Lynn Grooms
Lynn Grooms is an agricultural journalist living in Mt. Horeb, Wis. She watches biofuels industry trends and contributes articles on the subject to Farm Industry News and...more
This week at the 14th annual National Ethanol Conference in San Antonio, TX, Bob Dinneen, president and CEO, Renewable Fuels Association (RFA), put the ethanol industry in a proper perspective.
“In the effort to navigate the trees of falling ethanol values, rising input costs and credit woes, we miss the ever growing forest that is the U.S. ethanol industry today. Some see a crisis. I see an industry with the perseverance and determination to succeed,” Dinneen said.
In the face of a flagging economy and unprecedented commodity price volatility, the U.S. ethanol industry produced and sold a record nine billion gallons of renewable fuel in 2008, Dinneen said. Moreover, in these difficult economic times, the U.S. ethanol industry grew by 34%, adding $65 billion to the GDP; $20 billion to household incomes and 256,000 more jobs to the U.S. economy.
While 23 ethanol plants were idled in 2008, 171 plants were in operation, including 31 new plants. Even with recently announced plant closures, the U.S. ethanol industry is operating at about 85% capacity, compared to the U.S. manufacturing sector (as a whole), operating at 68% capacity.
With 171 plants in operation and 21 more under construction, Dinneen says the ethanol industry is still an industry “in ascension.”
“I see an industry that is constantly remaking itself,” Dinneen told ethanol producers. The ethanol industry is finding new technologies and developing new feedstocks to “put it on a more sustainable path that will chart a new course for our nation’s energy future.”
An RFA survey, compiled by the Argonne National Laboratory, indicated how ethanol production plants are more efficient than just a few years ago. They consume 20% less electricity, 26% less water, and require 15% less overall energy inputs.
Low heat fermentation and corn fractionization are among the new technologies that have helped ethanol production facilities become more energy efficient.
Taxpayer ROI
The ethanol tax incentive that refiners receive for blending ethanol continues to be a cost effective mechanism for growing domestic renewable fuels, Dinneen said. Last year, the combined cost of the volumetric ethanol excise tax credit and the small ethanol producer tax credit totaled approximately $4.7 billion, but the benefit to the federal treasury from increased tax revenues attributable to ethanol production was greater than $11.9 billion, resulting in a savings to consumers of $7.2 billion. That is roughly a 2.5:1 direct return of the taxpayers’ renewable energy investment, the RFA president stressed.
“Add to that the indirect savings from reduced farm program costs, improved balance of trade and increased employment, and the taxpayers’ return on investment improves exponentially,” Dinneen said.
The benefits of ethanol go beyond cost effectiveness, Dinneen said, adding that ethanol displaced 321 million barrels of oil in the U.S. last year. The production and consumption of nine billion gallons of ethanol last year also reduced CO2 equivalent greenhouse gas emissions by about 14 million tons.
“These statistics reflect this industry is facing these economic times with resolute commitment to address the economic, environmental, energy and national security crises facing the world today,” Dinneen said.
Valri Lightner, Acting Biomass Program Manager, EERE
The American Recovery and Reinvestment Act that President Obama signed this week includes an appropriation of $16.8 billion for the Department of Energy’s Office of Efficiency and Renewable Energy (EERE) programs and initiatives.
Of this total, $2.5 billion will be allotted for Applied Research, Development, Demonstration and Deployment, including $800 million for biomass, $400 million for geothermal and $50 million for information and communications technology.
EERE is working in partnership with the USDA Regional Feedstock Initiative (including Sun Grant initiative universities) to deploy energy crops for biofuels production and other new markets, says Valri Lightner, acting Biomass Program manager, EERE.
In addition to the partnership, the Biomass Program focuses on logistics, including the harvesting, collection, transportation and storage of various ag residues, including corn cobs, corn stover, wheat straw and switchgrass.
The Biomass Program also is focused on sustainably producing feedstock for biofuel production, including minimizing the amount of water and nutrients used on the land, Lightner says. The program wants to maintain the balance of fulfilling the country’s food, feed, fuel and fiber needs, she adds.
How soon could we see biomass used on a wide-scale commercial basis? The Renewable Fuel Standard program requires increasing the use of renewable fuels every year through 2022 (growing to 36 billion gallons in 2022). Biofuels will begin to make some market penetration in 2010, Lightner says.
Plant and forestry waste and energy crops could sustainably replace nearly a third of gasoline use by 2030, according to a new study published by Sandia National Laboratories (www.sandia.gov) and General Motors Corporation.
The “90 Billion Gallon Study” assumes that 75 billion gallons of ethanol would be produced from cellulosic feedstocks while 15 billion gallons would be made from corn.
The study focused on four sources of biofuels: agricultural residue (corn stover and wheat straw); forest residue; energy crops (such as switchgrass); and short-rotation woody crops (including willow and poplar trees). It also focuses on the costs of producing, harvesting, storing and transporting these cellulosic sources to biorefineries.
The researchers determined that 21 billion gallons of cellulosic ethanol could by produced per year by 2022 without displacing current crops. Sandia National Labs points out that the Renewable Fuels Standard calls for increasing biofuels production to 36 billion gallons annually by 2022.
The study’s other findings are noteworthy:
• Continued support of R&D and initial commercialization is critical because sustained technological progress and commercial validation is a prerequisite to affordably producing the large volumes of ethanol considered in this study.
• Policy incentives such as a federal cap and trade program, carbon taxes, excise tax credits and loan guarantees for cellulosic biofuels are important to mitigate the risk of oil market volatility.
• The domestic investment for biofuels production is projected to be virtually the same as the investment required to sustain long-term domestic petroleum production.
• Cellulosic biofuels could compete without incentives with oil priced at $90 per barrel, assuming a reduction in total costs as advanced biofuels technologies mature.
• Large-scale cellulosic biofuel production could be achieved at or below current water consumption levels of petroleum fuels from on-shore oil production and refining.
Sandia is a multi-program laboratory operated by Sandia Corporation, a Lockheed Martin company, for the U.S. Department of Energy’s National Nuclear Security Administration. Sandia researches national security, energy and environmental technologies at facilities in Albuquerque, NM, and Livermore, CA.
Algae has made a splash in the U.S. Patent Office, according to Minneapolis-based law firm Fredrikson & Byron, P.A. The firm’s attorneys Todd Taylor and Philip Goldman report that growth in algae has been spurred by the potential for algae to provide an “abundant and sustainable feedstock for fuels, biomaterials, feed, and other products.”
Ten years ago, there were 22 U.S. patents issued containing the words “algae” and “bioreactor” somewhere in their text. Last year, there were 51. But, get this–there were also 208 applications published in the United States in 2008.
People are seeking patents for bioreactors, algae strains, open pond designs, harvesting, and separation and processing equipment.
Has anyone read Thomas Friedman’s book Hot, Flat, and Crowded? If so, please write and tell me what you think.
I just finished the first chapter and am already inspired. Friedman lays out the case of why America needs to move beyond 9/11 fear and lethargy, and toward nation-building right here in the United States. We need to move beyond a Code Red mindset toward a Code Green one where America is “united and propelled by a common purpose, not a common enemy.”
That common purpose is reinventing America as the world’s “greenest country.” This, Friedman writes, “is not a selfless act of charity or naïve moral indulgence. It is now a core national security and economic interest.”
“Why we need a green revolution—and how it can renew America” is the book’s subtitle. I’m looking forward to reading more over the next few nights to see how biofuels, wind and solar energy, and more will figure in to creating a stronger, more economically stable America.
Economic Stimulus Bill
In the past few days, I’ve been talking with some small wind energy equipment manufacturers who look forward to passage of the economic stimulus bill. While the Senate is still debating the bill, the small wind industry people believe provisions to keep the wind energy industry growing and creating jobs will survive. The small wind energy market already is growing by 25% annually. If federal subsidies are uncapped, the small wind industry could grow by as much as 50% annually, one small wind expert says.
While some might wonder why I’m writing about wind energy in this biofuels blog, it is an important part of the renewable energy solution to our national security and economic concerns. It is part of a “silver buckshot” approach in which biofuels, wind, solar, geothermal, hydropower and more will help renew America.
The economic stimulus bill would improve tax incentives for farmers and other rural landowners interested in installing small wind turbines. It would also provide for a three-year extension of the production tax credit and includes several provisions to promote transmission for renewable energy, according to the American Wind Energy Association.
The bill, which passed the House and is now being debated by the Senate, proposes $18.5 billion be appropriated for Energy Efficiency and Renewable Energy. Not less than $800 million is to be appropriated for biomass and $400 million is to be appropriated for geothermal technologies. To view the other proposals related to renewable energy, visit http://thomas.loc.gov/cgi-bin/query/F?c111:3:./temp/~c111E5VMzu:e121224:
Regardless of the outcome of the stimulus bill, renewable energy has momentum–spurred on by investors, researchers and producers who see promise in new technologies.
Do you think that America can reinvent itself as the world’s greenest country or that it can at least unify behind a Code Green strategy? Can renewable energy become a cornerstone of the American economy? I think it’s possible. Please send your thoughts.
COMMENT
I have completed the Freidman book, Hot, Flat, and Crowded, and except for his negative bias about US ethanol I completely agree with his points, very enlightening. Too many people somehow have the impression that US ethanol has too many subsidies. I typically ask, “what subsidies?” and no one answers. Yes all new industries that create jobs are incentivized with tax credits. Yes there is a blending tax credit, and yes there are tariffs to help establish infra structure and encourage the massive amount of production needed, but unlike the “bail-outs”, there is an ending outcome which is Freidman’s point, about furthering the “green” revolution, and reducing dependance on foreign oil. The public opinion seems to be that corn for ethanol is NOT the answer. Never thought it was, just a part of the puzzle to engage the enterprising American ingenuity to develop better solutions and focus on something like corn which is completely renewable!
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Valri Lightner, Acting Biomass Program Manager, EERE
