Friday, January 25, 2008

Venter's Magic: Synthetic Genomics

Something that probably won't register much more than a blip in the ethanol news but will have serious impact occurred today when J. Craig Venter, the man who was the first to fully map the human genome by mapping his own, announced that his lab had established a completely synthetic genome that could potentially sustain life. Their lab's goal is to be able to build a genome, (a long string of DNA that makes up genes capable of supporting life), capable of supporting the most basic functions of a living cell. Although some question the ultimate goal of the study and claim that it is some kind of mad-scientist's quest to develop the power to control life, the more probable goal is something that could impact the world of biofuels in the years to come.
Building a synthetic genome means that a lab would know which basic set of genes, "housekeeping genes," are needed to support life and would then be able to insert one or two genes needed, say, to produce ethanol, or butanol, or hydrocarbons. What you would have created is a bacteria cell with a genome created in a lab with the sole purpose being to live and produce the desired product. This is the kind of research going on at J. Craig Venter's lab, Synthetic Genomics.
The announcement today was the discovery that they had successfully built a very small synthetic genome, (582,970 'base pairs' or pieces of DNA), and were able to place the genome into the bacteria that the synthetic genome was modeled after, mycoplasma genitalia. Although this is a great step forward and a huge jump in the number of base pairs connected synthetically, by comparing it to the number of base pairs in the human genome, (3.1 billion representing approximately 50,000 genes), it's easy to see that they are nowhere near having the capability to produce extensive genomes. This might not be a problem if they are only trying to make a synthetic genome with the fewest number of required genes (which is currently unknown so the exact size would be hard to guess at). Also, they inserted the synthetic genome into a bacteria they modeled the DNA off of, AND the bacteria still had its original genome. Let me repeat that, they do not know how to remove the original DNA, replace it with the synthetic genome, and then get the bacteria to 'reboot' with the new DNA. They are only able to get the host to live with its old genome and then function with the new synthetic DNA.
So what impact is this science having right now? Well, they are making definitive progress towards their goal; a goal that could potentially have industry altering effects from biofuels to medicine production to understanding the essential components of our DNA in a more extensive way. Right now, the breakthrough is still on the horizon, but it has definite potential for ethanol production and the goal may be closer than we think.

Article in the Chicago Tribune on Venter's announcement:,1,6501125.story

Website for Synthetic Genomics:

Wednesday, January 23, 2008

Grocery Store Prices

Chuck Schumer, the democratic senator from New York, has called for a repeal of the import tariff on ethanol because he feels that the surge in demand for corn-based ethanol in the United States has led to large increases in grocery store prices. He is supposedly especially concerned about a commodity dear to some of his constituents in up-state New York -- milk, which has increased substantially in the past few weeks. In coming to these conclusions, Senator Schumer not only perpetuates one of the greatest known and disproven myths about ethanol, but it shows how little he understands this very complex and dynamic situation that ethanol finds itself in.
First of all, let's get the facts straight. Ethanol demand has increased considerably in the United States leading to increased demand for corn and a subsequent competition for acreage, which has driven up prices for commodities such as corn and soybeans. This strong uptick in ag. products is what Schumer and other critics of ethanol hold as the reason for surging grocery prices. If this correlation is true then we should see a large price increase in the consumer price index CPI over the last few years relative to the prior string of years in which corn and soybean prices were relatively low. The USDA, through their Economic Research Service, found the CPI increased 2.6% between 1996 and 2005, and then only 2.3% in the year 2006. They went even further to record that the CPI for meat products in 2006 only increased by 1%, which would refute any claims that the CPI isn't responsive to corn based products. Iowa State University study these trends and found that a 30% increase in the price of corn would only have a 1% increase in grocery prices.
Experts offer that energy prices for transportation (such as oil and gasoline) along with increasing labor costs constitute a much larger piece of why milk, eggs, and other food staples have increased.
But the above response is only one half of why Chuck Schumer is not only wrong in this case, but proven his naivety in this debate. The other half is the debate about whether or not to have a tariff on imported ethanol. I feel that people don't realize that the main reason the tariff exists isn't for protectionist measures, it is to prevent the Caribbean countries and Brazil from gaining taxpayer benefits that the ethanol industry currently enjoys. What I'm referring to is the 51 cents per gallon blending credit the government pays to blenders in order to establish a market for ethanol in gasoline. The tariff is set at 54 cents per gallon and is used to prevent other countries from exploiting the 51 cents per gallon taxpayer credit that they would otherwise enjoy. What Schumer needs to do first is debate the merits of a 51 cents per gallon tax credit -- to which I see the benefits both of having it available and of doing away with it. However, as long as the credit exists, we need an import tariff to prevent Brazilian and Caribbean nations from exploiting our tax dollars with the 51 cents credit.
Finally, I can't resist using a great analysis refuting the food versus fuel arguement from American Fuels ( The analysis shows that the amount of corn produced, subtracted by the amount of corn used for ethanol, has actually increased since 2005 -- from 9.6 billion bushels up to 10.5 billion bushels. This would seem to negate the argument that some kind of severe shortage of corn has put positive pressure on other industries.
One thing for sure is that politicians definitely make the decisions in this country, but that doesn't always mean that they have the best facts or present the pertinent arguments. Schumer would be doing his state and country a disservice if he follows knee-jerk reactions against ethanol just to assuage fears about rising milk prices.

Original article refuting Sen. Schumer's remarks:

USDA analysis of trends between ethanol and CPI:

Tuesday, January 22, 2008

Brazilian Rainforest

One of the greatest fears one should have in developing a new technology is that the benefits would be erased by some alternative impact the new technology has on the world. To be more specific, it is imperative that while ethanol production develops and matures as an industry that we watch out to prevent widespread deforestation in tropical areas, or work to relieve stress to food markets that biomass crops might have.

With this is mind, there is some very good news from Brazil. Once on the minds of soybean farmers in the Midwest who worried that Brazil would use deforestation to plant larger and larger tracks of soybeans, the fear has now shifted to the environmentalists who worry that encouraged sugar cane growth might take over land covered by the rainforests in the Amazon region. The problem with this is that the forests hold a lot of carbon dioxide and removing them would eliminate environmental gains made by planting a biomass crop for use as a renewable fuel. Luckily, farmers in Brazil are realizing that the land underneath the forest canopy is devoid of carbon and most nutrients since these things are held high up in the trees and plants. Soybean farmers are realizing that they have to employ intensive fertilization efforts even to get 4 or 5 years of planting soybeans on land formerly maintained by the rainforest.

Professor Peter Suurbeir, a researcher working in the Amazon region, has released his findings that increased ethanol production in Brazil has not resulted in increased deforestation of the rainforest. Rather, he points to decentralized land title claims that allow timber companies to pouch the land for wood and then leave the land vacant. However, his findings state that these lands are not employed in the subsequent production of sugar cane for ethanol.

Image showing the Amazon rainforest in green, with sugar cane production area shown in red dots, far to the South of the forested areas.

Original interview with Peter Suurbeir can be found at:

Monday, January 21, 2008

Natural Gas Find Benefits Ethanol Production

Professors at Penn State University are announcing the discovery of a significant natural gas reserve tucked in the Northern Appalachian mountain range. According to Terry Engelder, a professor of geosciences at PSU, the natural gas find could hold as much as 516 trillion cubic feet of natural gas. To put that into perspective, the United States uses approximately 30 trillion cubic feet of natural gas per year and the amount of proven natural gas reserves in the United States has been dropping over the past few years. This find, if realized, would be worth trillions of dollars to the United States' energy economy, according the Engelder.

What this means for the ethanol industry is that a major energy requirement to produce ethanol is now in greater abundance and will hopefully be available for a cheaper price. Natural gas prices are currently $15.1 per thousand cubic feet, up 61% from the same time 4 years ago. Since the use of natural gas in the production of ethanol, (used in the distillation process and in drying the DDGS), can account for approximately 2/3rds of the total energy and a large part of the cost to produce ethanol is used to purchase natural gas, it would be great news to the ethanol industry if gas prices could recede. To put things into perspective, it is estimated the 16% of the natural gas used by the state of Iowa is used by our ethanol plants. Although scientists are working hard to displace the need to use natural gas, and some ethanol plants have been built to work using coal instead of natural gas, coal power has notoriously negated much of the greenhouse gas emission benefits realized using ethanol and new technologies to displace the use of natural gas have not yet matured. Until that time comes, ethanol plants will rely on natural gas and moderating prices could have a large beneficial affect on the industry, especially in these times of tight economics.

Below is a picture of the Marcellus Shale, where the new natural gas field was found, from the United States Geological Survey USGS. The Highlighted area is the entire Appalatian area of interest to natural gas production, while the Marcellus Shale encapsulates the lower New York and upper Pennsylvania areas.

Original article from Penn State University:

Source used for establishing natural gas prices:

Sunday, January 20, 2008

Agricultural Realignment

Iowa's Secretary of Agriculture and former president of the Iowa Corn Grower's Association is pleased with the way the state's agricultural industry is headed. Bill Northey says that he "sees optimism grow" in those that are involved in agriculture in the state and points to a renewed attraction for younger people to take over the family farm as they grow older. Northey credits ethanol demand and a weak dollar for spurring exports and allowing the price of grain to climb to all-time highs (31% rise in corn prices and 86% rise in soybean prices from 2006 to 2007). This is great news for Iowa and the Midwest, where only a few short years ago the talk was all about how quickly farmers, and especially their children, were fleeing farms for the towns in Iowa or the cities in surrounding states. The fact was that farming in the 90's and early 21st century was a gamble that was making break-even profits at best. Although input costs such as nitrogen fertilizer and diesel have risen along with grain prices, the excitement that this time in agriculture is bringing to the Midwest seems to be the shot in the arm that the industry and the state needed. Hopefully, this trend can continue without a serious freefall in prices back to previous levels. For those of you who are not from the Midwest thinking that this is an issue simply for "those hicks" out in Iowa, think again. Profitable agriculture allows for prices to moderate and should eventually allow the United States Congress to lower subsidy payments to farmers, which would save money in the federal budget. The fact of the matter is that although some subsidy payments are still needed, you would be hard pressed to find a respectable family farmer in Iowa that wouldn't have supported Sen. Chuck Grassley and Sen. Tom Harkin's push a few months ago in the Senate to limit subsidy payments to farms at less than $250,000 per year.

Iowans want the steady and sustained growth of the family farm without the encroachment of commercial agriculture into our state. Hopefully this recent round of excitement in the industry will give the chance for this dream to be passed on to one more generation, and allow Iowa to be filled with "fields of opportunity."

I encourage those that are interested to read the article and interview with Bill Northey in the Des Moines Register. He has several good points including the renewed effort that Iowa must undertake in order to ensure that conservation efforts are not lost in this new era of excitement in farming.

A beautiful seen of the Iowa countryside with same corn fields in the fore-ground.

For the original article, please follow the link below: