Des Moines Register
08-27-06
Ethanol: The facts, the questions
The industry is booming, but where is it headed next?
Nationwide, ethanol production more than doubled in the past five years, and it's
expected to double again by 2012. Iowa, the nation's top ethanol producer, has
played a big role in driving that growth, diverting part of its nation-leading corn
crop to ethanol production. Still, ethanol today provides only a tiny fraction of the
U.S. motor-fuel supply. Further growth is limited in part by the size of the corn
crop. Replacing even 30 percent of U.S. petroleum consumption would require
research advances that allow using material such as cornstalks and wood chips
as ethanol feedstock.
Consumer's guide
- E10: Nearly all the ethanol fuel sold in the United States - 99 percent - is E10, a
blend of 90 percent gasoline and 10 percent ethanol. Most vehicles
manufactured after 1986 can run on E10. The Renewable Fuels Association
maintains lists of automobile warranty statements regarding ethanol use. Link
there from desmoinesregister.com/energy. E10 also can be used in small
engines unless otherwise specified by the manufacturer.
- E85: The remaining 1 percent is E85, a blend of 85 percent ethanol and 15
percent gasoline. Most vehicles that can use E85 are flexible-fuel vehicles,
capable of operating on any mixture of gasoline and 0 percent to 85 percent
ethanol. The National Ethanol Vehicle Coalition estimates there are 6 million
E85-capable vehicles in the United States. As recently as 2004, only 146,000 of
the vehicles actually used E85 instead of gasoline, in part because so few filling
stations sold it. Many owners don't realize they're driving a flex-fuel vehicle. To
determine whether your vehicle can run on E85, check your owner's manual or
fuel-filler door or contact your dealer. Or, go to desmoinesregister.com/energy to
link to the National Ethanol Vehicle Coalition's lists of flexible-fuel vehicles. You
also can link to the coalition's tool for finding an E85 fueling station. Just enter
your city or Zip Code.
- Mileage: Ethanol contains less energy than gasoline, so ethanol blends get
fewer miles to the gallon. Ethanol advocates contend the drop is 2 percent or
less for E10. Iowa State University Professor Larry Johnson estimates that
E10 delivers 96.4 percent of the miles per gallon of gasoline, a drop of 3.6
percent, and E85 delivers 80 percent. Using Johnson's figures, based on
numerous studies, a car that gets 25 miles to the gallon and has a 17-gallon tank
could go 425 miles on a tank of gasoline. That same car would get 24.1 mpg with
E10 and travel 410 miles, or get 20 mpg with E85 and go 340 miles.
- What's the better deal? It depends on the price and the reduction in mileage
you experience with your vehicle. In mid-August, the price of a gallon of regular
unleaded gasoline at a Des Moines station was $2.74.9 and a gallon of E10 was
$2.68.9. If you experience a 2 percent reduction in mileage, ethanol is a slightly
better deal. To be priced the same, a gasoline-equivalent gallon of ethanol would
cost $2.69.4, but you're getting it for 0.5 cents-a-gallon cheaper. If the reduction
in mileage is 3.6 percent, though, gasoline is easier on the wallet. To get
equivalent mileage for the same price as gasoline, the E10 price would need to
be $2.65, or 3.9 cents cheaper. E85 was selling in West Des Moines for $2.38 a
gallon. If you experience a 20 percent reduction in mileage, gasoline is a better
deal. To be priced the same based on miles obtained, a gasoline-equivalent
gallon of E85 would need to be priced at $2.19.9.
Impact on air quality
Ethanol use leads to better air quality and less greenhouse-gas emissions,
proponents say. While that's generally true, estimates of the extent of benefits
vary.
Ethanol serves as an oxygenate, leading to lower emissions of carbon monoxide.
Air-quality improvements are much less for low-level ethanol blends, such as the
10 percent blend commonly sold in the United States, than for higher blends or
pure ethanol.
A fuel-cycle study by Argonne National Laboratory found that a blend of cornbased 10 percent ethanol reduced greenhouse-gas emissions by 1 percent.
Emissions were reduced by 20 percent for E85. A January study reported in
Science magazine, reviewing previous research, estimated the E85 reduction at
10 percent.
Future production of cellulosic ethanol - made from material such as prairie grass
or wood waste - holds the potential for significant reductions in greenhouse
gases - from 67 percent to 89 percent, according to the Argonne study - because
of reduced use of fertilizers and fossil fuels.
IOWA: We're No. 1
Iowa is the nation's leading producer of ethanol. As of January 2006, Iowa's
plants represented 29 percent of the nation's then-operating production capacity.
As of mid-August, Iowa had 25 ethanol refineries in operation, and construction is
under way on five new refineries and two expansions, according to the Iowa
Renewable Fuels Association.
THE WORLD
Brazil has led the world in switching to ethanol. It's also the world's leading
grower of sugar cane. Since alcohol is created by fermenting sugar, sugar crops
are the easiest ingredients to convert into alcohol and thus are an ideal feedstock
for making ethanol. Growing it also requires less fertilizer than corn does.
Most gasoline sold in Brazil is a 20 percent to 25 percent ethanol blend, and
most vehicles there are flexible-fuel models, capable of running on any variation
from 100 percent gasoline to 100 percent ethanol.
However, Brazil consumes less than 1/20th of the motor fuel gulped by the
United States. And in 2005, the United States edged Brazil in ethanol production,
according to the Renewable Fuels Association.
Economic impact
As of November 2005, Iowa's ethanol industry employed 900 to 950 people. It
has created perhaps 3,400 indirect jobs, according to Dan Otto, a professor at
Iowa State University.
Estimates of the multiplier impact of ethanol production on Iowa's economy vary
widely. In June, ISU economist David Swenson unveiled a model for a
hypothetical ethanol plant producing 50 million gallons a year and employing 35
people. He estimated that each job in the ethanol plant would generate 3.8 jobs
in other industries, such as suppliers, for a total increase of 133 jobs. The plant
would have an output of $118.65 million and make purchases in the region worth
$13.3 million. Factors such as the workers spending their paychecks on local
goods and services would create $21.8 million in added value for the region.
Another impact: increased corn prices for farmers. A typical plant buys corn from
fields within a 30-mile radius, driving up prices about a nickel a bushel. As more
plants are built, that difference could be much higher. Iowa elevator bids for corn
in mid-August ranged from $1.62 to $2.03 a bushel.
State fuel standard
In 2006, the Iowa Legislature adopted its own renewable-fuels standard, in effect
from 2009 to 2019. It offers incentives to qualifying retailers that sell a certain
percentage of fuel sales as renewable fuels, including biodiesel and ethanol,
eventually rising to 25 percent.
THE BIG QUESTIONS ABOUT ETHANOL
Energy balance
Critics continue to question whether more fossil energy is used to produce a
gallon of ethanol than energy is released when it is burned, if one counts
everything from the fertilizer used to grow the corn, the diesel to harvest and
transport it and the natural gas and electricity to distill it into alcohol. Plus, since
ethanol is too corrosive to be carried in current pipelines, additional fuel is
required to deliver it, by truck or rail. Most current studies have found a positive
balance, however.
A July report for the National Academy of Sciences found that ethanol made from
corn grain today yields 25 percent more energy than the fossil energy invested in
its production - better than gasoline. Upgrades in technology will continue to
improve that balance. And if cellulosic ethanol becomes feasible, improvement
would be dramatic. Fossil-energy consumption would drop by 70 percent when
producing E85, according to an Argonne National Laboratory study.
The broader question as the world searches for a replacement for petroleum is
whether other fuels would offer even better results. Biodiesel, for example, yields
93 percent more energy than the fossil energy invested in its production, the
National Academy of Sciences report found.
Subsidies
Some critics contend that ethanol wouldn't be commercially viable without hefty
subsidies and regulations that encourage its use. They also point to sharply
higher prices for ethanol at the pump in the past year and the industry's rapid
expansion as evidence subsidies are no longer needed.
The federal government subsidizes ethanol with a tax credit of 51 cents per
gallon. Small ethanol producers also qualify for an additional production credit,
according to the Congressional Research Service.
The government also has promoted growth of the industry by establishing the
Renewable Fuels Standard, which essentially requires use of ethanol. It offers
automakers incentives for producing flexible-fuel vehicles, which can use E85.
And government loans and grants have bankrolled plant construction.
Some states subsidize ethanol, too. Iowa offers retailers a 2.5-cent income-tax
credit for each gallon of ethanol sold above 60 percent of their total volume. That
will expire at the end of 2008, but then new incentives kick in if they sell a certain
percentage of renewable fuels, starting at 10 percent. Beginning this year,
retailers also can earn a 25-cent promotion credit for each gallon of E85 sold.
Grants of up to $30,000 are available for installing E85 pumps.
Proponents counter that such subsidies are needed to nurture an industry that
can reduce the nation's dependence on imported oil. The industry is in its infancy
compared with the long-subsidized petroleum and gasoline industries, they say,
and government support is needed to fund research and development of
infrastructure as well as lessen risk for investors. The oil industry continues to
receive government assistance in a host of ways, including support for research
and development, tax credits for enhanced oil recovery and favored tax treatment
through the depletion allowance, allowing owners to recover the capital cost of a
natural resource as the resource is exhausted.
Impact on agriculture
Turning the nation's farms into major producers of fuel as well as food and fiber
would dramatically transform agriculture.
Already, an estimated 15 percent of all corn used in the 2005-2006 marketing
year will be consumed in making ethanol. Substantial expansion of ethanol
production would require overcoming the technological hurdles to produce
cellulosic ethanol economically, using biomass such as cornstalks, perennial
grasses and wood chips.
A report last year from the agriculture and energy departments concluded it's
possible to grow enough grain to feed humans and livestock while producing
enough biomass to displace 30 percent of current U.S. petroleum use - with a lot
of "ifs." Farms and forestry operations would need to increase yields, develop
new equipment to recover more crop residue and wood waste and switch
production of some current cropland and idled acres to perennial grasses or
poplar trees. The time frame for accomplishing all that? Mid-21st century.
There are concerns that harvesting too much crop residue would rob the soil of
nutrients, or that marginal land would be pressed into production, increasing
potential for erosion. Conversely, perennials such as switchgrass would require
less fertilizer and reduce runoff.
Sustainability
Fueling the nation and world with petroleum isn't sustainable on a number of
fronts: Although worldwide demand steadily increases, driven by fast-growing
economies such as China and India, supplies are finite. Gasoline usage also
contributes to poor air quality and climate change.
Ideally, the world's next fuel source would be ecologically sustainable, defined
this way by the U.N. World Commission on Environment & Development: "Meets
the needs of the present generation without compromising ability of future
generations to meet their needs."
A fuel source that reflects the characteristics of sustainable development would,
for example, be renewable, provide energy security and offer options for
managing environmental and human risks, according to University of Northern
Iowa professor William Stigliani, director of the Center for Energy &
Environmental Education.
He compared production of gasoline from petroleum, ethanol from corn and
ethanol from switchgrass and looked at the risks they posed regarding four
factors: climate change; human health; erosion and health of soil; and depletion
potential of the fuel.
The clear loser: gasoline, posing no danger to soil but serious, irreversible
problems regarding climate change, human health and fuel depletion. The clear
winner: ethanol from switchgrass, posing no problems regarding climate change
and soil and only minor, reversible problems regarding human health and fuel
depletion.
However, the sustainability problems posed by gasoline still affect ethanol, as
long as large amounts of fossil fuels are expended to produce it and it's blended
with a percentage of gasoline.
Another future scenario: Biorefineries
As technology evolves, today's corn-grain ethanol plants can be retrofitted to
accommodate making cellulosic ethanol, using corn stalks and husks, known as
stover. Another leap forward would transform such facilities into biorefineries.
A biorefinery would work like a petrochemical refinery, but would use biomass plant or animal matter - as the raw material instead of petroleum.
An oil refinery manipulates hydrocarbon molecules in petroleum to produce
gasoline, diesel fuel and a host of petrochemicals that in turn are used to make
everything from nylon to paint to pesticides.
In theory, anything that can be made from petroleum can be made from biomass.
A biorefinery could use biomass to produce fuel as well as plastics, solvents,
adhesives and drugs.
In one scenario for Iowa, an ethanol plant retrofitted into a biorefinery would
process both corn grain and stover. The starch in the grain is made up of a string
of glucose molecules. Cellulose, the fibrous material in the cornstalk, also is
made up of a strain of glucose molecules, but their bonds are more difficult to
break down. Advanced enzymes would be used to treat the cellulose. Such a
plant would produce not only ethanol but also a product called lignin, which
would be converted into a synthetic gasoline and heat for plant operations.
The possibility of producing chemicals in biorefineries could spawn new
industries in Iowa to make use of the chemicals and add value to the state's corn
crop exponentially.
Ethanol makes up a fraction of total fuel...
4
billion gallons of ethanol were produced in the United States in 2004.
That's only...
2.9%
of the 140 billion combined gallons of gasoline and ethanol produced that year.
It's only...
2.3%
of the combined gasoline and diesel-fuel production.
... but it's growing fast
- As of August, 101 ethanol plants were operating in the United States, capable
of producing 4.8 billion gallons of ethanol annually, according to the Renewable
Fuels Association. Ethanol is blended in 40 percent of the U.S. gasoline supply.
New plants and expansions now under construction will add more than 2.5 billion
gallons of capacity.
- In 2005, Congress adopted a Renewable Fuels Standard, requiring use in 2006
of at least 4 billion gallons of fuel produced from renewable sources, such as
plant matter or solar or wind energy. That figure nearly doubles, to 7.5 billion
gallons, by 2012. Although biodiesel and other fuels will play a small role, that
requirement in all practicality requires nearly doubling production of ethanol.