of 170,000 gas pumps in the United States are equipped to handle E85.