How Reliable are Those USDA Ethanol Studies?

Introduction

The pro-ethanol contingent is quick to point to certain studies published by the USDA to support the claim that the energy balance of grain-ethanol is positive. Many anti-ethanol advocates will point to studies by Professors Pimentel and Patzek (1) to support claims that the energy balance is negative. Say what you will about the Pimentel and Patzek studies, but they have one thing going for them that that USDA studies do not: They have been published in peer-reviewed journals. Why does this matter? Peer reviewed papers have been examined by reviewers familiar with the subject matter (but who are not colleagues of the authors) who are looking for deficiencies or gross errors. Peer review is no guarantee that errors won’t slip through, but it is a check on papers that establishes that they have met certain scholarly guidelines. Peer review can be a pretty rough ordeal, but does a pretty good job of weeding out poor arguments.

Now, having said that, I will acknowledge that some of the criticisms of the data that Pimentel used may be legitimate. So, the purpose here is not to defend Pimentel’s work, but instead to take a rigorous look at the USDA studies. In 2002, the pro-ethanol USDA released a paper by Shapouri, Duffield, and Wang in which they claimed that the energy balance of corn-ethanol was 1.34 (2). In other words, for every 1 BTU you input into the process, you got 1.34 BTUs back out. I analyzed these arguments in an earlier essay, and showed that proper accounting shows that the energy balance is actually 1.27 (using their assumptions, and as long as co-product credits are included) over an average of the 9-highest corn-producing states. Extrapolating this energy balance outside this area is inappropriate. Even within these 9 states, Nebraska, which must irrigate its corn, used substantially more BTUs to produce the corn. The energy balance for Nebraska – assuming for a moment that all of their other assumptions were correct - is 1.21 based on the data in the 2002 paper.

Incorrect Assumptions in the 2002 Report

However, all of their assumptions were not correct. In a 2004 update (3), they note that the estimate of the energy required to produce a pound of nitrogen fertilizer was much too low in the 2002 report. They reported 18,392 BTU/lb in their 2002 report. For the 2004 report, Shapouri consulted a fertilizer manufacturer, and was told that the actual number is about 24,500 BTU/lb. So, Shapouri underestimated this energy input by 25%.

In addition, they also acknowledged that they underestimated the amount of energy used to produce seed corn. They had estimated in 2002 that it took 1.5 times the amount of energy for normal corn, but actually found out that the true number is 4.7 times the amount of energy for normal corn. So, they underestimated this energy input by almost 70%.

They did not include any secondary energy inputs (such as the energy to actually produce an ethanol plant) in either their 2002 or 2004 paper, saying the data is "old and outdated". So, here is an energy input that they simply ignored.

They report higher yields in the 2004 report (weighted avg. of 139.3 bushels per acre for in the 2004 report versus 121.9 in the 2002 report). However, some states saw very little change in their yields between the two reports. Nebraska, for example, increased from 130 bushels per acre to 133.7, a gain of less than 3%.

Analysis of the 2004 Report

Again, they only focused on the 9-highest corn producing states. Nebraska again provides a perfect example of how the energy balance tends to get much worse as you move away from the best corn-producing areas. The energy input for Nebraska is almost 20,000 BTU/bushel higher than for the 9-state weighted average, primarily due to their need to irrigate. So, their energy balance will be much worse than the average number that was ultimately calculated.

Overall, they lowered their estimate for the total energy input into the corn-growing process from 57,476 BTUs/bushel to 49,753 BTUs/bushel. However, Nebraska came in at almost 69,000 BTUs/bushel.

The most amazing thing, though, is that they reported an overall energy balance of corn ethanol of 1.67 in the 2004 report, versus 1.34 (their number) in the 2002 report. Why the huge change? Did the process improve by that much? No, they are just employing ever more sophisticated sleight of hand. What they did is to allocate the energy used in the process to by-products and ethanol separately. This is a valid way of accounting for the energy, if it is done correctly. However, they way they did it looks highly suspicious. It would be quite easy to over-allocate energy to the by-products (especially if one had an agenda), making the ethanol portion show less energy than it actually used. This appears to be exactly what they did.

In 2002, their calculation resulted in 81% of the energy allocation going to ethanol. In 2004, they only allocate 64% of the total energy to ethanol production (Tables 3 and 4), dramatically "improving" the energy balance. They have acknowledged that they changed their accounting methods from their 2002 report, now using an Aspen model to allocate energy. I have plenty of experience with Aspen models, and I can say that it is imperative that you validate your assumptions. If you do not - and I can see no indication that they did - it is nothing more than garbage-in, garbage-out.

Here is an example of how invalid assumptions can lead to an invalid answer. They calculated that the total energy cost for the ethanol conversion step was 49,733 BTUs/gallon, but then allocated almost 20,000 BTUs of that to the by-products! Hello? The only reason you do a distillation is to purify the ethanol. That step has to be completely allocated to ethanol. By allocating some of these inputs to by-products, the impression is left that it took less energy to purify the ethanol than it actually did.

What is stated explicitly is that, ignoring co-product credits, they have energy inputs of 72,052 BTUs to produce 76,375 BTUs of ethanol, for an EROI of 1.06. They are allocating credits based on an Aspen model which is not publicly available, so it is impossible to check their assumptions. I can say that based on the way they have allocated some of the conversion energy to the co-products, that they have made invalid assumptions.

But, we can take the co-product value they reported in 2002 and estimate a more valid EROI. In 2002 they estimated co-product value at 14,372 BTU/gallon of ethanol. If we add that to the BTUs of the ethanol they produced, we get (76,375 + 14,372) BTUs out, or 90,747 out. Given their input of 72,052 BTUs, then their EROI with co-products is 90,747/72,052, or 1.26. That is a terrible EROI, and is even worse than what they calculated in 2002. This is not entirely surprising given that they admit that they significantly underestimated certain inputs (and left secondary inputs completely out of the equation). The 1.67 number is a fantasy based on very selective accounting.

Summary

Given the selective accounting employed in the USDA papers (both 2002 and 2004), it is doubtful that it would have passed peer-review without substantial modification. While I have my reservations about the data used by Pimentel, the USDA work is very shoddy in comparison. It has all the ear-marks of an agency attempting to push a political agenda. Certain data were selectively omitted from the energy calculation. The reported EROI of 1.67, parroted by the pro-ethanol contingent, completely breaks down under close examination. It is simply inaccurate and irresponsible to claim this EROI given the factors examined in this essay.

References

1. Pimentel, D., and Tad Patzek (2005). Ethanol Production Using Corn, Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower. Natural Resources Research 14, 1 (March): 65-76.

2. Shapouri, H., J.A. Duffield, and M. Wang. 2002. The Energy Balance of Corn Ethanol: An Update. AER-814. Washington, D.C.: USDA Office of the Chief Economist.

3. Shapouri, H., J.A. Duffield, and M. Wang. 2004. The 2001 Net Energy Balance of Corn Ethanol. Washington, D.C.: USDA Office of the Chief Economist.

A Primer on Gasoline Pricing

There was a story today in the Detroit Free Press on rising gasoline prices (1). Two items caught my attention:

"We've seen a dramatic increase in gasoline prices," said Mark Routt, a senior consultant with Energy Security Analysis Inc. in Wakefield, Mass. "Why? The bulk of it is due to an annual and normal change from winter to summer gasoline. Unfortunately for us this year, there is also a significant impact on prices because refiners are switching from MTBE to ethanol as an oxygenate to make summer gasoline."

Methyl tertiary-butyl ether (MTBE) is a gasoline additive that oil refiners have used to help meet emissions standards set by the Clean Air Act of 1990. Refineries around the country have stopped using MTBE and are switching to ethanol as the preferred oxygenate to make the specialty fuels for the summer months. Others cite the astronomical profit taking by oil companies such as ExxonMobil as the main culprit for rising prices.

I highlighted the two pieces in bold so I can elaborate a bit. First of all, it is true that gasoline prices are currently going up due to the MTBE to ethanol switch. There is not enough ethanol to meet demand, and there are logistical problems getting enough ethanol to where it is needed. This has driven the price of ethanol pretty high, and is putting some upward pressure on gasoline. Imports from Brazil are expected to cover the near term shortfall. New ethanol plants will cover the demand in the longer term (unless other states get the same oxygenate waiver just granted to California). This should bring the ethanol price down somewhat (but grain-ethanol still has serious shortcomings as detailed in my previous essays).

The second highlighted portion - that astronomical profit taking is responsible for rising gas prices - has mixed up cause and effect. It seems that some people think an oil company can just dial in a profit number, and raise gasoline prices to meet it. If that were so, why didn’t ExxonMobil make $37 billion in 2004, like they did in 2005? Because that’s not the way it works. Profit-taking does not drive gasoline prices.

OK, Then What Does Drive Gasoline Prices?

The contribution from the ethanol shortage was mentioned above. A second major item that you may have heard in the news is the switch from winter blends. OK, what does that mean? In the winter, when it is cooler, large amounts of butane can be added to the gasoline pool. The vapor pressure of butane is quite high, so you can’t do this once the weather warms back up (otherwise your gasoline might boil). The return of warm weather means that butane must be backed out of the blends. This reduces the overall fuel supply, because a readily available ingredient in gasoline, butane, is no longer available. So, the supply has been reduced, just in time for the season in which people tend to drive the most – summer. Which leads us to the third, and primary, factor in rising gasoline prices.

The main reason gasoline prices go up is that they follow the laws of supply and demand. If a refiner starts to run low on product, they raise prices so they don’t run out. This has the effect of reducing demand. They will raise prices to the point that their supply is balanced by the demand. This is exactly what happened after Hurricane Katrina. Around 25% of the refining capacity in the U.S. was knocked off line. In this case, there are 2 options. The first is to hold the price where it is, and let the public completely drain gasoline inventories. Unless they voluntarily cut their gasoline consumption by 25%, we are going to run out of gasoline in this case. That is not an acceptable option. So, we go for option 2. We start to raise prices until demand reduces to the point that our production can meet demand, but at a higher price. This tends to anger the public, who feel they are being gouged (especially when oil companies make more money as a result). But it is not profit taking that is driving up gasoline prices. Rising gasoline prices, primarily due to tight supplies, are driving up profits.

The price of oil also has an impact on the price of gasoline. A barrel of oil contains 42 gallons, and around 35 gallons of that (depending on the refinery configuration) will ultimately be turned into gasoline, diesel, and jet fuel. So, every $1 increase in the price of oil will translate into an increase of almost 3 cents per gallon of gasoline. There are also costs associated with processing. State and federal taxes add another $0.40-$0.50 per gallon (more than the oil company makes). But the single most important factor behind higher gasoline prices is simple supply and demand.

In my opinion, gasoline prices will continue to escalate higher and higher in the long-term. Supply is very tight, and yet demand continues to grow. The only way to mitigate this situation is 1). Increase supply; or 2). Reduce demand. Oil companies are reinvesting a lot of those multi-billion dollar profits right back into their companies with the intent of debottlenecking refineries. This will open up more supply, but China and India are gobbling up excess production as fast as it comes online.

Whenever it is apparent that oil production has finally peaked, I expect prices to go through the roof. There is a certain fear premium built into oil prices right now, but nothing like the premium that will occur when we start down the other side of the production curve. Oil companies will certainly make a lot of money during this period, as prices will have to rise to stem demand. I plan to write an upcoming essay on the potential fallout of record oil company profits during a period where energy costs are breaking people’s budgets.

To be certain, oil companies are not charities. They are in the business of making a profit for the shareholders. If you really want to do something about rising prices, I can offer a couple of suggestions. You can get yourself a very fuel-efficient vehicle, which will lower the demand just a bit. If everyone did this, demand would plummet, and prices would follow. Or, if you want to drive a gas-guzzler, buy some stock in an oil company so you can share in those profits. Many people think E85 will help mitigate this problem, but you are only shifting the issue from gasoline to natural gas - required for making the ethanol - which will put upward pressure on natural gas prices. Big Oil makes a lot of that natural gas.

Reference

1. Ahead: More Sun, Higher Gas Prices: New Additive Will Contribute to Rise

Biodiesel: King of Alternative Fuels

OK, maybe not the king yet. But if we judge based on the merits, biodiesel is head and shoulders above ethanol. Let’s take a closer look at it.

Biodiesel has a couple of huge advantages over ethanol. First, it is not miscible in water, so you don’t have the huge input of fossil fuels that is required to separate ethanol from water. This makes the energy balance far better than that of ethanol. A poor energy balance is my primary objection to ethanol (especially grain-ethanol).

The second major advantage biodiesel has is that it has over 1.6 times the BTU value of the same volume of ethanol. A gallon of biodiesel contains approximately 121,000 BTUs/gallon (about the same as gasoline), versus approximately 75,000 BTUs per gallon for ethanol. Diesel engines also run 35-40% more efficient than spark-ignition engines (the kind that use gasoline or ethanol). That means that 1 gallon of biodiesel has the effective energy value of 1/0.65, or 1.5 gallons of gasoline. As shown in previous essays, 1 gallon of gasoline is worth around 1.5 gallons of ethanol on a BTU equivalent basis, so 1 gallon of biodiesel is effectively equivalent to (1.5*1.5) or 2.25 gallons of ethanol! The biodiesel group at UNH has done similar calculations if you want to get into greater detail (1).

Unfortunately, there are a couple of major disadvantages for biodiesel as well. The biggest is that most of us do not drive vehicles with diesel engines. It will take some time for a transition to diesels to take place. This is the most serious obstacle to wide-scale adoption in the short-term.

A second disadvantage that is often cited is that biodiesel has a much higher pour point and cloud point than petroleum diesel. This means that it will solidify at a much higher temperature, making it useless when the temperatures are cold. However, I can envision some easy engineering solutions for this problem. A vehicle could have a dual-tank, in which it is started up on petroleum diesel. The exhaust could pass through a heat exchanger through the biodiesel tank. There could be controls to regulate the temperature in the biodiesel tank so that it doesn’t get too hot. After the biodiesel warms up, a switch could automatically flip the fuel supply to the biodiesel tank. (If someone invents this, I want a cut!) Alternately, it can be simply cut with petroleum diesel, but the amount of biodiesel that can be added will be limited in cold climates.

Biodiesel from What?

Biodiesel can be produced from crops, such as soybeans. The reported EROI for biodiesel from soybeans is 3.2(2). Note that this is over double the EROI for ethanol, and that doesn’t even account for the higher efficiency of the diesel engine. Soybeans yield about 40 bushels per acre, which translates into around 60 gallons of biodiesel per acre. This is far short of the 350 gallons or more of ethanol that can be produced from an acre of corn, but we have to take into account the net energy produced. Given that the real energy return of grain ethanol is around 1.3, it took the energy equivalent of around 350/1.3, or 269 gallons of ethanol to make the 350. We netted out 81 gallons. For the soybeans, it took 60/3.2, or 19 gallons of biodiesel equivalent to produce the biodiesel, for a net of 41. But recall that 1 gallon of biodiesel is worth 2.25 gallons of ethanol when both are used in their respective engines, so the biodiesel yield is "worth" 2.25*41, or 92 gallons of ethanol. (Please note that these calculations are approximate. If I were going to try to publish this somewhere, I would convert everything into BTUs to calculate the net yields.)

However, I do not wish to make the argument that we should be making biodiesel from crops, unless we are doing so from by-products left over from food production. Production of biodiesel (or ethanol) from crops can’t make a significant dent in our current usage of motor fuels. Fortunately, there may be a better way. A couple of years ago, I ran across an article that really caught my attention. It was my Reference 1 below, a report by Michael Briggs at The University of New Hampshire. Briggs explained that biodiesel can be produced from algae, at yields as high as 15,000 gallons per acre! Briggs did a number of calculations of the feasibility and cost of replacing the entire motor fuel supply of the U.S. with biodiesel. I checked his calculations and read his references, and his analysis - based on experiments conducted by NREL - appeared to me to be spot on. In his own words, regarding the acreage that would be required:

In the previous section, we found that to replace all transportation fuels in the US, we would need 140.8 billion gallons of biodiesel, or roughly 19 quads (one quad is roughly 7.5 billion gallons of biodiesel). To produce that amount would require a land mass of almost 15,000 square miles. To put that in perspective, consider that the Sonora desert in the southwestern US comprises 120,000 square miles. Enough biodiesel to replace all petroleum transportation fuels could be grown in 15,000 square miles, or roughly 12.5 percent of the area of the Sonora desert (note for clarification - I am not advocating putting 15,000 square miles of algae ponds in the Sonora desert. This hypothetical example is used strictly for the purpose of showing the scale of land required). That 15,000 square miles works out to roughly 9.5 million acres - far less than the 450 million acres currently used for crop farming in the US, and the over 500 million acres used as grazing land for farm animals.

It would be preferable to spread the algae production around the country, to lessen the cost and energy used in transporting the feedstocks. Algae farms could also be constructed to use waste streams (either human waste or animal waste from animal farms) as a food source, which would provide a beautiful way of spreading algae production around the country. Nutrients can also be extracted from the algae for the production of a fertilizer high in nitrogen and phosphorous. By using waste streams (agricultural, farm animal waste, and human sewage) as the nutrient source, these farms essentially also provide a means of recycling nutrients from fertilizer to food to waste and back to fertilizer.

Regarding the costs, he writes:

In "The Controlled Eutrophication process: Using Microalgae for CO2 Utilization and Agircultural Fertilizer Recycling", the authors estimated a cost per hectare of $40,000 for algal ponds. In their model, the algal ponds would be built around the Salton Sea (in the Sonora desert) feeding off of the agircultural waste streams that normally pollute the Salton Sea with over 10,000 tons of nitrogen and phosphate fertilizers each year. The estimate is based on fairly large ponds, 8 hectares in size each. To be conservative (since their estimate is fairly optimistic), we'll arbitrarily increase the cost per hectare by 100% as a margin of safety. That brings the cost per hectare to $80,000. Ponds equivalent to their design could be built around the country, using wastewater streams (human, animal, and agricultural) as feed sources. We found that at NREL's yield rates, 15,000 square miles (3.85 million hectares) of algae ponds would be needed to replace all petroleum transportation fuels with biodiesel. At the cost of $80,000 per hectare, that would work out to roughly $308 billion to build the farms.

The operating costs (including power consumption, labor, chemicals, and fixed capital costs (taxes, maintenance, insurance, depreciation, and return on investment) worked out to $12,000 per hectare. That would equate to $46.2 billion per year for all the algae farms, to yield all the oil feedstock necessary for the entire country. Compare that to the $100-150 billion the US spends each year just on purchasing crude oil from foreign countries, with all of that money leaving the US economy.

I spent a lot of time reading through his references (some are very long reports), and I could not understand why we weren’t massively funding this research. It turns out that NREL stopped funding the program in 1996. The reason remains unclear to me, but this concept had given me hope that there might be a viable alternative out there after all that didn’t require us to turn all our forests into farmland. I spent a lot of time wondering just how I could involve myself in this area and contribute. I did e-mail Michael Briggs and we had a nice discussion, and I came away convinced that he knew what he was talking about. So why on earth weren’t we all over this? Frankly, I still don’t know the answer to that.

Biodiesel Plus Carbon Dioxide Recycle

Fast forward to 2006, and newspapers across the country picked up the story that Isaac Berzin, of MIT, is using algae to quickly recycle carbon in carbon dioxide rich exhaust stacks from power plants (3). What a brilliant, brilliant idea! Why didn’t I think of that? By doing this, he is able to double up on the benefits. First, the carbon dioxide gets converted back into plant material instead of going directly into the atmosphere. This would be a way of sequestering the carbon, provided the algae was properly disposed of. The story reports:

Fed a generous helping of CO2-laden emissions, courtesy of the power plant's exhaust stack, the algae grow quickly even in the wan rays of a New England sun. The cleansed exhaust bubbles skyward, but with 40 percent less CO2 (a larger cut than the Kyoto treaty mandates) and another bonus: 86 percent less nitrous oxide.

That alone is incredible. But that isn’t all:

After the CO2 is soaked up like a sponge, the algae is harvested daily. From that harvest, a combustible vegetable oil is squeezed out: biodiesel for automobiles. Berzin hands a visitor two vials - one with algal biodiesel, a clear, slightly yellowish liquid, the other with the dried green flakes that remained. Even that dried remnant can be further reprocessed to create ethanol, also used for transportation.

One key is selecting an algae with a high oil density - about 50 percent of its weight. Because this kind of algae also grows so fast, it can produce 15,000 gallons of biodiesel per acre. Just 60 gallons are produced from soybeans, which along with corn are the major biodiesel crops today.

Now that’s ethanol I can live with. Finally:

For his part, Berzin calculates that just one 1,000 megawatt power plant using his system could produce more than 40 million gallons of biodiesel and 50 million gallons of ethanol a year. That would require a 2,000-acre "farm" of algae-filled tubes near the power plant. There are nearly 1,000 power plants nationwide with enough space nearby for a few hundred to a few thousand acres to grow algae and make a good profit, he says.

I hope this guy is extremely successful and makes a billion dollars. He has the potential here to make a contribution to society that most of us only dream about. As he himself said "This is a big idea, a really powerful idea." I couldn’t agree with those sentiments more.

Summary

Biodiesel has a much greater energy content than ethanol, and diesel engines are more efficient than spark ignition engines. The energy return for biodiesel is over double that of ethanol. One the downside, most of us don’t drive vehicles with diesel engines, and there is a technical problem (minor, in my opinion) that biodiesel will solidify in cold weather. But the most amazing thing is that biodiesel can be produced from algae that have been used to reduce carbon emissions from the exhaust of power plants, in yields as high as 15,000 gallons per acre. This is 2 orders of magnitude higher than biofuel yields from crops. Biodiesel produced from algae is the only theoretically feasible alternative energy solution that could actually replace our current fuel demand. Combined with an aggressive conservation program, success in large scale biodiesel production from algae could ultimately lead to energy sustainability. The one thing we lack here is a good analysis of the energy balance. The group at UNH reports that the EROI is likely to higher than the 3.2 reported for soybeans, but I would still like to see a rigorous analysis.

References

1. Wide-scale Biodiesel Production from Algae

2. Life Cycle Inventory of Biodiesel and Petroleum Diesel for Use in an Urban Bus

3. Algae — like a breath mint for smokestacks

4. Life Cycle Inventory of Biodiesel and Petroleum Diesel for Use in an Urban Bus

Exchange with an Ethanol Advocate

I am working on a biodiesel post, but I am having an exchange with an ethanol advocate that is worth capturing here. Over at the blog 7 Deadly Sins, a number of fallacious arguments in favor of ethanol subsidies have been given. I responded, and this led to the exchange that I capture here.

I have become used to unsavory tactics by the pro-ethanol contingent. You wonder why such tactics are necessary, if their arguments are any good. This is also what happened following my testimony to the legislature against the ethanol mandate. People wanted to hurl insults and call names, but nobody was interested in engaging the facts.

Note that in the exchange, the following occurred:

1). Ad hominen argument right off the bat (implying that I am a "Big Oil shill").
2). A false accusation that I am against alternative energy research.
3). A false accusation that I committed argumentum ad verecundiam.
4). A hand wave on the energy balance issue (said it isn’t important).
5). Brought up the cost of the war in Iraq (which he says he supports).
6). Concludes by repeating the ad hom, and then falsely says that I am just suggesting we should stick with Big Oil.

Exchanges like this fascinate me. What was missing from his response? He didn’t actually address my arguments. He made a number of false accusations, and demonstrated quite clearly that he engaged in very selective reading of what I wrote, but he did not address the arguments. He said he doesn’t believe the calculation from my first blog entry - that it takes over $4.00 of ethanol subsidies to displace a single gallon of gasoline - but he wasn’t willing to attempt a rebuttal.

Let’s hit 1-6 above, and then dissect his opening post a bit more.

Responses to 1-6 Above

1. Considering the time and energy I have devoted to alternative energy research, calling me a Big Oil shill is ludicrous. There will be certain issues over which my personal interests and those of my employer will coincide. Defeat of a grain-based ethanol mandate was one such issue. Had they asked me to go testify against a biomass ethanol mandate, or a biodiesel mandate, I would have refused. (Not that I am for mandates, but I can see true benefits in the case of biomass or biodiesel). Besides that, calling me a "Big Oil shill" is simply a way of telling readers not to pay attention to my arguments.

2. This is pretty funny, considering the amount of time I have spent doing alternative energy research. This was the topic of my thesis, after all. I strongly support alternative energy research. I don’t support throwing money into an endless black hole with no real benefits.

3. Let me provide a definition here: argumentum ad verecundiam: the fallacy of appealing to the testimony of an authority outside his special field. Anyone can give opinions or advice; the fallacy only occurs when the reason for assenting to the conclusion is based on following the improper authority. There are a couple of glaring problems here. First of all, this is my field. I didn’t make an appeal to an authority. Second, I supported my arguments with factual observations and calculations.

4. The energy balance issue is certainly important. First, if we use coal to make ethanol (or methanol), we have given up any pretense that this is an issue of renewable energy. (He says this doesn’t matter to him anyway). But the second thing is, we can use natural gas directly as a transportation fuel. Speeding up the rate at which we use it by making ethanol (and subsidizing the process!) is incredibly inefficient, and wasteful.

5. As I noted, I did not support going to war in Iraq. I would be willing to pay a much higher price for gasoline in order to keep us out of war. Note that I am not protesting the war, as we are already engaged. But I regret that we went to war, as I predicted it would not be over any time soon, and the cost in lives and money would be a lot higher than the administration had predicted. But we are there, and I support our troops.

6. Just another indication that he is interested in trying to force-fit my position into some predefined category. Unfortunately, he is trying to stick me into the wrong category.

Furthermore….

Here are some responses to his initial posting. His comments are in italics:

Lots of my conservative brethren are fond of saying that the government should build roads and secure the country. Investing in an Ethanol infrastructure does both.

This claim is ironic, considering that the ethanol subsidy is paid for out of the Highway Trust Fund (1):

The 1998 Transportation Equity Act for the 21st Century (TEA-21) extended the costly excise tax exemption through 2007. In addition to the tax exemptions, three income tax credits are provided for alcohol fuels that are biomass derivatives (renewable resources) and used as fuel: the alcohol mixtures credit, the pure alcohol fuel credit, and the small ethanol producer's credit. The tax exemptions have cost the Highway Trust Fund about $10.4 billion in needed revenues. Balances in both the highway and mass transit accounts will be depleted between 2003 and 2015, according to estimates by the Congressional Budget Office.

I submit that the consumers have no freedom now and cannot while a very few big oil companies control the price and supply.

That demonstrates a tremendous ignorance of the oil industry. ExxonMobil, the biggest public oil company in the world, controls something like 3% of global oil production. How on earth can they control oil prices? Is he implying collusion? If so, he needs to get on the phone and call the FTC. Of course the FTC has already found that collusion is not taking place (2).

Gasoline prices are increasing primarily because of market conditions, not collusion or other anti-competitive activities, according to a report released yesterday by the Federal Trade Commission.

"The vast majority of the FTC's investigations have revealed market factors to be the primary drivers of both price increases and price spikes."

Oil prices are set on the open market. Strong demand and tight supplies are why oil prices are as high as they are.

The impact of Katrina is nothing compared to what is coming in the Middle East.

I will agree with that. I submit that fossil fuels are entering a new phase of being incredibly expensive. Unfortunately, due to the high fossil fuel inputs into ethanol, they will follow the upward trend.

Farm lobby or big oil, your choice. What is the difference? One is in Wisconsin the other only extracts cash from Wisconsin. One is mainly your local employers, the other is beholden to terrorist supporting states. I know which I would pick.

The real misunderstanding is that supporting grain-ethanol will ever help us get off of Mideast Oil. It will not. We simply can’t make enough to replace what we get from the Middle East. So it’s not a choice. The choice is "farm lobby, plus Mideast Oil".

I dislike farm subsidies as much as the next conservative. If you want to be fair, compare the total money spent on farm subsidies against the cost of the war in Iraq.

Again, all the farm and grain-ethanol subsidies in the world wouldn’t eliminate our need for Mideast Oil. You are setting up choice that doesn’t really exist.

Is Ethanol the long-term solution? Maybe, maybe not, but it is clearly better than continuing the status quo and bowing down to our Saudi masters.

Grain-ethanol is not going to change that status quo. Cellulosic ethanol, biodiesel, and conservation could accomplish this. Let’s spend our tax money on something that can actually make a difference.

References

1. ETHANOL CONTINUES TO REAP SUBSIDY WINDFALL

2. FTC Finds No Collusion In Rising Gasoline Prices

Ethanol from Biomass: A Sustainable Option?

The Promise of Cellulosic Ethanol

I have mentioned a couple of times the research I was involved in during graduate school. I have provided a couple of links (under "Links") that describe this research in detail. Briefly, we were trying to turn biomass (switchgrass, corn stover, wheat straw, and municipal solid waste) into ethanol and various organic acids and ketones. Biomass consists of many organic components, but it is primarily the cellulose component that gets turned into ethanol, hence the term cellulosic ethanol.

Cellulosic ethanol has two major advantages, and one major disadvantage over ethanol from grain. The first major advantage is that large fossil fuel inputs in the form of fertilizer are not required to produce the biomass. Therefore, cellulosic ethanol has a much better energy return on energy invested (EROI) than grain ethanol. The second advantage is that the feed stock will be cheap, or even free (in the case of municipal solid waste, you can earn money by just accepting the waste). The disadvantage, however, is the reason cellulosic ethanol has yet to make a major impact. The enzymes required to free the fermentable sugars from the cellulose are very expensive. Historically, these enzymes have added as much as $5.00 a gallon to the cost of producing cellulosic ethanol. (1) However, substantial R&D efforts by a number of companies have brought the costs of these enzymes down to around $0.30 per gallon of ethanol.

One idea that I had in graduate school was the use of termites to do the conversion in our bioreactors. To my knowledge, I was the first person to ever try this. I got some butanol by doing this, but with a very low yield. The reactor probably also made methane, but we only looked at the liquid products. Perhaps if I could have very accurately replicated the termite gut chemistry I could have gotten yields up. It still makes sense to me that since termites are so efficient at converting cellulose, that would be a good place to look for a template organism for a bit of genetic engineering. It was my opinion then, and it is my opinion now, that the future of cellulosic ethanol hinges on genetically engineered microorganisms.

It is safe to say that while the gap has narrowed, cellulosic ethanol is still more expensive to produce than grain-ethanol. However, barring the kind of quantum leap I discussed in my previous essay, grain-ethanol has little upside potential. In addition, even if we turned the entire U.S. corn crop into ethanol, it would supply no more than 10% of the current fuel demand in the United States. (2) Given the facts that 1). The energy balance for grain ethanol is not that great; 2). We don’t grow enough grain to significantly lower our fossil fuel usage by turning it into ethanol; 3). Soil is eroded and fertilizer and pesticide runoffs contribute to water pollution as a result of large-scale corn farming; one wonders why this is even a topic worthy of discussion. Forget grain ethanol. If the government is going to force ethanol into the fuel system, make it cellulosic ethanol. I for one don’t mind paying $0.30 more a gallon for something that actually has a chance to be sustainable. However, many projections indicate that cellulosic ethanol will cost substantially less than grain ethanol in the not-too-distant future. A story in Business Week last year (3) reported:

Last December the bipartisan National Commission on Energy Policy released a report, Ending the Energy Stalemate, that analyzed the potentials of various alternative fuels, including both types of ethanol (which is just an industrial grade of alcohol). Only cellulosic ethanol got a decisive thumbs-up. By 2020, the commission predicts, its production cost could be less than 80 cents a gallon. In stark contrast, after 20 years producing grain ethanol, it still costs $1.40 a gallon to produce -- roughly twice as much as gasoline.

Is This Enough to Ensure Sustainability?

Let’s not kid ourselves. It is going to take more than all the ethanol we can possibly produce to replace our current usage of fossil fuels. I watched a CNN special a week ago on the topic of peak oil. Frank Sesno visited Brazil, where they make ethanol from sugar cane. When it was explained that Brazil is supplying much of their own fuel from homegrown ethanol, Sesno asked "Why isn’t the U.S. doing this?" There are a couple of things that Sesno apparently missed. First, sugar cane is the optimum crop for producing ethanol, because the ethanol yield per acre is about twice what you can get from corn. Unfortunately, there are few areas in the U.S. that are ideal for sugar cane production. Brazil is currently exporting ethanol to the U.S. and Europe, and they can ship it to the U.S. for cheaper than we can make it here. (So, we slap a tariff on it to make sure they can’t undercut our corn-ethanol producers). The 2nd thing Sesno apparently didn’t notice was all of the compact cars on Brazil’s roads. They showed a clip of him on the highway, and every car on the road was a compact. Therefore, their per capita fuel demand is far lower than ours.

To put the U.S. situation in perspective, consider a recent article on sustainability in Sweden. (4) The Swedish government has set a goal of being totally independent from oil by 2020. The article reports that today, Sweden only relies on petroleum for 34% of their energy needs, and renewable energy supplies 25% of their energy. However, Sweden relies heavily on Brazil for their ethanol:

Today the most effective source of ethanol is sugar cane. Brazil produces ethanol from it and Sweden obtains most of its ethanol from Brazil. But the country also already produces a fourth of its ethanol from Swedish wheat. Neither system is fully satisfactory in terms of energy output and the effects on the environment involved.

Sweden’s highways, like the rest of Europe’s (and Brazil’s), are dominated by small, fuel-efficient cars. Given that 1). Sweden is far ahead of the U.S. in their march toward energy independence; 2). Their government has made a serious commitment toward energy independence; 3). Petroleum is already a minor contributor toward their energy needs; 4). Renewable energy already supplies 25% of their energy needs; 5). Their per capita energy usage is much lower than ours; and 6). They think it will still be 2020 before they achieve energy independence; it should be clear just what a pipe dream energy independence is for the U.S. at the moment. Barring a concerted effort at conservation in the U.S., we don’t have a prayer of energy independence. We simply won’t be able to make enough ethanol to meet our demands. A combination of renewable sources might be able to meet our current needs, but it is going to require a huge effort on our part. Even then, at some point we are going to have to come to grips with sustainability. That will be the topic of an upcoming essay.

Summary

If ethanol is going to be mandated into our fuel supply, we will be far better off utilizing waste biomass instead of grain. The energy balance is more favorable for cellulosic ethanol, and it is projected to have the potential to compete with gasoline without the need for subsidies. However, due to our very high per capita energy usage, we are kidding ourselves to think that we can meet our needs with renewable energy unless we reduce our consumption.

References

1. Creating Cellulosic Ethanol: Spinning Straw into Fuel

2. The Money-Grubbing Mendacity of the Ethanol Lobby

3. Not Your Father’s Ethanol

4. Sweden Plans Wood-fueled Future

Improving the Prospects for Grain Ethanol

In my previous essay, you probably gathered that I am not enamored with grain-derived ethanol. I consider it to be a kind of fool’s gold that looks nice and shiny to the general public. Considering the magnitude of the subsidies as I showed in the previous essay, the industry is nowhere close to being able to compete on a level playing field. If the industry is to survive, you can count on multibillion dollar handouts – or mandates - as far as the eye can see.

As I write this, the spot price of ethanol is $2.43, versus $1.74 for mid-grade gasoline. Considering that most people don’t buy mid-grade, you can knock another dime or so off the price of the gasoline. As an aside, I will acknowledge that E85 (85% ethanol) is currently cheaper than gasoline. The subsidies bring the cost down, but since gasoline has approximately 1.5 times the BTU value of ethanol, the price for ethanol has to be much cheaper to persuade consumers to buy it. Consider that without subsidies, ethanol at $2.43 means you have to pay 1.5 times that, or $3.65 in order to drive the same distance as you could on 1 gallon of gasoline. In other words, unsubsidized ethanol at $2.43 is just like paying $3.65 for gasoline.

So, presently ethanol is not close being economical without the subsidies. It will take serious improvements in the technology (or more mandates) to enable grain-ethanol to economically compete with gasoline without relying on subsidies. I see 3 possible developments that could close the economic gap. However, none appear to be close to viability. There is also a 4th possibility that would definitely close the gap, but it is not a solution an environmentalist could endorse. I will address these 4 options, and try to summarize the current state of the art.

There are two major energy consumers in the grain ethanol production process – fertilizer and distillation - that contribute to the poor energy balance. While there are gasoline and diesel inputs into the process, the major energy input is natural gas. Fertilizer production is highly natural gas intensive, as is the process of distillation that removes water from the crude ethanol. Eliminating either of these inputs would substantially improve the energy balance, likely increasing the EROI to >2.0.

Nitrogen Fixation

The first potential advance would be to eliminate the need for fertilizer. Of course grain can be grown without fertilizer. That’s not the issue. The grain needs to be grown without fertilizer, while maintaining the fertility of the soil and keeping the yields high. Failure to satisfy these criteria will eventually ensure that the energy balance becomes negative. The potential answer to this problem is corn that can utilize nitrogen from the air. This is called "nitrogen fixation", and has been called the holy grail of crop science. A detailed explanation can be found here:

Biological Nitrogen Fixation

Here are a few important excerpts:

Synthetic nitrogen use has grown from 3 million to 80 million tons over the last 40 years. This increase occurred in both developed and developing countries. The current annual worldwide expenditure for fertilizer nitrogen exceeds $20 billion-an amount comparable to that for synthetic chemical pesticides. Modern industrial production of fertilizer nitrogen demands large inputs of energy in the form of natural gas, a finite natural resource; fertilizer constitutes a major energy cost in the production of a high-yield corn or rice crop. Moreover, carbon dioxide is released by the consumption of natural gas. Food production may thus contribute indirectly to global warming. Of the fertilizer nitrogen applied to a crop, seldom is more than 50 percent assimilated, and often the efficiency of utilization is much less.

Some species of microorganisms have the ability to convert atmospheric nitrogen into forms that are usable by plants and animals. BNF occurs in bacteria that possess the enzyme nitrogenase. Plants and microbes form symbiotic associations in legumes, lichens, and some woody plants. The system most important for agriculture is the legume-rhizobia symbiosis: the fixation of atmospheric nitrogen occurs within root nodules after rhizobial penetration of the root. Thus, many legumes can grow vigorously and yield well under nitrogen-deficient conditions, and may contribute nitrogen to the farming system in the vegetative residues after grain harvest, or more significantly as green manure incorporated in the soil.

Molecular genetic research has made available the tools for possibly conferring upon cereals and other nonlegumes the ability to fix atmospheric nitrogen. Although realization of this goal represents a long-term endeavor, the possibility of either substantially reducing or eliminating the economic and environmental cost of the use of fertilizer nitrogen justifies the effort. Fundamental knowledge is now in hand to provide the basis for focused efforts on BNF in legumes and cereals. Benefits are expected from research with legumes in the nearer term, whereas benefits from research with cereals could be very large but are in the longer term.

So, the potential payoff is huge, not just for ethanol, but for feeding the world. Unfortunately, as indicated by the last sentence, this is not expected to be realized in cereal grains for some time. However, a number of research groups are working on this problem.

Novel Extraction Techniques

The second potential advance addresses the distillation portion. Crude ethanol contains roughly 8% ethanol and 92% water. It takes an enormous input of natural gas to boil off the ethanol from the water. If an extraction process existed in which ethanol could be pulled from the water, or vice versa, this could dramatically lower the natural gas requirement. This was in fact one area that my research group was investigating in graduate school. Such an extraction technique is described here:

Separating Ethanol From Water Via Differential Miscibility

Some excerpts:

The differential miscibility of castor oil in ethanol and water would be exploited to separate ethanol from water, according to a proposal. Burning the separated ethanol would produce more energy than would be consumed in the separation process. In contrast, the separation of a small amount of ethanol (actually an ethanol/water solution poor in ethanol) from water by the conventional process of distillation requires more energy than can be produced by burning the resulting distillate.

There is very little in the literature on this topic, leading me to believe that research in this area has not been productive. There should be a great deal of incentive to come up with such a scheme, but not a lot of research appears to be taking place in this area.

Don’t Separate the Water

The third potential advance would be to utilize the water/ethanol mixture without separating it. Lanny Schmidt’s group at the University of Minnesota is working on just such a process. I have been familiar with his work for several years, because some areas of my research have been in this area. I have spent quite a bit of time reading papers and patents by Professor Schmidt and his group.

In a 2004 report in Science (1), Schmidt’s group reported that they were able to produce hydrogen from a mixture of ethanol and water via an autothermal reforming process. This is potentially a very significant development, as it would eliminate the single biggest energy input in the ethanol process – energy for distillation. However, there are two concerns. First, the latent heat of water is very high relative to other liquids, so heating up the water will absorb some - and maybe a lot - of the energy that is produced. Second, this will require an entirely new kind of car motor, and those kinds of revolutionary changes don’t take place overnight. But it is a promising development. For more information, Professor Schmidt describes his research in a PowerPoint presentation here:

Renewable Hydrogen and Olefins by Autothermal Reforming

Coal-Based Ethanol

This is an option that most environmentalists will abhor. However, it is the one most likely to take place in the short-term. The natural gas input into ethanol production is a serious long-term threat to economic viability. Since natural gas is a fossil fuel, and supplies are diminishing, it will put upward pressure on the price of ethanol over time. However, if the energy inputs could be produced from coal, ethanol prices would be insulated from escalating natural gas prices.

Using coal might also lessen the significance of the EROEI debate. If you take 1 BTU of (cheap) coal, and you get back 0.8 BTUs of (more valuable, liquid) ethanol, then EROEI doesn't have the same significance as when you use natural gas to produce ethanol. You converted the BTUs into a readily usable liquid form. This argument may be valid from an economic point of view, but it ignores the fact that coal is still an inherently dirty energy source. If coal remains abundant and cheap, coal economics will beat natural gas economics, but coal will increase the rate at which we put carbon dioxide into the atmosphere. If we come up with a viable method of sequestering the carbon dioxide produced at the power plant, then we might have a temporary economic solution (although we are still using up a non-sustainable fuel in the process).

Interestingly enough, after I had written the previous paragraph, I ran across this story in the March 23rd Christian Science Monitor (2). Apparently, some ethanol producers have already figured out that coal utilization will provide superior economics. Some excerpts from the article:

The trend, which is expected to continue, has left even some ethanol boosters scratching their heads. Should coal become a standard for 30 to 40 ethanol plants under construction - and 150 others on the drawing boards - it would undermine the environmental reasoning for switching to ethanol in the first place, environmentalists say.

"If the biofuels industry is going to depend on coal, and these conversion plants release their CO2 to the air, it could undo the global warming benefits of using ethanol," says David Hawkins, climate director for the Natural Resources Defense Council in Washington.

"It's very likely that coal will be the fuel of choice for most of these new ethanol plants," says Robert McIlvaine, president of a Northfield, Ill., information services company that has compiled a database of nearly 200 ethanol plants now under construction or in planning and development.

I have to say that this development is entirely predictable. We have lots of coal, but declining natural gas supplies. Use of coal should make ethanol pricing (without subsidies) more competitive with gasoline. However, there will still be a significant natural gas input for the fertilizer used to grow the corn, so it won’t be entirely insulated from spiking natural gas prices. But this step may provide "shutdown economics" for ethanol plants that use natural gas as their fuel of choice.

Summary

Given that we now have a national mandate to use ethanol, it is not going away any time soon despite the poor economics. In the short term, I think coal-based ethanol plants will start to predominate, ending the argument that ethanol is a "green" fuel. In the longer term, cellulosic ethanol has the potential to be an even more viable source of ethanol, but the time frame is unclear. I think biodiesel has the potential to trump all sources of ethanol. I will be writing more on biodiesel and cellulosic ethanol in upcoming entries.

References

1. G. A. Deluga, J. R. Salge, L. D. Schmidt, and X.E. Verykios, "Renewable Hydrogen from Ethanol by Autothermal Reforming", Science 303, 993-997 (2004).

2. Carbon Cloud Over a Green Fuel

Grain-Derived Ethanol: The Emperor’s New Clothes

Energy security. Homegrown fuels. Better markets for our farmers. And by gosh, it’s good for the environment. Sounds good, doesn’t it? Where do I sign up?

However, the truth behind grain-derived ethanol is masked behind half-truths and myths promoted by a very powerful lobby on behalf of agricultural and ethanol interests. This is one of the biggest scams in operation today, enabled by politicians who fear the political power of that powerful lobby. I will dissect some of the claims in this essay, and show why grain-based ethanol is a huge misallocation of resources.

First, what do I know about ethanol? I grew up on a farm, and my family still farms. I wanted to help farmers and the environment, so I went to a graduate school where I could be a part of a research project that was doing just that. My research group in graduate school was working on the conversion of biomass (aka cellulose) into ethanol. Biomass conversion via microorganisms was the topic of my thesis. After graduation, I worked several years for a chemical company in various roles (R&D, process, production) supporting propanol and butanol production. I currently work for a major oil company, and I try to stay current on developments in the alternative energy fields. In 2005, my company sent me to the state legislature to provide expert testimony regarding a proposed ethanol mandate for my state. My testimony generated a lot of discussion, and I was called back to the stand ten times to answer questions. Despite some very contentious questioning, nobody rebutted the arguments that I made, which is the gist of this essay.

There is a pretty good consensus that oil production will peak in the next 10-20 years. Some are suggesting that it has already happened. I share the view that an oil peak is on the horizon, and I believe that it is critical for our very way of life to prepare for the imminent changes ahead. It is clear that sooner or later we will need to develop sustainable alternative fuel sources for transportation. However, grain-based ethanol production is not sustainable in the long-term.

A lot has been written about the energy balance of grain ethanol. Clearly, to be renewable, the Energy Return on Energy Invested (EROI) must be greater than 1.0. Pimentel at Cornell and Patzek at Berkley have argued that there is actually a net loss of energy when producing ethanol (as well as some other biofuels) (1). I do not share this view, although there is enough uncertainty in the data that there is a possibility that the EROI for grain ethanol is less than 1.0. However, in order to make my point, I am going to use the data from a 2002 USDA study by Shapouri et al. entitled "The Energy Balance of Corn Ethanol: An Update"(2). To be certain, Shapouri is an advocate of grain ethanol. In his report, Shapouri argues that when a BTU credit is taken for co-products like animal feed, the EROI is 1.34. In other words, for 1 BTU of energy invested, the total BTU value out was 1.34 BTUs if co-products were included.

At this point, it is important to point out a bit of accounting sleight of hand utilized by Shapouri, as well as a number of others when calculating EROI for ethanol. Note that the actual energy inputs into the process according to him are 77,228 BTU per gallon of ethanol produced (using the higher heating value, or HHV). The BTU value given for a gallon of ethanol (HHV) was 83,961. Therefore, excluding co-product credits, the EROI would appear to be 83,961/77,228, or 1.09. He includes a co-product credit of 14,372 BTU, which should raise the overall value of the BTU products to (83,961 + 14,372), or 98,333 BTUs. This would imply an EROI of 98,333/77,228, or 1.27. However, Shapouri, like many ethanol advocates, performs a completely illegitimate accounting trick to exaggerate the EROI of ethanol. He uses the 14,372 co-product credit to reduce the energy input of 77,228 and assumes an energy input of just 62,856 BTUs/gallon. Since the co-products are not actually used as inputs in the process, this is invalid. But that is not the most serious issue. When he uses the co-product credit to offset the energy input, it should be removed from the product side. Shapouri includes it on both sides of the equation – reduce the inputs with the co-product credit, and increase the BTU output with the co-product credit.

Consider this analogy. I invest $100, and I get a return of $20 and another $40 worth of goods (co-product). What is my return on investment (ROI)? Most people would say that I got a total return of $60 on an investment of $100, for an ROI of 60%. If we utilize Shapouri-style accounting, we would use the $40 co-credit to offset our initial investment. We would then argue that we only invested $60 to get a return of $60, for an ROI of 100%. So, the answer to the question - "When does a $60 return on a $100 investment amount to a 100% return on investment?" – is "Whenever the USDA is doing the accounting."

To give another example of why this accounting practice is invalid, consider a case in which we invested 100 BTUs of energy, and got in return 100 BTUs of animal feed and 1 BTU of usable energy. What is the EROI? Using Shapouri-style accounting, the EROI is infinite, since the 100 BTUs of co-product completely offset our initial investment. We invested nothing, and got 1 BTU in return! Clearly this is not a valid way of accounting for our energy balance, but this practice is common in ethanol accounting.

So, we have an exaggerated EROI in the case of ethanol, but what’s the bottom line? Energy is being created, right? Isn’t that what we are after?

Yes, we are after energy creation (indirectly via capture of solar energy). However, the EROI must be very good, or the price we pay for this energy creation will be much too high. At present there is a federal subsidy on ethanol that amounts to $0.51/gallon. Let's consider what we are getting for the subsidy. A gallon of gasoline contains 125,000 BTUs (same HHV basis as ethanol). In the Shapouri paper, the net gain reported in producing a gallon of ethanol was 21,000 BTUs. This means that we have to produce 125,000/21,000, or 5.95 gallons of ethanol before we have generated the energy contained in 1 gallon of gasoline. Given a federal subsidy of $0.51 a gallon, we have spent 5.95*$0.51, or $3.03 subsidizing replacement of 1 gallon of gasoline! This amounts to $24.29 of federal subsidy for every million BTUs (MMBTU) of energy created. Contrast this with a natural gas price of $7.00 per MMBTU. That doesn't even factor in various state subsidies which push the overall subsidy up to over $4.00 per gallon of gasoline displaced. So, taxpayers pay this, but then they still have to buy the ethanol. Any way you slice it, this looks like a bad deal to me.

I questioned Shapouri about this in an e-mail. I wrote that the subsidies appeared to be way out of line, considering that the subsidy on wind power was about $5/MMBTU. In his response, he made no attempt at all to rationalize or defend these subsidies. He wrote If we want to produce fuel ethanol from biomass and crop residues, then ethanol should compete with gasoline on the BTU bases. We do not have the technology yet. But in the future it is a possibility. His conclusion is the same one I came to in graduate school in the 90’s: Someday the technology may be economical for biomass, but grain-based ethanol is not even in the ballpark.

Also note that Shapouri’s paper examined the energy balances for the 9 highest corn producing states. He used a weighted average for the states (Table 4 in his report) and concluded that on average it takes 57,476 BTU to produce a bushel of corn. It is this average on which his EROI is based. However in states like Nebraska, where corn must be irrigated, they concluded that it takes 68,120 BTUs to produce a bushel of corn. In other words, the energy balance for some states is far less favorable than others, and may be negative in some cases (even using Shapouri’s methodology).

What of the claims from the pro-ethanol literature such as: Ethanol production is extremely energy efficient, with a positive energy balance of 125%, compared to 85% for gasoline (3). If these claims were true, then would they actually need ethanol subsidies? Ethanol could put oil companies out of business if this claim had merit.

In fact, however, such claims are false. These claims are based on the use of two different accounting methods designed to show ethanol in a positive light. The energy balance for ethanol is calculated for the entire life cycle, and that for gasoline is calculated on the basis of a barrel of crude oil ready to be refined. We can calculate gasoline based on an entire life cycle to obtain a true apples to apples comparison. It takes only about 1 barrel of oil energy input to net 10-30 barrels of oil from the ground, depending on the source. So, this step has an efficiency of at least 1000%. Once the 85% energy efficiency is factored in for refining gasoline from the oil, the positive energy balance for gasoline ranges from 850% to well over 1,000%. That’s why gasoline costs significantly less than ethanol on a BTU basis. The claim that gasoline is less efficient is just another piece of propaganda used to make the public believe ethanol is better than it is. It would be interesting to see a closed-loop ethanol plant, in which the ethanol they produce provides the energy for the plant. It would not take long for the charade to fall apart, as it would become apparent just how dependent they are on fossil fuels.

I have not even addressed the environmental impacts of growing corn to produce fuel. This is usually given a "free pass" when considering the economics of corn ethanol. Consider a recent report by Lester Lave and Michael Griffin, from Carnegie Mellon University. They write:

Corn farming is rough on the environment. Soil erosion due to wind and water is rampant. Fertilizer and pesticide runoffs produce algae blooms that result in "dead zones," including one in the Gulf of Mexico that is so polluted it cannot support aquatic life. Furthermore, building the ethanol processing plants will take 3–4 years, and gas stations would have to commit to providing ethanol. And, because ethanol uses only the starch in corn, not the oil, protein, or other components, converting corn into ethanol is attractive only if there is a market for the byproducts. Opinions differ, but some estimate that byproduct markets could saturate well short of 11 billion gallons of production.

So, we have a marginal energy balance, subsidies that are far out of line with what we are getting for the money, and we are damaging the environment in the process. This idea sounds like something hatched by politicians and kept alive by lobbyists with deep pockets. Which is, in fact, the truth of the matter.

This was the gist of my testimony at the state legislature in 2005. I made an offer to the representatives, as well as to the ethanol proponents and general members of the audience. I told them that I would hang around and answer every single question or criticism they had about my testimony. That was quite interesting. I was cursed by one of the sponsors of the bill. I was accused of protecting the interests of "Big Oil". I was blamed for the war in Iraq (despite the fact that my state gets all of our imports from Canada). Lots of people told me that I had my facts wrong, but every one of them backed down when I asked for specifics. Nobody rebutted my argument.

References

1. Pimentel, David. The Limits of Biomass Energy. Encyclopedia of Physical Sciences and Technology, September 2001.

2. Shapouri, H., J.A. Duffield, and M. Wang. 2002. "The Energy Balance of Corn Ethanol: An Update". AER-814. Washington, D.C.: USDA Office of the Chief Economist.

3. This claim seems to have originated with the American Coalition for Ethanol, but can be found on a number of the ethanol advocates’ information sheets. It is also promoted by Argonne National Laboratory through their misleading GREET model.

4. The Green Bullet