2010 LSU AgCenter AgOutlook Conference
January 21, 2010, Alexandria, Louisiana
Michael E. Salassi
Department of Agricultural Economics & Agribusiness
Louisiana State University Agricultural Center, Baton Rouge, Louisiana
Louisiana State University Agricultural Center
Louisiana Agricultural Experiment Station / Louisiana Cooperative Extension Service
www.lsuagcenter.com
Million Barrels per Day
2010
Forecast
(18.896)
Net imports in 2009 were 9.727 million barrels per day
(52.1% of total petroleum consumption).
Net Imports
In 1973, imports were 6.3 mil. barrels per day
(36.6% of consumption).
(9.636)
Domestic production has declined 38.6% since 1973.
2009 production estimated to be 5.315 million barrels per day. (5.446)
(3.818)
Other Supply
Source: Energy Information Admin, Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Renewable energy resources:
Energy resources that are naturally replenishing but flowlimited.
They are virtually inexhaustible in duration but limited in the
amount of energy that is available per unit of time.
Renewable energy resources include: biomass, hydropower,
geothermal, solar, and wind, as well as ocean thermal, wave
action, and tidal action.
Source: Department of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Bioenergy technologies use renewable biomass resources to
produce an array of energy related products including
electricity, liquid, solid, and gaseous fuels, heat, chemicals,
and other materials.
Bioenergy is the leading source of renewable U.S. primary
energy production and accounts for 53 percent of total
renewable energy production and 4 percent of the primary
energy production in the United States.
Source: Department of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
The term “biomass” refers to any organic non-fossil
material of biological origin constituting a renewable
energy source (wood, waste, biofuels),
including dedicated energy crops and trees,
agricultural food and feed crops, agricultural crop
wastes and residues, wood wastes and residues,
aquatic plants, animal wastes, municipal wastes,
and other waste materials.
Source: Department of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Quadrillion Btu
In 2009, fossil fuels (coal, natural gas, petroleum) accounted for 83.0% of total energy
consumption, approximately the same percentage as in 1999.
1999
2009
6.9%
7.9%
8.2%
8.9%
39.1%
37.4%
23.7%
24.3%
22.4%
21.2%
Source: Energy Information Admin, Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Solar
0.1%
Hydroelectric
2.5%
Geothermal
0.4%
Biomass
3.9%
Wind
0.5%
Renewable energy comprised 7.5% (7.300 quadrillion Btu )
from a total energy consumption of 99.275 quadrillion Btu.
Source: Energy Information Admin, Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Million gallons per year
Source: Renewable Fuels Association
12,000
10,000 + 500
9,000
6,500
10,000
4,855
8,000
3,904
3,400
2,800
6,000
1,400
4,000
2,130
175
2,000
0
1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008
Louisiana State University Agricultural Center
www.lsuagcenter.com
1
Jan 1999
Jan 2005
Jan 2009
Total ethanol plants
50
81
170
Production capacity1
1,702
3,644
10,569
Plants under
construction/expansion
5
16
24
Capacity under
construction/expansion1
77
754
2,066
States with ethanol plants
17
18
26
Capacity in million gallons per year
Louisiana State University Agricultural Center
www.lsuagcenter.com
Source: Renewable Fuels Association
Million gallons per year
10,569 MGY in 2009
2,066 MGY in 2009
Source: Renewable Fuels Association
Louisiana State University Agricultural Center
www.lsuagcenter.com
Million gallons
9,600 M in 2008
9,237 M in 2008
Net Imports
Source: Energy Information Admin, Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
519 M in 2008
Million gallons per month
Net Imports
Source: Renewable Fuels Association
Louisiana State University Agricultural Center
www.lsuagcenter.com
Dollars per gallon
Source: CBOT
Louisiana State University Agricultural Center
www.lsuagcenter.com
Source: CBOT
Louisiana State University Agricultural Center
www.lsuagcenter.com
Million gallons
Louisiana State University Agricultural Center
www.lsuagcenter.com
Source: Energy Information Admin., Dept. of Energy
Million gallons
Over the past few year, the U.S. has been a net exporter of biodiesel
The majority of U.S. biodiesel exports are bound for the E.U.
683 M in 2008
677 M in 2008
USDA is projecting annual biodiesel production of 1.0 billion gallons by
2012, with less than half utilizing first-use vegetable oil as a feedstock.
320 M in 2008
315 M in 2008
Imports
Source: Energy Information Admin, Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
Issues concerning technical and economic feasibility, political
factors, capital investment and infrastructure, as well as other
factors and challenges exist at each phase.
Louisiana State University Agricultural Center
www.lsuagcenter.com
Quadrillion Btu
Source: Energy Information Admin., Dept. of Energy
+6.2%
+13.1%
10.6 bil gal
Louisiana State University Agricultural Center
www.lsuagcenter.com
+6.2%
+14.0%
10.8 bil gal
Louisiana State University Agricultural Center
www.lsuagcenter.com
Quadrillion Btu
Source: Energy Information Admin., Dept. of Energy
+13.4%
+15.8%
+46.9%
+67.3%
515
mil
gal
Louisiana State University Agricultural Center
www.lsuagcenter.com
382
mil
gal
18%
9%
73%
Quadrillion Btu
7%
0%
93%
4%
1%
95%
5%
9%
86%
Source: Energy Information Admin., Dept. of Energy
Louisiana State University Agricultural Center
www.lsuagcenter.com
Louisiana State University Agricultural Center
www.lsuagcenter.com
Louisiana State University Agricultural Center
www.lsuagcenter.com
Advanced biofuel
Calendar
year
Renewable
Fuel Standard,
total
Total
Cellulosic
biofuel
Biomass
based
diesel
Unspecified
maximum
Conventional
biofuel
maximum
--0.20
0.30
0.50
0.75
1.00
1.50
2.00
2.50
3.00
3.50
3.50
3.50
4.00
9.00
10.50
12.00
12.60
13.20
13.80
14.40
15.00
15.00
15.00
15.00
15.00
15.00
15.00
15.00
Billion gallons
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
9.00
11.10
12.95
13.95
15.20
16.55
18.15
20.50
22.25
24.00
26.00
28.00
30.00
33.00
36.00
-0.60
0.95
1.35
2.00
2.75
3.75
5.50
7.25
9.00
11.00
13.00
15.00
18.00
21.00
Louisiana State University Agricultural Center
www.lsuagcenter.com
--0.10
0.25
0.50
1.00
1.75
3.00
4.25
5.50
7.00
8.50
10.50
13.50
16.00
-0.50
0.65
0.80
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
1.00
 Biomass Research and
Development Board
 Created by Congress
 Biomass Research and
Development Act of 2000
 Purpose:
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Maximize the environmental and
economic benefits of biofuels
use by advancing sustainable
practices and improvements in
efficiency throughout the
biofuels supply chain from
feedstock production to final
use.







Sustainability
Feedstock Production
Feedstock Logistics
Conversion Science and Technology
Distribution Infrastructure
Blending
Environment, Health and Safety
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Sustainability
 Energy Independence & Security Act of 2007 amendments to the
Renewable Fuels Standards promote sustainability by:
 Direct that significant reductions in greenhouse gases be
achieved for different feedstocks
 Require that biofuels production not adversely impact the
environment or natural resources
 Focus on the development of cellulosic and other feedstocks
which will promote the sustainable production of biofuels
 Assess the environmental impacts of biofuels systems
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Feedstock Production
 First generation feedstocks:
 Includes corn for ethanol and soybeans for biodiesel
 Environmental implications and balance between food, feed, and
fuel use needs to be considered as use as feedstock increases
 Second generation feedstocks:
 Consists of crop and forest harvest residue
 Utilization should sustain and enhance water and air quality
 Third generation feedstocks:
 Crops requiring further R&D, e.g., perennial grasses, fast growing
trees, algae
 Need to increase drought and stress tolerance, fertilizer and water
Source: National Biofuels Action Plan, BR&Di
use efficiency
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Feedstock Logistics
 Harvesters and collectors:
 Removal of feedstocks from cropland and forests
 Storage facilities:
 To support a steady supply of biomass to the biorefinery, in a
manner that prevents material spoilage
 Processing/grinding equipment:
 To transform feedstocks to the proper moisture content, bulk
density, viscosity, and quality
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Conversion Science and Technology
 Knowledge of plants, microbes, and enzymes at the system,
cellular, and molecular levels to enable re-engineering of these
biological systems to substantially reduce conversion costs and
increase product yields
 Technologies to enable co-production of marketable fuels and
value-added co-products that can improve production economics
 Address the feedstock-conversion interface with the ultimate goal
of robust utilization of regionally diverse, multiple, variable and
potentially complex feedstocks
 Optimize processes to make technologies economically viable
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Distribution Infrastructure
 Future biofuels infrastructure must address:
 Capital
 Appropriate regulations and policies need to be put in place
to attract adequate capital for infrastructure growth
 Corrosion
 Physical properties of biofuels may require modifications to
existing infrastructure to ensure safe transport
 Capacity
 Existing infrastructure will need to be optimized to handle
increased liquid fuels throughput
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Blending
 Necessary steps to increase the availability of blended ethanol to
the retail market:
 Air quality impacts of higher blends need to be quantified
 Ethanol use and limitations on use may be a function of the
automobile and transportation fleet’s ability to legally and
technically absorb higher ethanol volumes and this is a function
of both fuel and vehicle allowances and constraints
 Materials used in current infrastructure (tanks, piping,
dispensers, etc.) may not be compatible with higher blends
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Environment, Health, and Safety
 Biofuels have been safely produced, transported and used in the
U.S. for decades and have hazard characteristics similar to those of
gasoline.
 While many of the characteristics of various biofuels are already
known and documented, the broader application of these fuels, as
well as the entry into service of advanced fuels not currently in
use, will require attention to anticipate risks, control potential
hazards, and prevent mishaps.
 This requires an approach that protects public health and worker
safety, while doing so without excessively constraining businesses
serving the biofuels supply chain.
Source: National Biofuels Action Plan, BR&Di
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Verenium
 Cellulosic ethanol pilot plant in Jennings utilizing sugarcane
bagasse as feedstock
 Dynamic Fuels
 Plans for a $150 million project in Geismer to produce alternative
diesel and jet fuel from waste meat products
 NRG Energy
 Announced plans to add locally grown switchgrass and sorghum as
fuel for its coal-fired Big Cajun electricity plant in New Roads
 EPEC Holdings
 Plans to contract production of sweet sorghum as an ethanol
feedstock in Concordia Parish
Louisiana State University Agricultural Center
www.lsuagcenter.com
 Near Term
 Expansion of the U.S. ethanol industry is projected to continue,
although the pace is expected to be slower compared with
previous years.
 Corn is expected to remain the primary feedstock for U.S. ethanol
production over the near term.
 Biodiesel production is expected to increase to 1.0 billion gallons
over the next few years.
 Longer Term
 Development of advanced biofuels (cellulosic, syngas, algae) will
continue to be dependent upon and enhanced by research using a
wide variety of regionally specific feedstocks.
 At the end of the day, “economics rules”
 Feedstock production, conversion technology, distribution, etc. must all
come together in a manner which economically feasible in the long run.
Louisiana State University Agricultural Center
www.lsuagcenter.com
Louisiana State University Agricultural Center
Louisiana Agricultural Experiment Station / Louisiana Cooperative Extension Service
www.lsuagcenter.com