ADM Carbon Sequestration

Archer Daniels Midland (ADM) announced an ambitious project yesterday to further improve the net carbon balance in ethanol production. At its plant in Decatur Illinois, the company will spend $85 million including money from the Department of Energy to pump carbon dioxide released during the production of ethanol into an underground sandstone formation that will store 1 million tons of carbon dioxide over a three year period. This would be particularly important for ethanol plants that heat their fermentors using coal rather than natural gas. The reason is that coal is a much cheaper and less volatile form of energy while natural gas has seen a strong surge in prices over the past year. On the flip side, ethanol production in a natural gas powered ethanol plant leads to a reduction of 16 - 20% greenhouse gas emissions over gasoline while coal powered plants only see a reduction of about 3 - 5% (National Geographic Oct. 2007 Issue). So if a company could reduce or eliminate the emission of GHGs during ethanol production, a cheap form of energy (coal) would become a reasonable alternative. This is, of course, if the process can be made economically viable, which is hard to tell at this point. ADM hopes that the procedure will prove to be a benefit to their plant and serve as a model for all industries, not just the ethanol industry, that carbon sequestration works. I guess we will just have to wait and see since the results won't be available until 2012.

$100 Oil

With oil reaching $100 per barrel, the entire energy market has seen reverberations. Most would agree that an ideal situation in the future will be one in which we can uncouple the oil markets from the ethanol and corn markets but right now that simply can not be done. Some of the growing pains seen in the ethanol and ag markets in the past year are a direct result of traders, such as those on the Chicago Board of Trade (CBOT), trying to find a level at which corn is priced correctly relative to ethanol relative to oil. The only way to uncouple this phenomenon is to transition towards an ethanol industry built on corn but made of cellulosic feedstocks that don't impact the grain markets. However, with oil, corn, and ethanol tied together, their prices are guaranteed to move in tandem.

This fact was pointed out in the Des Moines Register's article "Crop, ethanol prices mirror oil's rise," and can be linked to by following the link shown below.

http://www.desmoinesregister.com/apps/pbcs.dll/article?AID=/20080104/BUSINESS01/80104018

The article points out that as oil has approached $100 a barrel in recent days, ethanol has moved up 22 cents per gallon on the CBOT to $2.22 per gallon and corn prices have continued to rise; reaching $4.66 per bushel on Thursday. Many of my friends would clamor to claim fowl against the ethanol industry or the corn farmers for the record profits that they must be making with these amazing new prices. However, the ethanol plants are only averaging around 3.5 cents per gallon of ethanol produced because of their higher input costs (corn). Similarly, farmers should not be made out to be the culprits in some kind of price write-up scheme. There input prices to grow the corn, such as seed and fertilizer have also reached record levels this year, which serves to negate much if not all of the additional profits the farmers might be seeing. Unfortunately, baring the introduction of a new feedstock, such as switchgrass, or the removal of oil's volatility from the energy markets this new scenario of oil, ethanol, and corn prices moving together will probably be something the industries and consumers must be ready to deal with for quite some time to come.

Below is DTN's calculation for their hypothetical South Dakota ethanol plant with input costs calculated.

Note: The above green line is the net income seen for E100 per gallon, while the net profit is around 3.6 cents per gallon.

Worldwide Biomass

Looking towards the future of a global renewable fuels market, we need to have only one word in mind... biomass. As technology improves, processing will eventually switch from sugars, such as corn or sugar cane, to plant material that is harder to break down, such as lignin and cellulose. While it is imperative that we are watchful not to do more harm than good by, for example, reducing rainforest area to process into biofuels, there is a large potential for developing countries to take part in this effort because of their biomass concentration. Below is an interesting picture to illustrate that fact.

www.geocities.com/dieret/re/Biomass/biomass.html

With the correct implementation of conservation and re-planting techniques, these areas could potentially be a great source of revenue. Either way, it is important in this period of extreme flux in our energy and agricultural systems that we pay attention to what may lie ahead so that we can decide with a clear mind and clear conscious what path we should take.

Ethanol: At What Cost?

A common piece of conversation surrounding ethanol isn't energy security, or the potential environmental benefits, but what ethanol will mean to the consumer. Questions like, at what price will filling up on E10 or E85 be more costly to me than purchasing regular unleaded gasoline? Although I think that looking only at ethanol's price to determine whether to fill up with it is to ignore the benefits that are unable to be calculated, such as a decrease in geo-political tensions due to the decrease in oil imports, or the decrease of greenhouse gases into the environment, but I also agree with these people that consumers will wait until retailers price ethanol correctly.

This discussion has become more interesting recently when oil prices rocketed up to nearly $100 per barrel, which saw a jump in gasoline prices. A similar jump in ethanol inventories allowed ethanol to be priced less than gasoline for the first time and retailers jumped at the opportunity to blend more ethanol into their gasoline. But now that prices in both sectors are beginning to stabilize, there has to be a way to track these prices to see whether it is worth it to fill up.

By following the link below, you will find an easy way to input the price of unleaded gasoline (with an 89 octane rating so as to match the E10 blended octane number), that will be responsive to local gasoline pricing.

http://data.desmoinesregister.com/fuelcalculator/ethanolcalculator.php



I've found that many websites will calculate the prices for E10 and E85 based on the price of regular 87 octane gasoline, which is a different product all together and misleading since the price will be lower due to lower potential engine performance.

One interesting thing found when using the calculator above was that the current price of E10 is priced correctly (approximately 10 cents per gallon cheaper and in some cases 12 cents per gallon cheaper than gasoline). Again, this will depend on region, but assuming that regular gasoline is priced at $3.03 per gallon, E10 should be priced at least 8 cents per gallon cheaper or $2.95 per gallon to be an equivalent source of energy. E85 should be priced at least 69 cents per gallon cheaper, or $2.34 per gallon in order to be as cost effective as unleaded gasoline. Keep in mind that the current price of gasoline at $3.03 is regional and subject to change in different parts of the US.
While E10 is priced approximately 10 cents per gallon cheaper, it will remain a better purchase. E85, for the most part, has been sold for $2.45 per gallon (according to AAA's website at http://www.fuelgaugereport.com/, and so it is not economical. This is the case for two reasons -- the demand is simply not there due to the lack of flex fuel vehicles and so it is still a "boutique fuel" that comes at a high infrastructure cost to the gas station. The second reason in simply that the retailer wants to make a profit on the fuel. Current E100 rack prices are at $2.21 per gallon and so anything priced above that will be profit for the retailer. Unfortunately, unless the gasoline prices take off towards much higher values, it is reasonable to say that ethanol and gasoline prices will probably trend together. In other words, the costs will stay consistently within the value recalculated for their energy density. As we saw above, E10 is currently the better buy but retailers should adjust their E85 prices so that consumers are more enticed to buy the fuel.

Fuel Economy

After taking a detour into auto-mechanics in the last post, I think it's time to get back on track. This post will involve both evolving ethanol knowledge and its application in car engines. Before going any further, I want to add that this research is new and needs more verification before any of the results should be implemented. However, it is always good to keep track of the newest information.

The research, released in November of 2007, was conducted by the University of North Dakota and Minnesota State University and can be found at

http://www.ethanol.org/pdf/contentmgmt/ACE_Optimal_Ethanol_Blend_Level_Study_final_12507.pdf. This study mirrors the call for more information on blending standards for cars in the United States. Currently, car makers will only honor their warranties on cars that fill up to E10 or a 10% ethanol blend in non-flex fuel capable cars. However, partly because of an anticipated excess of ethanol and because of a desire to blend ethanol in higher amounts to displace US imports of foreign oil there has been a call to look into the possibility of higher blends in non-flex fuel cars. The study looked at the the use of regular unleaded gasoline, E20, and E30 blends in four different cars. These cars were the 2007 models of the Toyota Camry, the Chevrolet Impala (flex fuel), the Chevrolet Impala (non-flex fuel), and the Ford Fusion. Results are displayed below.

As I mentioned before, the researchers would be the first ones to point out that the results are preliminary, but they are interesting. The above bar graph reveals the results of their tests showing that two models showed an increase of 1% in fuel economy for the E30 blend over conventional gasoline (the Camry and the Fusion), and the flex-fuel vehicle saw an amazing 15% increase in its E20 blend over conventional gasoline. Although unexpected, the researchers believe that some engines might have 'sweet spots' at which a certain blend might have the optimum combination of ethanol and gasoline to allow for a high mileage.

But what might be even more interesting is that all of the models of cars in all of the blends outperformed their calculated MPG based on their penalties for decreased energy densities. In other words, ethanol's energy density should result in a decrease in mileage by 2.7% for every 10 percent of ethanol blended into the gasoline. Below is an example from the sited study to reveal how the data bumped above the calculated energy density for the Toyota Camry.

As you can see above, the apparent 'sweet spot' in the Camry is around E30. Even though these tests need to be corroborated, they agree with similar results seen in 2005 in the study found at http://www.ethanol.org/pdf/contentmgmt/ACEFuelEconomyStudy_001.pdf.

While these studies show that E20 and E30 could be incorporated into non-flex fuel vehicles, a better potential benefit of this study is the realization that it may be possible to engineer a car engine to favor ethanol over gasoline, thereby relieving any potential MPG dip due to lower energy density. This would seem to parallel the finding in the previous post that a turbocharged engine built with ethanol in mind might be able to alleviate several of the potential negative aspects of ethanol.

Turbocharged Ethanol

While some are busy at work creating the next generation of ethanol produced from cellulosics, MIT's best and brightest are continuing to work hard for the development of the next generation engine. In the process of developing industry and technology that will benefit the environment and our energy security it may be easy to lose track of how the system needs to come together. What I mean by this is that whether or not ethanol's lower energy density results in decreased MPG than gasoline, doesn't necessarily mean that we need to live with this problem. In fact, the engine may be optimized for gasoline usage without taking into consideration the advantages that ethanol might bring.

This case is illustrated in J. B. Heywood's work titled "Calculations of Knock Suppression in Highly Turbocharged Gasoline/Ethanol Engines Using Direct Ethanol Injection," and can be found at http://www.ethanolboost.com/LFEE-2006-01.pdf. The basis of the study attempts to answer the problem of knock suppression in turbocharged engines using ethanol. But first, let's back up for a second. Turbocharging in an internal combustion engine is the use of the exhaust gas from the engine to drive a wheel that compresses the air to deliver to the engine. This allows for more air to enter the engine than a naturally aspirated engine and improves on the energy-to-size ratio of the engine. In other words, using the turbocharged engine allows for the use of much smaller engines with the same or more energy and torque output of the engine. The one problem with this is that a turbocharged engine is more susceptible to engine knock. Knocking occurs when the fuel/air mixture is ignited correctly in the piston but then a second pocket of fuel ignites as well. These two countering fronts of energy create destructive interference for each other, which can range from mistiming the stroke of the engine causing a loss of power all the way to possibly destroying the engine.

Ethanol has two key components that make it a prime candidate to combat engine knock in turbocharged engines -- 1) its high octane rating, and 2) ethanol's capability for evaporative cooling of the system after ignition.

Ethanol's octane rating (115 versus 87 for normal gasoline), prevents engine knock because, by definition, ethanol's fuel has the right kind of molecules that will ignite correctly and uniformly under pressure. A second requirement in turbocharged engines is to quickly decrease the in-cylinder (charge) temperatures so as to prevent the detonation of unexploded fuel/gas mixtures. This is accomplished by ethanol's ability to quickly cool the mixture to 355K versus 383K (Heywood et. al 2006).

According the Heywood, he concludes that a turbocharged engine would allow for the size of a modern fuel-injected engine to be decreased by half. At the same time, the manifold pressure and compression ratios could be increased allowing for comparative engine performance compared to the larger gasoline fueled engines. This is all possible because of the knock suppression of an ethanol blend. Heywood calculates that with the engine downsizing and performance enhancement of the turbocharged engine, efficiency of the automobile could actually increased by 30%! This would, in effect, completely offset the calculated energy density penalty of ethanol on the MPGs of a car, (which is approximately 27%).

As a final note, I found an update on this technology today that these researchers are working closely with Ford in the production of this engine and are progressing quickly. Hopefully we will see these engines in the near future.

Electricity

I thought that to start off, I should collect as much baseline information as possible. Here are some real good figures that I found on the Department of Energy's website:

http://www.eia.doe.gov/neic/brochure/electricity/electricity.html

Information was originally from the Energy Information Administration's 2003 "Combined Heat and Power Plant Report."

I was kind of surprised to see the amount of hydroelectric power generated in the United States, although I would guess that a large portion of that comes from large operations such as the Hoover Dam.

Below is another plot of average electricity prices by state. I thought it was relevent since my last post dealt a lot with electricity prices so I better indicate where those numbers came from.

http://www.eia.doe.gov/neic/brochure/electricity/electricity.html