## The Economics of Corn Ethanol

Someone e-mailed a few days ago and asked about the present economics of corn ethanol. I did a few calculations, and thought the results were interesting enough to share. This exercise should make it clear which factors have the biggest impact on corn ethanol profitability – and why corn ethanol producers are presently struggling.

Consider this a supplement to Stuart Staniford’s comprehensive essay Fermenting the Food Supply. Stuart’s essay goes into great detail on the factors underlying the economics. In my essay, I take a snapshot of a corn ethanol plant based on current prices for corn, natural gas, and by-products. (Note that because this is a snapshot, the numbers will change over time. But you should be able to use the methodology here to roughly calculate the economics at any point in time.)

I found multiple references for all of the numbers I am going to use, but I will only reference a single source. According to Ethanol Reshapes the Corn Market, one 56-pound bushel of corn will yield up to 2.7 gallons of ethanol and 17.4 pounds of distiller’s dried grains with solubles (DDGS).

The current spot price of corn as of this writing is about \$5/bushel, so each gallon of ethanol contains \$5/2.7, or \$1.85 of corn per gallon of ethanol (or if you prefer, 21 pounds of corn per gallon of ethanol). However, the DDGS can be sold, so a credit is applied for that. The current price of DDGS as of this writing is \$170/ton, which is \$0.085/lb. Given that a bushel of corn yields 17.4 pounds of DDGS, there is then a \$1.48 credit, which spread over 2.7 gallons is equal to \$0.55 gallon. This reduces our cost per gallon to \$1.85 minus \$0.55, or \$1.30 for just the corn input. This also reduces our net corn input down to 14 pounds per gallon of ethanol produced. (Note that there is sometimes a credit for carbon dioxide sales, but it is very small relative to the other costs and credits).

I still have to consider utilities (natural gas is a major cost), labor, enzyme and yeast costs, and depreciation. I have a spreadsheet from an actual ethanol plant, but there isn't much in the public domain that I could find on this. The closest thing to a source on these is the spreadsheet in the presentation Fossil Fuels and Ethanol Plant Economics (for a standard dry mill process). If you look at Page 16 of the presentation, you can see that all of the miscellaneous costs together total approximately as much as the corn inputs. If you take the spreadsheet on Page 24 and change the natural gas price to the current price of \$8/MMBTU, you get an overall energy cost of \$0.33/gal of ethanol [Note: Some have pointed out that the energy usage in that spreadsheet looks pretty low, and that the average energy usage for a plant is probably higher than that]. The sum of enzymes, yeast, and other chemicals comes out to be \$0.14/gal, and labor, maintenance, and various miscellaneous expenses add another \$0.23/gal.

On depreciation, I have several sources for capital costs that are pretty consistent. In the EIA's Energy Outlook 2006, capital costs per daily barrel of corn ethanol ranged from \$20,000 to \$30,000, depending on the size of the plant. This breaks down to between \$1.30 and \$1.95 per gallon of installed capacity. This is also consistent with A Guide for Evaluating the Requirements of Ethanol Plants, which states "Current capital cost per annual gallon of installed capacity for an ethanol plant ranges from \$1.25 to \$2.00." So let's be conservative and say that we want to build a big plant, so the capital costs are on the low end at \$1.30/gallon. Depreciate that over 15 years and this portion amounts to about \$0.08 per gallon (but is captured above already).

However, for biomass to liquids facilities - which would include the biomass gasification to ethanol that some are calling cellulosic ethanol - the capital costs in the EIA's Energy Outlook 2006 are listed at around 5 times that of a conventional corn ethanol plant. Thus, the capital depreciation portion is going to be around \$0.40 per gallon of ethanol. (On the other hand, the feed costs should be much lower).

Summary

Times are tough for ethanol producers. They are in the same boat right now as refiners - enduring very poor margins. This is what the economics roughly look like at \$5 per bushel of corn and \$8/MMBTU of natural gas. To produce 1 gallon of ethanol today requires:

• \$1.85 of corn
• \$0.33 of energy
• \$0.14 of enzymes, yeast, etc.
• \$0.23 of labor, maintenance, and various miscellaneous expenses

There is a DDGS credit per gallon of ethanol of \$0.55. Thus, the total cost to produce a gallon of ethanol today is \$1.85 + \$0.33 + \$0.14 + \$0.23 - \$0.55, or exactly \$2/gallon of ethanol. For reference, the February contract for ethanol in the Midwest as of this writing is \$2.15. And \$2/gallon is merely cost of production. It doesn't take into account any return on investment.

Also note that due to the lower energy content, this production cost is equivalent to a \$3 per gallon production cost for gasoline - and that this production cost is a moving target: As long as the ethanol mandates are driving up the price of corn and increasing the demand for and cost of natural gas, corn ethanol producers must chase their tails in a vicious cycle. Producers are going to be hard-pressed to ever match the 2006 windfall that was given to them when the MTBE phaseout drove ethanol prices sky-high.

Anyway, this was a useful exercise for me to understand the magnitude of the various inputs (and the DDGS offset) in corn ethanol production. I hope you found it of some value. If you see errors or have suggestions, please let me know.

This simply confirms the dead-end nature of a corn-for-fuel approach. Caught in a trap of their own making, ethanol producers have the choice now to reduce production to lower corn prices (unlikely due to grain shortages), or continue uneconomic production at current (and expanding) rates.

At least in the context of market capitalism.

Well, yes. In the alternative context of Communism, no one had the slightest idea how much anything cost. That inured almost exclusively to the benefit of those sponging off of boondoggles - at the expense of everyone and everything else, including even the environment. Here, at least, we can get a rough idea of the costs and benefits.

No offense, intended, but if you are suggesting that the only options available are capitalism or communism, then that is really rather simple minded.

What I was referring to is an argument made by some here that while we should not pursue ethanol on a commercial level, their may be role for it in keeping farm equipment running. This would likely be done under some gov't sponsored program, or perhaps some sort of guild type arrangement where financial returns are secondary.

Although I tend to side with Rapier, Patzek, Hall, Pimentel et al. on the economics (and EROI) of ethanol as a large-scale replacement for petroleum, I think biofuels may have a very long future ahead of them on a small scale, even centuries longer than petroleum. It doesn't take any special government sponsorship or control to let a farmer grow his own fuel; indeed, that was the entire point of Rudolf Diesel's engine, and the reason that it ran on peanut oil.

BTW, Patzek also believes that a farmer growing his own fuel, on a micro scale, IS sustainable and appropriate...as long as it never leaves the immediate locality where it came from.

I believe that biodiesel and ethanol, at a small scale, will be with us for a very long time. They just won't help much with peak oil. For now though, they can give us a little more time to transition to an all-electric transportation regime.

I wonder how much of your land you would need to set aside to grow enough of your own ethanol or biodiesel. that would cut a lot of oil needed to farm. you take your corn to the local ethanol plant and next year you don't need oil for your tractors.

"I wonder how much of your land you would need to set aside to grow enough of your own ethanol or biodiesel. that would cut a lot of oil needed to farm. you take your corn to the local ethanol plant and next year you don't need oil for your tractors."

We currently "hobby farm" about 60 acres. I could provide a good years supply of bio-diesel for our needs with 10-15 acres of rape seed. However if you have a bad year, drought, locusts or whatever; you may not get that harvest and be in a bind for the following season.

If it where so easy...

How about supplying the fuel for the fertilizer production, transportation, herbicides, insecticides, miners for the steel on your tractor, Oil production for your tires etc, etc, etc...

Once you really crunch the numbers you would have to devote your whole farm plus 20%...

If you used a horse instead of a tractor you would only require 1/3rd of your farm..

We cannot go back to horses there is no way we can go to ethanol...

> If you used a horse instead of a tractor you would only require 1/3rd of your farm..

Do you have a substantive reference for this data point?

I can't say when, but we will go back to using horses eventually, especially if we don't conserve fuel sources by planning the weaning away from the ridiculous squandering due to automobility, which is a twentieth century historical flash in the plan. The way things are going, I foresee a terrible crash with respect to work and transportation needs currently subsidized by oil and other energy resources.

We probably should be Planning the conservation and population growth of draft animals so that we will not be left stranded with only human power to run our farms and deliver our goods. Such planning should be in the context of a larger plan that will make demand-side management the keystone, that is rebuilding our 20th century suburbs to make them walkable. We need to build and stock economic/community centers in all neighborhoods where all residents can get the things we need within walking distance. Let's bring the goods and services to the people rather than all this wasteful shopping behavior.

The assumption of automobility is absurd within a historical perspective.

Corn is a great converter of sunlight that is being grown on some of the best land in the world and in some of the best weather. It is the grain of N. America.

On a small scale a farmer would never make ethanol to run his tractor.

Show me a link to a small farmer raising and making his tractor fuel.

Why would anyone believe that small-scale alcohol production would somehow be more efficient than large-scale, when all industrial wisdom teaches us the opposite?

who said efficiency was the concern?

You are right - as long as transportation costs are a relatively minor factor. Once motor fuel becomes really expensive, subtracting out the round trip from farm to processing plant to farm might be enough to offset those economies of scale.

Unless I am very much mis-informed, most tractors run on diesel, not gasoline. Thus, it would be biodiesel, not ethanol, that farmers would need to produce to fuel their equipment. If they do have any gasoline-powered equipment, I am pretty sure that diesel-powered alternatives exist. Farmers would be well advised to ditch their gasoline-powered equipment and switch to diesel, as they will undoubtedly realize some fuel economies, and leave better options open for themselves in the future.

I think because of the high octane content of ethanol it could be used as a diesel engine fuel with some modifications.

"I wonder how much of your land you would need to set aside to grow enough of your own ethanol or biodiesel."

Less than the land needed to feed oxen or horses for the same work.

We worked through this on a series of posts last summer. The best I could determine, working with sunflowers one could probably produce enough biodiesel to power typical temperate-zone farm machinery with possibly around 5-10% of total cultivated acreage. I selected sunflowers because they have better oil yield than soybeans; while they yield a little lower than rapeseed, they are much easier for farmers across a broader area without previous experience with them to start growing. If need be, sunflowers could even be planted and harvested by hand, and the seeds could be pressed by hand. To my way of thinking, sunflowers thus are a good candidate for low-tech, alternative technology applications. To me, they were an answer to the question: How will the farmers keep their tractors running if there is no more oil? It is not the only possible answer, perhaps not even the best one. But I am reasonably satisfied that it is a feasible answer, and good enough of an answer that I need not stay awake at night worrying about how the tractors will stay fueled and running.

Obviously, we need a new economic paradigm other than the so-called free market Capitalism and the Communism of the so-called Soviet Union.

It is my considered opinion that we need a Planned Economy, peacefully arisng from the bottom up, to succesfully transition to a sustainable, equitable, peaceful world. To implement such an economic democracy, we need to get consensus on the basic principles that would guide our efforts.

I have identified the following principles as an effort to reach such consensus:

-ecology
-sustainability
-cooperation (economic democracy)
-equity
-community stewardship
-neighborhood improvement
-quality of life
-conservation
-peace and tranquility
-sufficiency
-primacy of the pedestrian/walkability/new urbanism
-economy and humanity of scale
-risk diversification
-life long education.

I invite questions and discussion.

Let me offer the following perspective with respect to ethanol (and Biodiesel):

Bio-fuels are a limited alternative and only within the context of a much less energy intensive civilization, and much better if we could produce it with byproducts and waste products. And there are opportunity costs associated with liquors and soft drinks. Dealing directly with such issues would also go a long way toward reducing health and waste problems. And there are the opportunity costs associated with food (and byproduct) production relative to the tobacco industry.

Would like to get your feedback.

Mike Morin
katerimarie@netzero.net

Wouldn't one of your principles be "no waste". Waste is a human invented term. Consequently, there should be no waste products, with which to produce ethanol. Doing so, implies that there are some local products that can be considered expendable, in the context of local sustainability (i.e, it is not necessary to recycle those products to maintain the local eco-system). Local, micro, ethanol production can only be considered sustainable if the external inputs equal the "waste" heat from producing and using the ethanol.

I would put your concern with waste streams and all attempts to minimize such under the consideration "ecology".

Mike - while your set of goals are (to me) laudable. You have skipped over the single step that prevents all such imagined worlds from coming in to being. Your statement that "we need to get consensus on the basic principles" is precisely where the problem comes in. Saying we need consensus is exactly right, but you skip over how that consensus is to be reached and launch into the goals you want as part of the solution.

The reality is that all of your goals are already extant in the world. We don't need to decide upon them. What is needed is for them to become more important that the goals for which there is already a consensus. The current economic system is the consensus or else it would not be in place. Yes, you can argue about individuals, corporations, governments, etc. having more say in defining that consensus, but isn't that just part of the way of how people work in groups?

Aye, how to get consensus is the rub. I'm trying to start by writing on these website forums and e-mailing folks that have similar perspective with regards to the supply side (peak oil) and the demand side (smart "growth", new urbanism).

Of course, my work is building on the work of others. It is hard to find people with similar viewpoints that understand what I am writing. Everyone specializes and builds upon their unique knowledge base. Most people on this website are specialists related to the supply side issues. People on planning websites tend to be locked into status quo positions and don't see the big picture.

The current economic system is not a consensus system. It is a system favored by an elite who manipulate the thinking (i.e. dumbing down) of the majority. We have a Capitalist "democracy" where we have choices to vote for a Capitalist elite with or without abortions for gay couples. Seriously, although I am a green socialist, I strongly favor the Democrats.

Seven years ago there was a lot of good discussion on the Internet from socialists and greens. For whatever reason, these people have moved on to other things. Of course, even at its peak, these folks were a tiny minority.

Take a look at www.culturechange.org/Morin.html

My goals are a starting point. I'd love to see feedback on the priciples underlying a Plan for a sustainable and equitable world, especially from those who share my values (Earth Charter, Ten Key Values of the Green Party, Declaration of Interdependence, Principles of the International Cooperative Alliance, eight-fold path of Buddhism, etc.)

Help me get the word out. I certainly invite and welcome discussion about how we can move the agenda forward.

Thanks.

To me, the most amazing number was that after applying the DDGS credit, 14 pounds of corn is still consumed (as in "poof", gone) when producing a gallon of ethanol. That's just stunning.

The loss of mass could be CO2 released by the yeast during fermentation.

I am not so amazed to find that industrial monoculture corn would give these results. However, what could help the result might be to have an integrated farm. That way you could use the DDGS to feed your aquaculture fish. Then sell the fish to local restaurants or in a farmers market. Take the pond water that has a significant anount of fish fertilizer in it an irrigate your fields. If you don´t like aquaculture, then how about pigs. Screen the wet distillers grains ( save that drying cost ) and feed this at 20 to 30% ration to your pigs. Sell the pigs but use their manure to produce methane to fire your alcohol still. Use the waste heat from the still to warm your brewing mash. Then there is the wet side from your screened distillers grain. Take some of your corn stover and soak it in the hot solubles and grow mushrooms. Cut and sell the mushrooms and feed the mycelial mats to your pigs. At the end, take the digester solids and compost them into a nice slow release fertilizer to use on your fields. There is actually a lot more that you can do but I think you get the idea. This is just with corn. Imagine what you could do with fodder beets, sweet sorghum, or jerusalem artichokes on marginal land. Industrial monoculture cropping was invented to minimize labor not maximize total farm output.

Yes, I agree that number is a stunner. Imagine you have a car that gets 20 miles per gallon on ethanol (probably a car above current gasoline CAFE average). You drive 1 hour at 60 miles per hour and you just went thru 56 lbs of corn.

Drive all day for 10 hours and you've gone thru 560 lbs of corn.

Once Peak Oil hits I think the giant sucking sound of corn into ethanol is going to seriously deplete food supplies.

Here in Minnesota, most ethanol plants are farmer-owned cooperatives, so the farmer members are benefiting from the higher corn prices. When grain prices drop, then they benefit from higher margins on ethanol. And unlike oil, this money stays local and gets plowed back into the local economy. The 10% ethanol that is in my Minnesota gas mix is going into the local economy, the other 90% leaves. If tight profit margins were a justification for quitting the business, then oil refiners should quit also. Their economics are even worse now than ethanol plants. But don't worry, gas will be \$4.00 a gallon this summer, and profitability will return.

Please note that spot prices are not local prices. Local prices are always lower, since cost of shipping to a major port is deducted from the Chicago Board of Trade price. Ethanol plants also contract for grain ahead of time and are not dependent on the spot market.

I don't think any commercial operation with such a small margin would be able to survive long term - a slight upward movement of input costs and they are broke. I am also doubtful whether ethanol refiners are able to receive NG at wholesale prices (\$8 MMBTU) or they need to pay premiums to the NG distributors - generally ethanol refineries are in remote places.

But you are not correct with coming up with \$3/gallon gasoline reference cost - blenders are receiving 51c/gallon subsidy for ethanol, which reduces the cost down to \$2.25/gallon (\$3 - 0.51/0.68). Incidently the spot price of gasoline in this very moment is \$2.24... explaining what exactly is it that makes corn ethanol afloat (though barely).

But you are not correct with coming up with \$3/gallon gasoline reference cost - blenders are receiving 51c/gallon subsidy for ethanol

I am looking at true production costs - not the government adjusted cost. But that does highlight exactly why the subsidies won't be going away any time soon. I can't see an end to this subsidized nightmare.

This is of course the direct cost of ethanol.

As Stuart points out, the pressure of increased corn production drives food prices up. Because of the inelasticity of food demand, I would expect that the true cost of ethanol would be more than double, if we could capture the change in food prices resulting from the increased production of corn, and add it to the ethanol cost. This is just a guess though - I haven't done the exercise.

I would also note that at this point, in the US ethanol mostly replaces MTBE, at least in terms of quantity. MTBE was about 300,000 barrels per day in 2000; ethanol was about 100,000 barrels per day. Now, with the big ramp-up of ethanol, US ethanol is a little over 400,000 barrels per day. MTBE is way down, or nil.

MTBE was made from natural gas, and was relatively cheap. We are replacing one relatively cheap US made product (MTBE) with a much more expensive US produced product (ethanol). The more expensive one requires imports of fertilizer and oil. At least so far, it is hard to see much of an economic benefit from this arrangement.

We have only begun to count the indirect costs and unintended consequences of corn ethanol:

http://www.sciencedaily.com/releases/2008/01/080122102428.htm

"Distillers' Grain In Cattle Feed May Contribute To E. Coli Infection"

Feeding cattle distiller's grain might seem like a great idea, but so did putting sheep offal in the feed back in the eighties.

I wonder if the same thing would happen if you feed the cattle grass or some other cellulosic material and then supplimented with DDGS. This study seems to be feed the cattle corn, then more corn then yeast digested corn. After all of that I would expect to see problems if not with e coli then with bloat.

E. coli O157:H7 is endemic in ruminants, which tolerate it without negative impacts to themselves. This form of E. coli is a serious problem for humans and is not limited to distillers grains fed cattle. Ironically, a straight corn diet reduces the concentration of E. coli O157:H7 in feedlot cattle guts, however, since cattle have an abysmal grain-to-meat EROI, not feeding distillers grains, which produce more unit weight gain than grain corn, would result in a higher corn consumption for feed than ethanol production.

The answer to E. coli O157:H7 contamination appears to lie in handling of carcases during processing, and especially the use of steam treatment which will not cook the meat, but kill the bacteria.

Another problem is the spreading of untreated manure on fields. E. coli O157:H7 can survive long periods under extreme climate conditions. Running all manure through anaerobic methane digestion would be a solution.

Wasn't the move away from MTBE driven by environmental concerns? So maybe the economic benefits of ethanol are secondary.

For example, see this rather old EPA infosheet: http://www.epa.gov/mtbe/water.htm
I find it interesting that we used 300,000 barrels/day of a chemical, but still hadn't done the research to find out what it would do to the environment.

Call me old fashioned, but I think "pure" ground water is important.

MTBE made the groundwater taste bad and attracted lawsuits, since it seems to be carcinogenic. Ethanol biodegrades, but doesn't seem to be as good as MTBE in some other respects.

It is not clear that an oxygenate is need any more. This is a link Robert Rapier posted in a comment to one of my articles, indicating that it is likely not needed.

One function of an oxygenate is to reduce tailpipe emissions. Cars built since 1994 are very good in this regard, and it is not clear that an oxygenate does much.

The other function is to increase octane. There are other ways to increase octane. It might be that they are more expensive, though.

The changed price of food is not IMO a legitimate systems level cost. The higher cost means that more money from consumers is going to farmers, i.e. it is a transfer of wealth, as opposed to a destruction of wealth.

I thought MTBE was being phased out because it had destructive (toxic?) effects on groundwater. Ethanol replacing an relatively low volume additive may make sense, whereas using it for its energy content does not.

MTBE is a teratogen. It causes cancer. It doesn't matter how cheap it was to produce. It's social costs in time would exceed its utility.

Corn ethanol's role right now is as an oxygenator for gasoline, a federally mandated requirement. You're all welcome to put your heads together and come up with a better oxygenator, one that isn't cancer causing. In the meantime, corn ethanol will continue to fill that function.

It's probably worth mentioning again, that if you want ethanol and have a supply of petroleum, the simplest route is to crack the petroleum to ethylene and then hydrate the ethylene. It saves all those messy fermentation and distillation steps, and I'm not so sure the biological route gives any better yield per barrel of oil.

I don't a see a line on page 16 for ethanol collection. As there are currently no ethanol-collection pipes running from the distilleries the finished product must be trucked to the distribution system at a cost in fuel, equipment, and amortized maintenance. I don't believe I've ever seen this important infrastructure cost itemized in various energy accounting (i.e.Pimentel,Shapouri). I've also never seen more than a cursory recognition that DDGS handling also cost money and fuel. Is it any wonder that the dog has come home to bite us?

Thermodynamics does trump economics every time. It should be very apparent now why the American farmer, the richest and smartest in the world, had not previously plowed his golden corn-fuel cornucopia into tractor fuel in the past. It never made any energy sense, not now with oil at \$90, nor when it was \$20 or \$3.

The primary farm fuel is diesel. Gasoline engines don't do very well when they're run at 90% full-load power all the time. Fuel use per unit of production has been steadily declining as farmers have been reducing tillage operations and tightening up on their cost control. Converting to horse-farming and tying up one-third of your acreage for pasture would be a much larger hit on gross income than present fuel costs.

Use of E-85 is primarily a rural phenomenon. It's farmers who are the primary users. The largest distributor of E-85 is Cenex, a farmer-owned co-operative. Cenex is short for Farmers Union Central Exchange.

Most ethanol gets shipped by rail to refineries where it is blended with gasoline. From there it gets distributed by truck, just as petroleum based fuel.

Distillers grains gets distributed by farmer-owned trucks. Farmers have their own semi-tractor rigs, and, in addition to hauling grain, many supplement their income by taking on commercial loads as owner-operators.

> Converting to horse-farming and tying up one-third of your acreage for pasture

Do you have any substantive references for this.

Well my father and grand father farmed 160 acres with horses From 1880 to 1948. They had 50 acres in horse and cow pasture and 100 in crops. 40 acres each year in oates to feed the horses. They can live on oats straw and oates in the winter, plus some alfalfa. The crops were rotated between corn, alfalfa and oates. Between 25 and 30% of all crop land was used to support the horse population before 1935.

I meant a reference vs anecdotal info. Out of curiosity, how many horses typically, and what kind (Suffolk, American Cream, Belgian, etc)? Did they bottom-plow for the most part?

this is a distraction. I am talking about the futility of using more fuel to make less fuel.

I pointed out that none of the current EROEI studies (Pimentel, Shapouri, Wang, etc.) consider the additional fuel cost in transportation (collection and distribution) of final liquid product, and suggest this would tip the energy balance below zero. An addendum to other previous studies might shed light on this omission, but as I am not an academic and have not done original research I do not believe I can quantify this supposition.

Robert, I appreciate your research, but I think you're a touch low on the output part. As your linked article suggested (it was published in 06') they would, the newer plants are getting right at 3 gallons of ethanol/bu. This lowers the corn input/gal by about \$0.20/gal. Also, I suspect you will find that \$23 Million/yr for a modern 100 Million gal/yr for labor, maint., etc is a touch high. Hint: Labor would be about 1/10th that, and it seems unlikely (at least to me) that the maint., etc would come out to twenty million.

Anyway, thanks for posting some, overall, pretty realistic numbers regarding ethanol production costs.

As your linked article suggested (it was published in 06') they would, the newer plants are getting right at 3 gallons of ethanol/bu.

I don't believe that's accurate. In fact, the most I had ever seen anyone claim before is 2.8. But Tad Patzek once wrote an article suggesting that this was about the theoretical limit, and those who claim more are actually including the gasoline used to denature the ethanol. An ethanol producer also once told me that the gasoline is often counted as ethanol production.

Here is a link to Patzek's article:

http://petroleum.berkeley.edu/patzek/BiofuelQA/Materials/RealFuelCycles-...

See Figure 13 and the caption underneath.

The simple numbers are bad enough to show corn ethanol is nowhere ...

92.9 million U.S. acres of corn planted (2007)
86 million actually harvested (2007)
155 bushels per acre (average rate for 2007)
13.2 billion bushels of American corn (2007)
Convert it ALL to E85 (for laughs)
(Realistically, 7 billion gallons of ethanol were produced in 2007 with 20% of the corn crop)
14 billion bushels (rounded from 13.2)
2.8 gallons of ethanol per bushel
39.2 billion gallons of American corn ethanol (becomes the 85% component of E85)
(Realistically, could produce only 14 billion gallons of ethanol in 2008 with 30-40% of crop)
75,700 BTUs per gallon of ethanol
2,967 trillion BTUs from the ethanol component
6.9 billion gallons of gasoline (becomes the 15% component of E85)
115,000 BTUs per gallon of gasoline
795 trillion BTUs from the gasoline component

***3,763 trillion BTUs total from 100% of corn crop made into E85 (into 46 billion gallons of ethanol-&-gasoline/E85)

150 billion gallons of gasoline burned per year in the U.S.
115,000 BTUs per gallon
17,250 trillion gasoline BTUs

60 billion gallons of diesel burned per year in the U.S.
130,500 BTUs per gallon
7,830 trillion diesel BTUs

***25,080 trillion total BTUs used burning gasoline and diesel every year

So, we find that:

***Only 15% (3,763/25,080) of BTUs of gasoline & diesel replaced by E85 using 100% of ALL U.S. corn

Meanwhile, we are starving, all the animals we eat are starving (50% of corn is feed for the animals we eat), and the rest of the world is also starving due to our lack of exports (and man does not live on rice, wheat and barley alone).

jivefive99, you realize you are overstating the value of E85 fuel. Under the most optimistic number-jiggling only 1 gallon of every 4 is actually available (as opposed to 9 out of every 10 for petroleum) to society for productive use. That's because E85 production has an energy return (at best) of 1.34:1, whereas petroleum is now around 10:1

So 15% is not 'replaced' with all US corn production, rather it is closer to 4%

Hi there,

I was trying to do a straight BTU side-by-side comparison, and stay away from the subjective "energy imputs" angle, which is problematic. What energy inputs do you include? You have to draw the line somewhere, and 100 people are going to draw 100 different lines -- what to include and what to not include. Basically, corn ethanol can never and will never replace any meaningful quantities of gasoline and diesel, whether by 4% or 15%, but I appreciate your furthering of the argument.

Scott

I'm aware that many consider energy-return analysis somewhat subject but this is a red herring. Recursive industrial life-cycle analysis does have a very clear boundry-- one iteration is all that is meaningful.

Furthermore even the angriest Pimentel-detractor appreciates that 1:34:1 return (or 25% efficiency) is the best case for biofuel and that petroleum is better than 92% efficient.

Nevertheless it has always (as you and Pimentel point out) been about scale and the limits of agriculture and our planet earth to supply us a never ending party. It had to stop sometimes and that appears to be now.

Corn exports have been increasing as ethanol production has been increasing. Ethanol uses the marginal crop production increase. Nearly three-fourths of U.S. corn production goes into feed. The part that gets exported is used primarily as feed. The corn we ship to Mexico is not made into tortillas; it goes into feed.

It is world demand for meat that is the primary driver for grain price increases. Globalization has worked in the developing world, especially south Asia, increasing their income and creating a demand for higher quality food. Demand for meat, and feed grains, has been skyrocketing over the past years.

We could reduce American corn use most dramatically by going away from feedlot fed cattle. Cattle are born on cow-calf ranching operations, mostly in the western states, grow up on grass, and get shipped to feedlots when they are at about 60% of their final weight.

By doing a better job of teaching ranchers to be botanists (as Gene Goven of Turtle Lake, ND, said when he got the rancher of the year award: "My crop is grass. I use cattle to harvest it.") cattle carrying capacity on rangeland could be increased without damaging the land. (Granted, this is more difficult in the Intermountain than on the Great Plains.) The bigger problem would be in getting Americans to eat less fatty beef, and to change their cooking habits to deal with lean meat.

Applying present fuel usage rates to the future is an exercise in futility, since today's usage is highly inefficient and highly aberrant in world terms. No matter what happens, we are at the peak of fuel usage and the only way from here on is down. Farmers use much less fuel per bushel production than 20 years ago. It's time the rest of you start doing so too.

Taking the absolute BTU value of ethanol and applying it directly to fuel usage is also inappropriate. Research has shown that in concentrations up to 30% in an ethanol-gas mix, there can actually be a fuel economy increase because the higher octane of ethanol allows the engine to run more efficiently. It's not just about the BTUs.

What is the point of this comment? How does it respond to the issue of scale? All the arable land in the US (400 million acre)devoted to corn ethanol production would only account for 19% of our gasoline use. There would be no more food in exchange of only one-fifth of our current gasoline demand.

No more vegetables, potatoes, corn, corn sweetener, stawberries, apples, oranges, cereal, oat meal, olives, oil oil, soy beans, soy oil, walnuts, pecans, pasta, spaghetti. There would be virtually no more meat of any kind that was not completely pasture-raised. There would essentially be no more pork, chicken, beef, buffalo, turkey, game hens. And no diesel to transport the empty trailers.

Do you see? I can fill a post with words also.

Corn ethanol can only be a failure specifically because of the issue of scale. No obfuscation or diversion will change this equation. period.

And nice timing for your post. Grains hitting new all time highs today (most of them)
corn +14 cents to \$5.48 dec basis. Wheat is limit up AGAIN. Interestingly, Chicago 'general' wheat contract is \$10/bushel for 2008, but the hard red wheat is at \$15 (up from \$6 last summer)!!! its been limit up for days as there is a real shortage (I don't know the specifics on why, but it certainly could be due to more acreage planted for corn, among other things) The normal wheat contract is not deliverable to the MWE contract because that type of wheat is used for specialty breads, bagels, etc.

The externalities of corn ethanol have only begun to be seen. The whole biofuel fiasco is going to be regretted and a further example of concentrating market wealth at expense of environment and rest of society. Anything with such a low energy balance is bound to perpetually run into receding horizons, all the while increasing its negative tally on water availability and quality, soil, etc.

I still find it shocking that so many people are behind it. Is it as simple as we want alternative energy - this is alternative energy - energy=energy so lets subsidize it??

The current high price of wheat is limit up because traders can't find any physical wheat to sell, and some have sold contracts for wheat they don't have.

I mentioned earlier that soft white wheat, usually the cheapest, had hit 13.05 in early Jan in Portland, a major center for Pacific exports. The elevators are empty, or sitting with only wheat that farmers still don't want to sell.

These high wheat prices are primarily due to drought. World yields, especially in Australia, were way off due to drought. This year, soil moisture appears much better world wide, and I doubt these high prices will last through the next summer's harvest, baring unforseen factors. July futures are around 9.50, CBOT, and it seems to me a good bet for farmers to grab these now. Drought resistant varieties, such as Espada in Australia, are being developed and released. It is much to early to tell if these might work, or seed production is sufficient, but some will hit the fields this year.

The speculation now centers on the costs of wheat production due to higher fertilizer prices, and whether you are better off, in spite of high cash prices, to switch to soybeans or a less fertilizer intensive crop. It should be remembered that wheat has been trading for decades in the \$3 range, and these prices are quite a bonanza.

But July 09 contract for wheat is also over \$9, so compared to \$3 historically, there seems to be some permanent change priced out in time beyond soil moisture.

The \$3 comment was meant to show just how much difference there has been in price for most growers, an older segment of the population at that.

It is very hard to say where it may settle, I think 3-4 is history, especially considering the slide in the \$. Yet I recall the 70's and the rise to \$5. Given the inflation and population fears of the 70's, there was reason to think it might last back then.

What killed it then was world production, and with the right weather, that can reoccur next year. Yields are moisture determined, or rather, is the variable you can't control. The world market sets the US price. Going out on a limb, I think cash prices next harvest will be in the \$6 range, assuming factors seen today. And to narrow my comments upthread, I'm not a big believer in new varieties, just that I recognize some of the work occurring. For the longer term, I am quite pessimistic on sufficient yields, given global warming and population.

The corn belt and the wheat belt don't overlap by much. Wheat is up because Australia has had two crop failures in a row and it doesn't look good for the future. Hard spring wheat is bread wheat; it has a high protein and gluten content. Hard red winter wheat is primarily grown in Kansas, and hard red spring is primarily grown on the Northern Plains: North Dakota, Montana, Manitoba and Saskatchewan. Only at the ecotones of the wheat and corn belts do you get crop rotations of wheat and corn. Corn is rotated with soybeans. Wheat (and barley) is rotated with soybeans in the east, milo (grain sorghum) in the south, and sunflower and canola in the west. Crop selection is primarily a function of cumulative growing-degree days and the water budget (ratio of potential evaporation to average moisture -- the dividing line is 80% water budget -- higher than that you grow corn, lower you grow wheat. Wheat is a dryland crop.)

Europe grows soft wheats, which has higher yields, and hard wheats are added in to improve baking qualities.

Let's get real. Increasing corn use for ethanol from 10% to 20% of crop, while not reducing export of corn, is not what's driving world grain price increases. Yes, it explains part of the variance, but only a tiny part. The reality is that world population has caught up with the Green Revolution and food supply, just as oil supply, has become inelastic. Oil tripled in price on only a small imbalance between supply and demand. Food is doing the same thing. Should that be so hard to recognize?

well I know of several farmers in Wisconsin (n=4) that chose to plant winter wheat which will preclude them from planting corn next spring. So there is at least some impact of higher prices (potentially due to ethanol) on the historical rotation cycle.

As far as TPTB are concerned, if it is a liquid that can be pumped into automobile fuel tanks, that's good enough for them. Consequences are out of sight and out of mind. Remember that these are the same people that waltzed into those MidEast hornet's nests known as Iraq and Afghanistan without a thought as to long term consequences. It is obvious to me that they are simply incapable of even conceiving of the possibility of unintended consequences.

You may want to check out the press releases from Verasun, and Poet; and, also, check on the Poet blog "Rhapsodyingreen." They've gotten the nat gas input down to around 24,000 btus/gal, and are rapidly heading (through utilizing biomass, using lower heat processes, etc) toward 12,000 btus of gas/gal. This probably reduces input cost another \$0.13, or so.

The new RFS effectively limits the input of "corn" ethanol to 15 Billion gallons (approx 10% of gasoline usage.) Now, remember: "Field Corn" is, essentially, cattle feed; and, DDGS are superior to corn (they give about a 10% greater weight gain when fed in 30% concentration. - Nebraska Cattle Producers.)

Okay: Average yield 151 bu/acre. For every 3 acres of corn that's processed for ethanol you get one acre back in distillers grains. Thus: 150 x 3 =450 then 450 x 3/2 = 675 (Effective yield = 675 bu/acre of corn. 22.2 Million acres of corn - compared to 87 Billion total acres harvested.

That other 18 lbs is CO2. This is being used in some places to "recharge" old oil fields. We will probably see more of this in the future.

DDGS superior to corn for cattle feed? We'll see, won't we, as we engage in yet another uncontrolled large-scale experiment on our food supply. Look upthread, please.

Neither DDGS nor corn starch are ruminant foods. Cattle eat cellulose and all else interferes with the animals digestive track (causing acidosis, laminitis, and fatty liver) and so requires daily antibiotic supplements. And we wonder where flesh eating e-coli comes from?

Don't worry, the cattle will be fine. The latest plan is to add DDGS to wheat flour for human consumption. See http://aglines.com/2007_11_27_archive.php.

You'd think folks would be against this, but see how HFCS has replaced sugar since the 80's, the same time period that obesity has become the norm.

It is generally accepted in waste-handling circles that "the solution to pollution is dilution." So DDGS is a byproduct, a waste material, of the cattle-feedlot industry and apparently needs a dump. That would be us?

Robert - The arguments of Patzek (founder, and director of the Univ of Cal Oil Consortium) are horribly flawed. He's been wrong about everything he's published regarding ethanol. The fact is the nameplate on vitually all of the new plants is 2.95 gal/bu; and, ethanol plants, almost always, outproduce the nameplate. Edit: I guess I really don't want to go to war, just yet, on the denaturant argument. I'm not sure (which means you could be right.) But, on Patzek, generally, he's been really, really out in left field on ethanol-related issues.

As for "energy content," remember ethanol has an Octane Rating of about 113. This means that with proper combustion, and tuning it can achieve an "efficiency" of up to 42% in an ICE. (the new flexfuel Ferrari achieves Both more HP, AND Higher Mileage on E85 than in it's standard engine. The new crop of Variable Valve Timing, Direct Injection, variable turbo boost engines will revolutionize the efficiency game as regards ethanol.

It's interesting to note that the Univ of N Dakota/Mn State tests showed that three out of the four production vehicles they tested achieved better fuel economy with a specific ethanol blend than they did when running straight gasoline. An most interesting example being a flexfuel Impala that got 15% better mileage with an E20 blend than it got with gasoline.

He's been wrong about everything he's published regarding ethanol.

Patzek is abrasive, to be sure. But wrong about everything he has published? Could you give a few examples?

the new flexfuel Ferrari achieves Both more HP, AND Higher Mileage on E85 than in it's standard engine.

It's interesting to note that the Univ of N Dakota/Mn State tests showed that three out of the four production vehicles they tested achieved better fuel economy with a specific ethanol blend than they did when running straight gasoline.

Again, source please. You can check the DOE tests here:

http://www.fueleconomy.gov/

You won't find one that claims better mpg on an ethanol blend.

By the way, I must ask if this essay was the inspiration for you to register 1 hour and 44 minutes ago? If so, I am honored. You aren't from the RFA, are you? Out of curiousity, what is your ethanol/corn affiliation?

Actually, It was. I've been lurking here for several months, and have been amazed at the lack of research many of the posters had done on the actual numbers regarding ethanol. I was impressed that you are trying to get to the bottom of it all.

I'm just a retired insurance guy. No connection whatsoever to any farming/ethanol/retailing/etc. Nor to RFA. Here's a link to the Mn State/N Dakota Univ study:

http://www.rhapsodyingreen.com/rhapsody_in_green/files/optimal_ethanol_b...

I just glanced at the ferrari story; I'll try to find it. The EPA, and the NREL did a study using a 1.9 liter volkswagen engine. They published an SAE paper. It showed that an ICE with a 19:1 compression ratio (achievable with ethanol blends) would yield higher efficiency than was possible to attain with either a diesel, or gasoline engine.

I don't believe you responded to Robert's challenge. Which of Patzek's arguments are "horribly flawed," and how has he "been wrong about everything he's published regarding ethanol." I consider his 2005 paper with Pimentel the finest piece analysis on this subject. The work is succinct and the implications obvious and born out by current events.

Well, I guess you could start with his "theoretical" limit of 2.7 bu/gal. Even if those people claiming a 3.0 gal/bu were including a five percent denaturant (I don't think so, but what if?) that would still leave 2.85. Right? It's, also, been proven in pilot plants that his numbers for the amount of ethanol that can be removed from switchgrass were way off.

He assumed that all field corn is irrigated. It's not. Most isn't. He included "solar" energy as an input. Did he do that with crude oil? He didn't account for the increasing practice of no-till farming. Even recently, he made the outrageous statement that it took 6 gallons of gasoline equivalent to produce a gallon of ethanol. I can't imagine where that statement came from.

Did I mention that the UCOC gets hundreds of thousands of dollars/yr from the major oil companies? Hmmm

I know Tad. He is brilliant and outspoken and controversial, but an excellent analyst. The main reason his and Prof Pimentels work on this topic differs from many other analyses is they try and include wider boundaries of analysis. Much of this is not yet considered as relevant by the market.

1. Modern ethanol plants ferment grain starches and sugars to produce 2.5 gallons of ethanol per bushel of corn.

2. Switchgrass ethanol is not a commercial product. It (along with algae, biodiesel etc.) remains a techtopian dream and diversion to distract us from the thermodynamic, social, environmental, agricultural, and policy failures of corn ethanol fuel schemes.

3. The irrigation issue is a red-herring. He accounted for 15% irrigation as per USDA figures. Besides accounting for irrigation does not alter the negative energy returns the study found.

4. I have no idea what you mean by solar input. His 2005 paper makes no mention of solar inputs. It looks at on farm inputs (including tractor diesel fertilizers etc.) energy-amortized farm and distillery inputs (energy for stainless steel ec), and especially process energy (the electricity for milling and fermentation of corn.)

5. Pimentel a long-time academic in a highly regarded university. I have no ideas how programs at the college are funded. What counts are his journal articles and his latest certainly is beyond dispute.

6. No till farming requires more petroleum inputs in the form of glycosphate and roundup, and the cost in energy for the application balances out the saving in cultivation.

7. You last point is an ad hominen and not worthy of my response.

Did I mention that the UCOC gets hundreds of thousands of dollars/yr from the major oil companies? Hmmm

I think you need to source that too. The way I read it, the funding from oil companies that the U.C. Oil Consortium receives is a grand total of \$120K. At the same time, Patzek has been very vocal in opposing a \$500 million grant from BP to turn UCB into its private cellulosic ethanol research lab. He and a few other faculty joined with a student-led effort to oppose the deal, which failed in Nov. 2007. If you're going to point fingers, point them at the UCB administration!

As for his work, so far you haven't convinced me at all that his work is "horribly flawed" or "wrong about everything." With biofuels, the devil is in the details. We need to know where the switchgrass was grown, under what conditions, the details of the study, etc. if your claim is to have any credibility. Let's see the numbers from the pilot plants you're referring to. Let's see some data on how many corn farmers use no-till practices. How much gasoline (actually more like diesel) do you claim is needed to produce a gallon of ethanol, and what is your data source?

Maybe you'd like to Google around and read up a little more. Patzek, Pimentel and others have published numerous detailed studies and worthwhile screeds citing sources and data. You're going to have to step up a lot more than this to rebut them.

No I don't. Current reality rebuts them. ie Production

See my input figures, below. That's One Hundred and Twenty Thousand, Right? I saw the figures a few years, ago, as to what they were receiving from which Major oil co. they were a lot higher than that, then. I guess they're losing their "utility."

Yes, I saw your input figures below, and once again, none of them were sourced! This is of particular interest to me since you mentioned in a post upthread that you "have been amazed at the lack of research many of the posters had done on the actual numbers regarding ethanol." Where are you getting your data?! Until I have a chance to examine the crucially important details that you aren't mentioning--where, when, how, and who--color me unimpressed.

BTW, Patzek's research on ethanol is on his own time. He has told me that he receives no support from the oil industry, UCB or anywhere else for it.

Here is one I read recently about that study. It appears to be a rather sound rebuttal. At least it is a starting point to examine some of the key assumptions about ethanol production. I personally do not believe any one thing is going to be scalable in time to replace petroleum. I think various regions will need to find there own solution that best fits. Farm communities seem like a good fit for ethanol but not the entire US. Wind is a good fit for some areas but probably doesn't scale well. I don't particuarly like nuclear but prefer it to coal. The footprint seems a lot smaller. Financing them seems to be the problem. Of course, if we can find money to wreck other countries and steal their resources this shouldn't be a real problem. Destroying Alberta to extract tar sands with perfectly good natural gas makes little sense to me. It makes even less sense to use nuclear power to do it. Yet, it is still being done. Solar thermal seems to have promise in certain areas. But solar PV seems to be a ways off yet. I like the dispersion and decentralization of it. It is still way too expensive for me. Here is the rebuttal. Sorry for any inconsistancies. It was a cut and paste job.

In this appendix, I have hit only the high points of the misrepresentations contained in the studies by Drs. Pimentel and Patzek. It should come as no surprise that no other statured scientists in the world today concur with the conclusions made in the Pimentel studies. But when the American Petroleum Institute cranks up its awesome press release mill and wallpapers the entire world media, a contrived paper can suddenly become the "truth" in the mind of the public. In an era when corporate funding of research is the norm, you cannot expect members of the scientific community to do the policing of their own that they once did, when to do so might endanger their own funding and survival. -----

Fig. A-3 Creative concealment. When converted to common units, it's easy to see how the change of units of measure masked the inexplicably divergent figures of the two versions of the study. The technology involved has not measurably changed during this period.

Endnotes 1. David Pimentel and Tad W. Patzek, "Ethanol Production Using Corn,Switchgrass, and Wood; Biodiesel Production Using Soybean and Sunflower,"Natural Resources Research 14:1 (2005), 65-76. 2. David Morris, The Carbohydrate Economy, Biofuels and the Net EnergyDebate (Minneapolis: Institute for Local Self Reliance, August 2005). 3. Guidelines for Contributors, Natural Resources Research, (April 2007). 4. Pimentel and Patzek. 5. Energy Research Advisory Board, Gasohol (Washington, DC: U.S. Dept. ofEnergy, 1980). 6. Jack Anderson, "Gasohol Program: Prey to Big Oil," Washington Post, May24, 1980. 7. Stephen Thompson, "Running on Empty?" Rural Cooperatives Magazine,September 2005, www.rurdev.usda.gov/rbs/pub/sep05/running.htm. 8. David Pescovitz, "Ethanol Stirs Eco-Debate," Lab Notes: Research fromthe College of Engineering. University of California, Berkeley 5:3 (March2005). 9. "Science and Politics Don't Mix," in Mobil Oil ad, The New York Times,June 19, 1980, Sec. A23. 10. Alexander E. Farrell, et al., "Ethanol Can Contribute to Energy andEnvironmental Goals," Science Magazine, 311:5760 (January 27, 2006),506-08. 11. Public Planet, radio show, hosted by Jodi Selene, KVMR, Nevada City,California, 2004. 12. Anderson. 13. "Science and Politics Don't Mix." 14. David Pimentel, et al., "Environmental, Energetic, and EconomicComparisons of Organic and Conventional Farming Systems," BioScience 55:7(July 2005), 573-82. 15. David Pimentel, CRC Handbook of Energy Utilization in Agriculture(Boca Raton, Florida, U.S.: CRC Press, 1980), 9-14. 16. Otto Doering III, in Pimentel, CRC Handbook of Energy Utilization inAgriculture, 9-14. ["There is no precise way to account for the energy used indirectly in agricultural production." ... "A tremendous amount of virtually unobtainable information would be required to make a precise accounting of the actual energy embodied in a specific stock of farm machinery for any given farming operation."] 17. 40,000 pounds divided by 49 pounds divided by 10 years. 18. Dr. Josmar Pagliuso, Universidade de Sdo Paulo, Brasil, UnpublishedData from Actual Experience of Sugar Cane Farmers Producing Table Sugarand Alcohol Fuel Over 20 Years. 19. Energy Savings from Recycling, Consumer's Choice Council, May 2001,(July 8, 2005). 20. Management of Scrap Tires, U.S. Environmental Protection Agency, (July 8, 2005).[Cites up to 80% recycling of tires, primarily into road asphalt.] 21. K.J. Hülsbergen, et al., "A Method of Energy Balancing in CropProduction and Its Application in a Long-Term Fertilizer Trial,"Agriculture Ecosystems and Environment 86 (2001), 307. 22. Isaias Carvalho Macedo, Energy Balance of the Sugar Cane and EthanolProduction in the Cooperated Sugar Mills, CT Brasil, Ministério da Ciênciae Tecnologia, The United Nations Framework Convention on Climate Change(1996). 23. Michael S. Graboski and John McClelland, A Rebuttal to "Ethanol Fuels:Energy, Economics and Environmental Impacts" by D. Pimentel (May 2002). 24. Hosein Shapouri, James A. Duffield, and Michael Wang, "The EnergyBalance of Corn Ethanol: An Update," Agricultural Economic Report 813,U.S. Department of Agriculture (July 2002). 25. Nathan Leaf, "Big Farm Plant Is Planned," Wisconsin State Journal,December 8, 2005, Sec. E-1. 26. Christoph Berg, World Fuel Ethanol Analysis and Outlook (April 2004), 5. 27. Matthew Brusstar, et al., High Efficiency and Low Emissions from aPort-Injected Engine with Neat Alcohol Fuels (Washington, DC: U.S.Environmental Protection Agency, Society of Automotive Engineers, 2002). 28. John M. Urbanchuk, Contribution of the Ethanol Industry to the Economyof the United States (Renewable Fuels Association, January 2005), 1-4.

This appears to be smear, a series of red herrings and distractions, against Pimentel rather than a discussion of this important issue. I read up to the Hollywood crap and stopped. You would be better served introducing this piece (author, publication, etc.) and linking to the original.

Wow, a whole 5 or 6 sentences into a several hundred sentence rebuttal. I think we have found a closed mind om this subject.

I think that using such a long piece without giving credit to the author is copyright violation.

Not to mention rude to TOD readers.

Robert,

Have you read the paper Patzek presented to the recent OECD meeting? It's "How Can We Outlive Our Way of Life?" It's at: http://petroleum.berkeley.edu/papers/Biofuels/OECDSept102007TWPatzek.pdf

This is a deeply flawed paper, and if he had sent it to a peer review journal and I were a reviewer I would immediately send it back. Just to give you one example of its problems. It ascribes wind energy as having a 1 watt/square meter potential. This is off by two orders of magnitude. The most charitable interpretation I can give is sloppy proof reading. He summarily dismisses the potential of biomass by only looking at tropical settings and completely ignoring mid-latitude. The guy is no botanist or soil scientist, that's for sure. He annoints photovoltaics as the only viable energy solution for the future but discusses no transmission and storage issues.

Patzek and Pimentel's ethanol papers are also deeply flawed from an agronomic analysis. They use ancient data and seem to think that all of us on pedocal soils are dumping huge amounts of lime on every year to make our soils even more alkaline.

Since this site appears to have tilted toward electrics as the private transportation solution for the future (and that also appears to be now the consensus of the environmental community), what's desperately needed now is an evaluation of the impact of coal-powered cars on green house gas production. Over half our electricity comes from burning coal. Increase electric demand substantially and I can guarantee the electric power industry will turn first to coal.

This is a call for a paper on a coal-powered transportation future.

I wonder if that could be a coal-powered car in the literal sense?

I just came across this technology, which is using a membrane and a heat source to force hydrogen from one temperature regime to another in a closed cycle at an energy efficiency of 60%

http://www.theregister.co.uk/2008/01/10/super_soaker_nasa_boffin_heat_en...

Not that I will be placing any bets on running around in a coal driven car using this anytime soon, and not only is this fledgeling technology but I have no idea how compact it is, but the guy who invented it is no mug, but a serious scientist.

It must be 10 years away at least, but it would do interesting things to the relative costs of power, with gas and coal benefiting most s it would reduce fuel costs, nuclear and solar thermal would be a middle cases, as it would cut costs but not so much as for coal and gas since most of their costs are upfront, whilst windpower and solar PV would suffer in price comparisons as it would not cut their costs.

http://www.nrdc.org/energy/pluginhybrids.asp

The National Resources Defense Council did a study on PHEVs looking at the power issue. They found a reduction in CO2.

This is a call for a paper on a coal-powered transportation future.

I have one on coal-based ethanol that I am going to put into the queue later today. I wrote it up several days ago.

Nonsence. This amounts to nothing more than a windy ad homimen.

Your first attack on Patzek's paper is based on cooked numbers You say:

It ascribes wind energy as having a 1 watt/square meter potential. This is off by two orders of magnitude.

This would require an average wind speed of 13 mph which rarely exists in the US. Patzek's figures are based on a average US windspeed of 3 mph.

Your second attack on Pimentel and Patzek's paper is a diversion as the soil type is irrelevant. Crop production is based on average standard USDA numbers, not indexed to soil.

I have a modest proposal: Let's treat oil and ethanol alike and see who gets the bigger subsidy.

1. Let's have a taxpayer funded strategic ethanol reserve just like the SPR.

2. Let's let farmers lease federal land for corn production through competitive bids for tillable land in parks and such. This is would be comparable to what the oil companies get in benefits from leasing off shore oil plays. Oil companies do not own the U.S. yet. Let's let the farmers pay for the leases through contributions in kind to the strategic ethanol reserve by ethanol coops they own. Then let's not pay to much attention and if it turns out that about \$60 billion has gone missing, let's just look the other way.

3. Let's have a soil depletion allowance for corn farmers. Many posters insist that corn for ethanol depletes the soil. Oil companies enjoy an oil depletion allowance. So why not ethanol.

4. Let's let ethanol companies merge during this tough time until just a few large efficient companies are left. Then let's let them have a de facto monopoly over liquid fuel distribution. If oil companies object, let's buy off the ethanol distributors with a 51 cent per gallon tax credit for every gallon of a gas blended into E85.

5. Let's invade Brazil to guarantee supplies of ethanol well into the future just as we did in Iraq. Let's spend a trillion dollars of tax payer's money doing it, not to mention 4,000 brave soldiers and 20,000 serious injuries. Let's not count the thousands of other deaths and collateral damage in the calculations.

6. Then let's have a thing called Peak Ethanol and not let anyone attempt to mitigate it by exploring for more oil. Let's insist that conservation is the only solution even if few want or practice it.

7. Let's use fallacious arguments that compare apples and oranges and leave out the critical function of price in resource allocation.

Seems like treating ethanol and oil alike shows who is really getting the bigger subsidy.

I have a modest proposal: Let's treat oil and ethanol alike and see who gets the bigger subsidy.

Now who would have guessed that a corn farmer - the biggest beneficiary of our ethanol policy - would get defensive? This post wasn't about subsidies, but since you asked:

http://zfacts.com/p/63.html

Oil get's big subsidies, not ethanol. Wrong by 54 times!

"Ethanol Today," (8/'05) states "Five years ago, a US General Accounting Office report showed that ethanol had received \$11.6 billion in tax incentives since 1968, while the oil industry had received over \$150 billion in tax benefit over the same period.

Probably true. But the oil industry produced 1068 times more energy so the subsidy rate per unit energy was 54 times higher for ethanol. That's like ethanol gets 54¢ and oil gets 1¢. Now if we had oil subsidies, and we do, and ADM is making more profit than ...

practical, let's review the bidding:
1. a mandate is the same as putting oil in the SPR; it dictates that the product must be taken out of the market.
2. much of the farming land that is private was homesteaded; someone got it for free or next-to-nothing, which is great...the government should have kept it up and the society would have been much richer. Having the government own 1/3 of the country and 1.6 billion acres in the OCS that is underutilized, undercapitalized and requires public expenditure to police is absurd. As far as parks go, they are not open for leasing. Neither is wilderness. Neither, for all practical purposes, are national wildlife refuges. Nor is much of the US or much of the land in the OCS. One of the reasons these debates even occur is because it has been government policy to restrict access to energy resources. Congress has even banned the regulations from being issued to enable access to 2 trillion barrels of oil shale in place. In the few places that are available, opponents of economic growth stop, enjoin, sue and demonstrate to preclude its development, as witnessed by yesterday's OCS sale in Alaska where 15 Bs and 77 Ts estimated by the government were opposed by greens because of phony global warming concerns in 13 below zero temperatures.
3.depletion is like amortization of equipment...do you depreciate?
4.Nobody's stopping ethanol companies from merging; they're doing it.
5 I don't know we'd ask Brazil to guarantee ethanol supplies; we make more than they do and the only reason they have become energy self-sufficient is their increased oil production from their OCS
6. I agree with your view on the value of increased energy production of all kinds...it makes life better.
7. On this one, I will just say we should stop fighting each other and start fighting the reason we are fighting...the watermelon environmentalists who are green on the outside and red on the inside. They create the energy problem through government actions and then use the problem as an excuse to legislate, regulate and ultimately subjugate a free economy to their regulation of the fuel injectors of economic growth. Until this group understands that, we will be arguing amongst ourselves as the parade passes us by. They don't like ethanol any more than they like petroleum, coal, natural gas, nuclear or anything else that provides energy at a reasonable cost. Their angle is increase the cost by restricting the supply, and demand will fall. They love that, because that gives them control of the joystick. And George Soros loves it because he can bet against the US currency as he funds the lefty green groups that work to shrink our economy against growing energy superconsumers like China and India. It is insidious.

Robert,

Thanks for a great post. According to this report from the Department of Agricultural and Consumer Economics, University of Illinois

http://www.farmdoc.uiuc.edu/policy/research_reports/ethanol_report/index...

the price of corn from 1975 to 2005 was about \$2.50 per bushel. Presumably some of the difference between this historical price and the current \$5 spot price you quote is a consequence of higher fuel and fertilizer costs. However, it seems that in the long run, with or without a subsidy, farmers selling corn for ethanol are likely to be competitive with petroleum countries selling oil for gasoline. And looking to the future, improved biofuels could be even more competitive.

Dave

Corn was selling for about \$3.30 bu, last year, when word of China's (China is the world's no 2 corn producer) Catastrophic corn harvest leaked out. On a more recent note, Argentina is getting all of their "weather" at just the wrong time, and it looks like they'll have another disappointing harvest.

BTW, a recent study found (I know, I know, I'll try to find the link) that a one dollar increase in the price of transportation fuel had between two and three times the effect on food prices as a one dollar increase in the cost of corn. Ex. The cost of the corn in that 14 oz box of corn flakes has gone from about 2.5 cents to 5 cents. The cost of an egg about a penny.

Yes, Robert, thanks for writing this up. Very interesting.

One aspect that I wonder about are the farmer coop ethanol plants. I think ethanol has been very good for grain farmers. If the boom hadn't happened, would corn still be \$2 a bushel? Those coops might be very interested in keeping the ethanol plant running, even if it loses some on each gallon, IF it means that corn prices stay high.

Disclaimer: I live among some grain farmers. I like what higher grain prices have done to the social environment in my neighborhood. (Farmers making a little profit, instead of going bankrupt) And I think that corn ethanol isn't the end game, but might be useful to get some people converted to running on ethanol (future cellulose style ethanol that makes more sense long term).

I am happy to see your local grange doing well but it's ashame that such prosperity is the consequence of a tragically flawed energy policy. Wouldn't it be more helpful for all concerned (the farmers, the local economy, the land and the animals, etc.) if the big grain dealer hegemony was reduce rather than exaggerated. It is no coincidence that Cargil, ADM, and Monsanto are using these ill-gained and subsidized profits to construct other ethanol boondoggles in foreign countries.

And what leads you to believe that cellulosic ethanol is a good thing?

While, as a matter of social policy and politics , the powers that be have concluded that some farmers should be supported financially in some way, we still have to question how resources are being allocated. Given a certain amount of capital, labor, land, and energy inputs, if it included that producing ethanol is uneconomic and has the side effect of harming both national and international consumers, do we want to spend our tax dollars (or borrowed Chinese dollars) encouraging such behavior. If it makes more sense to produce food than ethanol, let's encourage that. If, as a matter of social and political preference, the taxpayers want to subsidize the incomes of grain farmers, let's do that.

And, while we are talking about it, why are grain and soybean farmers the chosen ones, especially considering the health impacts of things like corn sweeteners and overconsumption of meat? If we are going to help farmers, let's give a helping hand to vegetable and fruit growers too.

Look at it this way; it takes about 33,000 btus of nat gas (this includes that used for manufacturing the fertilizer, and drying the seed corn,) and a little less than 2,000 btus of diesel (8 gal/acre, probably less, now, since 76% of corn farmers now use no-till farming, and the number goes up by 1.5% every year) to produce a gallon of ethanol. We, now, realize that a gallon of ethanol can replace a gallon of gasoline in an "optimized" engine; so, one gallon of ethanol can, for all practical purposes yield/replace the equivalent of 115,000 btus of energy.

So, what's that, a "functional" 3.3:1? And, that's before they start fractionating the corn, and removing the 1.2 lbs of corn oil (biodiesel,) and using the lignin, and the corn cobs in "process," and deriving a couple hundred gal/acre from those sources plus part of the stover.

Guys, this is a "New" Industry, and the Improvements that are being made, daily, are quite impressive. Be very careful accepting any numbers, or opinions, written more than a couple of months in the past.

Oh, and as for Transportation: One of the beauties of biofuels is that they can be produced almost anywhere. And, from dang near, anything. After studying this a bit, it's almost impossible for me to imagine a county in the U.S. that couldn't produce at least a hundred million gallons/yr. Many counties could produce much more than that.

Aren't you ignoring some very important imputs? Isn't energy required to actually grind, hydrolize, ferment, and distill corn into alcohol? How can you ignore these energy inputs and claim 3.3:1 energy return? Real life is not a series of externalities to simply ignore.

Furthermore, you listed additional benefits as free energy subsidies rather than the drains they are. Notice the active verbs associated with these processes. One must 'remove' the biodiesel, 'use' the lignin, 'process' the cobs and the 'derive' the stover. This cost fuel.

Furthermore the alcohol industry is not new. Farmers have been fermenting crops into alcohol for millenia and never thought to try to run a farm off the stuff.

Asky yourself why haven't our farmers (the smartest, most highly trained, and best financed anywhere in the world) done this in the past? Why have they sent their hard-earned dollars to the Arabs when the fuel was just rotting in the back-40? Makes no sense does it?

NLand, from what I've been able to extrapolate: I'm guessing that not that much extra energy is required to remove the oil. The equipment is pretty expensive, but everyone seems to be heading that way. As for the lignin, cobs, and stover they will be utilized to supply a large amount of the energy to drive the process, as well as to contribute, in the Liberty Process, cellulosic ethanol.

As for "Why Now?" It's simple. Oil at \$90.00/barrel. The whole thing starts working (w/o subsidies) at about \$50.00 barrel.

One of the beauties of biofuels is that they can be produced almost anywhere. And, from dang near, anything. After studying this a bit, it's almost impossible for me to imagine a county in the U.S. that couldn't produce at least a hundred million gallons/yr. Many counties could produce much more than that.

kdolliso, lest you think I'm just picking on you, I just finished writing a chapter on biofuels for my new book on renewable energy investing and I can't substantiate most of what you're claiming in this thread. That's why I keep insisting that you share your sources. I've read a good stack of technical papers on this subject and none of them claim anything of the sort. There are huge areas of the West, for example, that don't have enough rainfall to support anything but cactus and a little short grass. All of the good cropland is already under cultivation, so there are tradeoffs everywhere with biofuels. And though a given piece of marginal land might grow some switchgrass, for example, you have to really dig into the details to see if that land will grow it high enough, and fast enough, without irrigation and fertilizer, and do it for successive generations, to be worthwhile as a biofuel feedstock. The details matter!

For example, take a look at this study. According to their analysis, the available cropland in the U.S. to grow biofuels via rain-fed cultivation is approximately zero.

“Biofuels: Is the Cure Worse than the Disease?” September 2007, Organisation for Economic Co-operation and Development (OECD).

Now, that's a pessimisstic study, and there are more optimstic ones. I've got dozens and dozens of sources to share if you want to engage in a real debate on this. I'll know that you do when you show me one source for your data.

I should also note that I DO think certain kinds of biofuels are a worthwhile investment, at the right scales, in the right places and via the right methods. But there are many controversial issues around them, and it's essential to understand the details and not overstate their potential! A blind hope in ethanol and biodiesel anywhere, any time, from any feedstock, and at any scale is just as bad, maybe worse, than placing all one's faith in Big Oil to come up with a solution to the peak oil problem.

For 99.98% of human history, biomass has been the primary or only form of fuel. Now we find it attacked as having no potential for meeting future energy needs. What happened?

Part of the problem comes from an excessive focus on the potential of tropical regions. Another one is the inability to accept the possibility of technological breakthroughs. In 1907, I bet there were a lot of people who said the airplane was an interesting toy but it would never amount to anything since it can barely lift itself off the ground.

The biofuels industry is very young, but the meat production industry is not. The quickest way to make more calories and protein available to the world's population is to stop feeding grain to animals. See: "Diet, Energy and Global Warming" by Gidon Eshel and Pamela Martin geosci.uchicago.edu/~gidon/papers/nutri/nutri3.pdf

But the largest impact biomass fuel research may have lies not in fuel but in the production of food, bringing about a paradigm shift as great as the Neolithic Agricultural Revolution. 10,000 years ago people were starving because of overpopulation. Most were probably saying they had to get better at foraging and hunting, but a prescient few saw the potential apparent in pure native stands of large-seeded annual grasses. This was a quantum, not incremental, leap in food production capability and increased the carrying capacity of the earth to support humans by six orders of magnitude.

But agriculture's Achilles' Heel is that it is dependent on annuals, which in turn are dependent on high soil fertility, water usage, and soil disturbance. Perennials are not.

The University of Illinois has been running biomass production trials for several years now and are coming up with unimproved Miscanthus giganteus yields that are four times as high as grain corn with virtually no fertilizer, chemical, water or tillage input. One fourth of that biomass is lignin, a resin that at the minimum can be used as boiler fuel; one fourth is hemicellulose, a polymer of five-carbon sugars, which humans can't digest; and one-half is cellulose, a polymer of glucose, which is the primary fuel of the human body.

If we achieve the ability to extract usable nutrients --carbohydrates, proteins and oils -- from the vegetative parts of perennial plants, the way termites do from wood, we will make another quantum leap. Agriculture is stuck at the incremental improvement stage but biofuel research can get us past that blockage. It requires vision.

Biofuels are different to the ethanol program, as some of them appear to be a lot more efficient:
http://biopact.com/2007/12/biomethane-presented-as-most-efficient.html
Fuels compared

My objection is specific to the ethanol form corn project.

I am all for Substitute Natural Gas being made from biomass. I would rather gasify because the synthesis gas can be made into many useful products, but that is just a technicality. The U.S. imports 15% of our natural gas, mostly from Canada. Since natural gas is clean burning, it has become more popular over the years. We may be facing a natural gas shortage after a while and I would rather see biomass to methane than LNG.

You have never proved your claim that one gallon of ethanol can replace one gallon of gasoline. Just vaporware claims, not backed by anything.

You show up and register within hours after Robert posts, make a couple dozen posts all making WILD claims backed up by NO DATA and you expect people to take you seriously?

Better try again.

With ethanol currently trading at around \$2.15 a gallon, I assume you admit that ethanol is profitable by your \$2 calculation.

At any rate your comment "Also note that due to the lower energy content, this production cost is equivalent to a \$3 per gallon production cost for gasoline" is a little bit misleading.

There are NO E100 cars except maybe at the Indy 500. Realistically, there are E10 cars and the energy penalty for using E10 is about 3%. The high octane content of ethanol compensates for the decrease in BTUs.
Due to the low energy content of ethanol (Table 1), E10 has approximately 2 percent lower mileage than regular gasoline.
http://www.ext.vt.edu/pubs/bse/442-884/442-884.html

Therefore you are in fact replacing 100% gasoline with 90% gasoline with 10% ethanol added.

The 2007 Energy Bill caps corn ethanol at 15 billion gallons out and in the context of 150 billion gallons of gasoline that would mix up only to about E10.
http://wheels.blogs.nytimes.com/2007/12/18/ethanol-and-the-energy-bill/

Even E85 is decreases mileage by 10-30%
less than the energy difference (27-36%)due to the high octane charateristics of ethanol.
http://www.nrel.gov/docs/fy07osti/41828.pdf

You also don't compare the cost of ethanol with the cost of MTBE which is made entirely from natural gas which is being depleted.

Ethanol, being an oxygenate is not taxed as gasoline is. Therefore 50 cent federal blending 'subsidy' which goes for roads, etc. isn't a subsidy for ethanol as much as it is a penalty against the consumption of straight gasoline which creates smog. Still with ethanol being only 10% of the mix, it doesn't hurt gasoline against E10 that much.

The other 'outrageous subsidy' are agricultural price supports( yes, the government thinks it should support farmers with loans) which oil doesn't get. And when the price of corn is high those supports decrease greatly.

But the oil companies get their own oil depletion allowances, etc.

http://zfacts.com/p/785.html

Finally, the EROEI argument itself favors net energy positive corn ethanol. If a 1 barrel of oil equivalent petroleum can create 1.3 barrels of oil equivalent ethanol to surve the same purpose then obviously we should turn all our oil into ethanol in principle. Same thing goes for net positive tar sands.

There's a lot wrong with your post, but I will quickly hit just a couple of things.

With ethanol currently trading at around \$2.15 a gallon, I assume you admit that ethanol is profitable by your \$2 calculation.

I wasn't trying to prove that it isn't profitable. What I was showing is how corn and natural gas prices impact profitability, such that increased mandates will continue to increase corn demand which will mean a constant struggle (except for corn farmers). But right now, at these prices the average ethanol producer is marginally profitable. Some are surely losing money, some are making more money than others. But I do expect prices to improve from here.

There are NO E100 cars except maybe at the Indy 500.

That whole line of argumentation has little relevance to the production cost of ethanol on a gasoline equivalent basis.

straight gasoline which creates smog.

That's wrong. It's the ethanol blends that raise vapor pressure and create smog. The EPA has to grant RVP waivers for ethanol blends for this very reason.

If a 1 barrel of oil equivalent petroleum can create 1.3 barrels of oil equivalent ethanol

Well, it doesn't. What it does is create around a BOE of ethanol, plus some animal feed. You are just trading natural gas for ethanol, and paying a steep price in doing so. But the EROEI argument is one that petroleum wins by a mile.

Robert, did you click on my link?

Your above post is just not correct. It's generally accepted that, using a straight btu to btu analysis, the newest refineries return about 2.3:1.

BUT, once you realize that ethanol CAN replace gasoline on a 1:1 basis, it gets more like 3.3:1. And, this will increase, greatly, as more, and more, biomass is used in the process.

It's generally accepted that, using a straight btu to btu analysis, the newest refineries return about 2.3:1.

No, it isn't generally accepted. I see it claimed now and then, but the claims always fall under scrutiny. But there aren't even too many ethanol boosters who will claim over 2 to 1. You are way out there with your numbers. And I don't just mean this one - I mean lots of others that you posted above.

"But I do expect prices to improve from here."

So we agree that ethanol will become even more profitable on average into the future; i.e. if it is profitable now as prices rise it will become more profitable. Incidentally on the basis of oil input to the production of ethanol, one barrel of actual oil(leaving off natural gas or coal) produces 7.9 barrels of oil equivalent ethanol. That's a strong argument for increasing ethanol production as oil becomes depleted.
------------------------------------------
"That whole line of argumentation has little relevance to the production cost of ethanol on a gasoline equivalent basis."

I disagree. The whole debate is about ethanol replacing gasoline using numbers for E10 versus gasoline. It's unfair to use the same real prices to prove that ethanol at cost barely breaks even on a BTU basis when it isn't used that way.
-----------------------------------------

"That's wrong. It's the ethanol blends that raise vapor pressure and create smog. The EPA has to grant RVP waivers for ethanol blends for this very reason."

The reason for oxygenates like ethanol was to get reduce carbon monoxide and unburnt fuel which end up as smog.
Originally this role was played by tetraethyl lead, an obvious poison.
http://en.wikipedia.org/wiki/Oxygenate

http://www.ethanolrfa.org/objects/documents/338/cawaiverdenial.pr.050602...

EPA says ethanol doesn't increase smog.

http://tinyurl.com/8y2f8

"Well, it doesn't. What it does is create around a BOE of ethanol, plus some animal feed. You are just trading natural gas for ethanol, and paying a steep price in doing so. But the EROEI argument is one that petroleum wins by a mile."

A BOE is a BOE is a BOE.
A BOE of natural gas at \$.044/boe is cheaper than a BOE of crude oil at \$94/boe and a BOE of ethanol at \$134/boe and a BOE of gasoline +\$138/boe(\$3.33 per gal), too.
http://www.energy.ca.gov/gasoline/margins/

So it makes sense turning cheap natural gas into expensive ethanol. It also makes sense to go the GTL route. But in the case of ethanol, it's there because of the EPA oxygenate rules.

Petroleum refining is net energy negative as everyone knows. What the EROEI experts do is to pretend fossil fuels are free and just count human made energy as the only imput.

Obviously with carbon dioxide, mow a greenhouse gas
now having a value on it, that assumption is no longer correct.

The scarcity of any commodity causes its value to rise, except in the EROEI system which is another reason why EROEI is a dead end.

Oops...that was \$44 per boe NG(\$8 per MMBH) not \$.044.

Incidentally on the basis of oil input to the production of ethanol, one barrel of actual oil(leaving off natural gas or coal) produces 7.9 barrels of oil equivalent ethanol. That's a strong argument for increasing ethanol production as oil becomes depleted.

Actually, one ham bone produces 7.9 pints of split pea soup. (leaving off the peas, carrots, broth, garlic, water, spices, onions etc.) But it is a strong argument for increasing soup if we are hungry and have alot of ham bones

Stone soup, anyone?

So the fact that 1 barrel of oil goes directly (fuel for farming, transport,etc.) to make 7.9 barrels of oil equivalent in ethanol is just meaningless trivia, just a joke?

So nobody thinks that fact is interesting??

Now THAT is something which I find to be absolutely amazing!!

1)there is a huge amount of INdirect oil going into farming
2)low energy gain technologies are subsidized by high energy gain existing stocks
3)if we had unlimited gas, coal, land and water for corn, and liquid fuels were all that mattered, then the 7.9 would be 'acceptable', though still not great given global oil EROI is still higher than that and has less overall negative externalities

that is a trick to formulate the data like that - it assumes there are no other inputs or outputs. Not like that stat and these identical conversations haven't been occuring for over 2 years now on this site.

So the fact that 1 barrel of oil goes directly (fuel for farming, transport,etc.) to make 7.9 barrels of oil equivalent in ethanol is just meaningless trivia, just a joke?

As Nate said, I don't think you understand. 1 barrel of oil, plus a lot of natural gas and coal. Now from an economic point, the coal piece may make sense. The natural gas and oil pieces make no sense, as you are just converting one perfectly good transportation fuel into another, and using up food in the process.

Ethanol proponents grossly misuse that number above to imply that a barrel of ethanol actually displaces multiple barrels of oil. That’s ludicrous for multiple reasons, but it should be obvious that something with about half the BTUs of a barrel of oil isn’t going to replace multiple barrels of the stuff. There are a lot of things they overlook in the analysis.

So we agree that ethanol will become even more profitable on average into the future

I think you completely missed the points in my essay. It won’t become more profitable if demand for corn and natural gas continue to grow. That’s the point. Higher prices don’t mean more profitable if the raw materials costs keep going up (as they are).

It's unfair to use the same real prices to prove that ethanol at cost barely breaks even on a BTU basis when it isn't used that way.

It is used that way. Ethanol in a blend lowers the gas mileage. Countless studies have shown that. A true cost will reflect the actual energy basis. If ethanol costs \$2 a gallon, but propels you a shorter distance down the road – which it does – it isn’t unfair to reflect that.

The reason for oxygenates like ethanol was to get reduce carbon monoxide and unburnt fuel which end up as smog.

That was the original purpose. But today’s computerized engine’s don’t actually need oxygenates.

EPA says ethanol doesn't increase smog.

Did you even read your link? That’s not what it said. California scientists put together a number of studies that showed that it did increase smog. EPA rejected, saying the effect was “slight.” But observe what has happened since California made the switch to ethanol:

http://i-r-squared.blogspot.com/2007/08/ethanolalternative-fuel-faq.html...

Q: We're already using more ethanol in our fuel now, because of the outcry over the fuel component methyl tertiary butyl ether or MTBE and its propensity to foul groundwater. You had warned that replacing MTBE with ethanol could hamper efforts in cities like Houston to improve air quality because of these problems with volatile organic compounds and nitrogen oxides. So has that actually happened?

A: Yes, it has happened. Los Angeles is the cleanest example. They began switching from MTBE to ethanol in 2001. But when they made their major switch in 2003, there was a significant decrease in air quality. They basically stopped making progress toward attainment on EPA's ozone standards when they switched to ethanol. When using MTBE, with the cars getting cleaner each year, coupled with a very clean fuel, Los Angeles was on a straight-line path toward attaining EPA's air standards by about 2002 or 2003. Now that they have switched to ethanol, the trend line indicates nonattainment for many years to come.

So it makes sense turning cheap natural gas into expensive ethanol.

Not from an energy standpoint, it doesn’t. Do you know what Brazil does with their natural gas? They aren’t stupid enough to turn it into ethanol. No, they have a CNG fleet 10 times the size of ours. That is a much more efficient use of natural gas than recycling it into ethanol.

Petroleum refining is net energy negative as everyone knows.

Good Lord! Not that again.

What the EROEI experts do is to pretend fossil fuels are free and just count human made energy as the only imput.

That’s incorrect. What EROEI does is treat oil and ethanol both as captured sunshine, and then adjust for the energy inputs it took to get the final product.

majorian spews:

The reason for oxygenates like ethanol was to get reduce carbon monoxide and unburnt fuel which end up as smog.
Originally this role was played by tetraethyl lead, an obvious poison.

Tetraethyl lead was used as an octane improver; it had nothing to do with smog, and was specifically phased out when smog precursors were regulated because it poisons the catalysts in catalytic converters.

Spouting such arrant falsehoods makes you either ignorant or a liar.  In either case, you should shut up.

Replacing 50% of the nat gas with biomass at Chancellor, SD.

http://www.rhapsodyingreen.com/rhapsody_in_green/2008/01/biomass-powered...

Now, we're down from 24,000 btus of nat gas in the refining process to 12,000. Brings total fossil fuel btus down to about 23,000 - what does this do for our "energy efficiency" numbers?

That's the right direction, but remember, it's not been proven until it's been proven. Just ask E3 Biofuels, who was going to do the same thing. At least right up until they declared bankruptcy.

what does this do for our "energy efficiency" numbers?

Uh....nothing. Biomass is energy. Burning biomass is using energy.

Do you think that a power plant burning biomass (wood) is somehow more efficient or has a better energy return than one burning a fossil fuel? Biomass is not an unlimited environmental good. If you are burning it, it's not performing some other environmental service.

As Robert has pointed out, ethanol is basically an inefficient way of turning food and natural gas into liquid fuel. What happens when natural gas reverts more to BTU price parity with oil? (it currently trades at roughly a 50% discount to oil. And thats probably conservative -if one uses finished products like heating oil or gasoline the discount would be even higher (NG can be directly burned from the well head -oil has to first be processed into finished fuels.)

So the corn ethanol boondoggle is just another in a long series of the markets knee jerk reactions of putting a finger in a short term dike while not seeing the big wave on the horizon. What about when nat gas doubles in price? Already plans for more 'clean coal' (Futuregen) are being rethought as government funding has been retracted. When nat gas doubles and corn is \$7-8 per bushel and economy is in tank, how will ethanol look then? What if there are other limiting inputs like water, electricity, fertilizer, soil, etc. all of which ethanol is WORSE than oil, not to mention energy gain.

This is PRECISELY why EROEI, as a general guide, gets you into the ballpark on long term viability - it indicates how much of an energy surplus might be produced - big energy surplus usually means big dollar surplus. Low energy surplus usually means low (if any ) dollar surplus. And this doesnt consider the water issues at all, which I summarized the National Academy of Science report on Water and Biofuels here.

http://petroleum.berkeley.edu/patzek/BiofuelQA/Materials/TrueCostofEtOH.pdf

However, we can cite studies until we're blue in the face, to try and expose this "robbing Peter to pay Paul" scam and still never be able to convince the "alcoholics".

What I propose is a "process" for exposing the scheme for what it is--a payoff to big Ag.

Since it's purported to be a method to wean us off our dependence on foreign oil, I think we should:

1) Require all operations that are involved in growing and transporting ethanol to the plant to use the ethanol product in their machinery (as E85 if they wish) displacing diesel fuel, which is currently imported. This would apply to all new machinery used to make exclusively ethanol. They could sell the used diesel equipment to farms that don't turn food into fuel.

Since the areas are rural and don't in general contribute to urban smog, to make things fair they will be allowed to disconnect (or not be required to install) all pollution control equipment except for catalytic converters (which would be allowed to be smaller and cheaper). They would be allowed to increase compression ratios to take advantage of the higher octane or make whatever other modifications might be deemed useful to improve efficiency.

2) Require all steam and power necessary for the proces be generated by burning ethanol, which, for efficiency purposes could be done in combined cycle gas turbine plants, either with steam extraction to provide heat for distillation and drying, or, if they wished, make just electricity, some of which could power ground-assisted heat pumps to provide the process heat.

The natural gas backed out of the plant, would be compressed and used to power CNG vehicles. Not only would this displace foreign oil, the NG has, in effect already been transported, since it is available already in urban areas. Ethanol has to be transported in special tankers with significan added cost.

Only if all these internal demands were met, would the current subsidy be paid (on the "net export" of ethanol if there is any).

While the above should be enough to kill this nightmare scheme, a two dollar per million Btu tax on "anything" put into a private automobile, should do the trick.

Where is the profit? Maybe here:
What if the calculation works backwards:

\$3/gal gasoline
*2/3 energy ratio
= \$2/gal ethanol
+0.55 DGGS Credit
-0.33 energy
-0.14 enzymes
-0.23 labor+mainentance+miscelaneous
-------------------------------------------
= \$1.85 /"galon" corn
* 2.7 galons/bushel
= \$5.0 /bushel of corn

Now this is the PRICE of corn and perhaps not COST of corn.
If the COST of corn were \$3/bushel, then the farmers could use additional \$2 as profit, income and farm expansion funds.

That is, farmers could be at the good side of the balance as long as government (mis)regulations maintain an artificial shortage of ethanol.

That is, farmers could be at the good side of the balance as long as government (mis)regulations maintain an artificial shortage of ethanol.

No doubt that farmers benefit. If farmers own an ethanol plant, then they are doing well on the corn and not as well on the ethanol. It is more like an integrated oil company, where the oil price is high and refining margins are poor (as is the case today).

Robert -

thank you for this very useful analysis, which both answers items that have puzzled me and also raises new questions.

You asked for corrections and suggestions - I'm not about to presume to supply the former, but on the latter I hope I can provide something helpful.

It may seem a minor point, but the figure you chose for capital costs was from near the best end of the range, that is from the largest-capacity plants.

These will, I suggest, attract both development and operational costs that are especially liable to escalate under the present commodity price inflation -

1/. The larger the plant the longer the construction period and thus the greater the vulnerability even before start up to interest rate hikes (as hyper-inflation looms up), to raw material price hikes, and to component manufacturing, delivery & assembly cost hikes.
2/. The larger the plant the further the feedstock and the biproduct DDGS must be trucked, thus tying plant-operation to rapidly increasing trucking costs.
3/. The larger the plant the longer the construction period and thus the greater the vulnerability to feedstock-cost inflation at start-up, due both to fertilizer & other inputs price hikes and, potentially critically, to declining harvests due to an increasingly destabilized climate.

Under the eternal growth ideology titanicism is the lauded ideal, so while smaller plants may actually do rather better overall, I'd expect that most projects will try to maximize scale and, quite predictably, will meet various of the potential nemeses I've outlined.

Meaning no disrespect, I wonder if you'd agree that the DO.Energy, DO.Ag, State Dept. and other such institutions (who presumably had some input prior to the ethanol subsidy being rolled out) could commission perhaps a dozen analysts of your calibre to assess Corn Ethanol's prospects, and what's more would ensure that those analysts enjoy full spectrum data-bank access ?

Meaning that if policy-makers were actually interested in those prospects, then they knew full well that Ethanol is a bust financially, let alone in energy or carbon-efficiency terms, and they still went ahead with the subsidy.

A further wild anomaly in the policy-makers' conduct was, IMHO, the timing of the subsidy's roll-out. Am I right in thinking that it was far too late to have any very useful impact on GWB's very fraught re-election campaign ? When they could have gone for it from week one of the first term (and gained greeny points for doing so) ?

Alternatively the idea that Cheyney et al would do for the next republican presidential candidate what they did not bother to do for GWB, seems to me plainly irrational.

Similarly the idea that they knowingly launched the destabilization of world food markets simply to earn greeny points at home (and did so too late for the re-election campaign) smacks of wishful thinking that they give a damn for greeny points.

So, given that Govt analysts would forecast with great confidence the impact on world food prices of the USA withholding a large & rising fraction of its grain exports,
and of its doing so under conditions of severe weather impacts affecting agriculture worldwide,
it appears to me that the US govt saw a need to impoverish and to threaten the destabilization-via-famine of developing countries in general and the BRIC countries in particular,
and chose the ethanol subsidy as the best tool for the job that also offered the astonishingly effective defence of "plausible incompetence."

I should be happy to learn of any cogent refutation of this hypothesis, which has been troubling me for many months, during which time I've not found a coherent alternative goal for the ethanol subsidy.

As to this genocidal policy's intention, it might be posited that as a part of superpower rivalry "pushing China up a growth curve until it goes bust" (a la Caspar Weinberger) could be neatly foreshortened by spiking food prices,
and, equally, that impoverishing the BRIC nations will helpfully diminish their bidding power as oil supplies peak,
but for both these options the economic retaliation and the internal US consequences appear too severe to justify the policy choice.

Thus far I've seen only one negotiation that could (in Cheyney's evidently despotic mind) demand such a thascist policy -
namely that of the UN.FCCC deciding by formal treaty the allocation of this century's declining carbon-emission entitlements across the many nations.
(These entitlements are of course a close proxy for fossil fuel usage - additional entitlements will be available from within the annually-declining global budget, but only at the price for which other nations are willing to sell them).
That formal allocation is indispensable, for without it there will be no useful global GHG restraint, and, as the feedback loops accelerated, no nation would enjoy either food-security or economic growth.

So, there are two questions I'd really appreciate your thoughts on -

if developing countries' impoverishment is not the US ethanol subsidy's goal, then what other intended goal outweighs the destabilization which that impoverishment will entail ?
and,
if that impoverishment is intended but the UNFCCC negotiations are not the target, then what is ?

Regards,

Backstop

backstop: I doubt very much analysis of the actual impacts were made. Some politically placed farm interests -who couldn't see beyond the possibility of higher prices for their products wanted it, and our system of lobbying/pandering saw to it that it happened. Then some secondary players found it a useful program. Auto companies could use ethanol to distract the vast majority of the population, from peakoil and global warming. "We are doing something, we are making flex-fuel vehicles". And that has worked, although it is starting to wear a bit thin. But I bet Joe Sixpack is easily fooled.

It is not clear to me how much ethanol is to blame for the developing food shortages. It sounds likely to me (but I know no actual figures) that a string of unfortunate weather is probably a bigger factor. Of course seeing as how weather can have a larger global impact than we had previously thought, a reasonable response would be the create a surplus, and store it for potential future supply disruptions. At this point it seems politically unstoppable.

EoS: You don't explain why you doubt that any analysis of the impacts was made - over so seminal an issue - and one that has been seen as such by empires going back to pre-Roman times.
It seems that instead you just accept the "plausible incompetence" propaganda hook, line & sinker, and, further, espouse a rather spineless defeatism over increased future food fermentation for US transport desires.

In these things we differ fundamentally.

You miss the point that Ethanol expansion is not in US interests - Robert has covered the financial disbenefits at home - my post remarked the destabilization abroad - that is going to cost the US very dearly as Cheyney's gambit backfires.

The UN Food & Agriculture Organization can give you some rather soft spoken official critique of Corn Ethanol's impact, coming as it does on top of rising Asian meat demand and Climate Destabilization. The UN's special rapporteur referred to it bluntly as "a crime against humanity."

Regards,

Backstop

EoS: a senior executive at Goldman Sachs gives a pretty clear outline of the impact of US policy of Ethanol subsidies, coming as it does on top of the rising global meat demand (and climate destabilization) that I mentioned above.

The report (in the UK's Daily Telegraph) indicates that fairly widespread famine is likely within three years.

Quote from Telegraph article:

""Vulnerable regions of the world face the risk of famine over the next three years as rising energy costs spill over into a food crunch, according to US investment bank Goldman Sachs.

"We've never been at a point in commodities where we are today," said Jeff Currie, the bank's commodity chief and closely watched oil guru.

Global oil output has been stagnant for four years, failing to keep up with rampant demand from Asia and the Mid-East. China's imports rose 14pc last year. Biofuels from grain, oil seed and sugar are plugging the gap, but drawing away food supplies at a time when the world is adding more than 70m mouths to feed a year.

"Markets are as tight as a drum and now the US has hit the stimulus button," said Mr Currie in his 2008 outlook. "We have never seen this before when commodity prices were already at record highs. Over the next 18 to 36 months we are probably going into crisis mode across the commodity complex. ""

Regards,

Backstop

That is the beauty of gasifying biomass to syngas and using catalysts to make ethanol. You can use many different kinds of feed stocks.

"The variable cost per gallon of alcohol on current yield is USD0.48 per gallon which is expected to shrink to USD0.37 per gallon on reaching the targeted yield."

http://envirofuel.com.au/2008/01/04/syntec-acquires-ethanol-catalyst-technology-to-convert-biomass-to-alcohol/"

Could a farmer use ethanol as a fuel for tractors?

150 Bu corn is 400 gallons per acre.
1 gallon of diesel= 138000 Btu’s
.57*14=80000 Btu’s or 228 gallons of diesel Eqv.
At 10 gal diesel Eqv. Per acre it takes 1 acre of corn to provide the fuel for 23 acres of corn. Plus \$220 per acre for DDG

Lets try Bio-diesel with soy-beans.

Soy-beans yield 15% oil by weight or 9 Lbs. per 60 Lbs. Bu.
9 pounds oil yields 7.2 pounds of bio-diesel or about 1.1 Gallons.
50 Bu. Soy-beans yield 55 gallons per acre.
At 10 gallons/acre it takes 1 acre to produce 5.5 acres of soy-beans.
Current price of soy-meal is \$360 per ton or about \$460 per acre. About 39 Bu/ton.

Nov ethanol production was 479,000 Brl's/day and 6.5 billion gallons for 2007.

Brazil produced 4.4 billion gallons in 2007.

Thanks Robert.

I will want to cite this story in the future.

-- Dave

Hey stranger! You probably didn't see my note, but I am leaving the oil industry in about 3 weeks:

http://i-r-squared.blogspot.com/2008/01/manpower-shortage-worsens.html

I am looking forward to doing something sustainable for a change.

Natural gas draw last week:
Working gas in storage was 2,062 Bcf as of Friday, February 1, 2008, according to EIA estimates. This represents a net decline of 200 Bcf from the previous week. Stocks were 317 Bcf less than last year at this time and 62 Bcf above the 5-year average of 2,000 Bcf. In the East Region, stocks were 32 Bcf above the 5-year average following net withdrawals of 119 Bcf. Stocks in the Producing Region were 54 Bcf above the 5-year average of 616 Bcf after a net withdrawal of 50 Bcf. Stocks in the West Region were 25 Bcf below the 5-year average after a net drawdown of 31 Bcf. At 2,062 Bcf, total working gas is within the 5-year historical range.

US ethanol production at 400,000+ bpd and growing. Infrastructure is springing up all over the country. I honestly don't think they intend to be running on just corn in ten years time. In any case, corn is being used for both ethanol and biodiesel at some plants currently.

According to the RFA, U.S. ethanol production capacity stood at 7.2 billion gallons per year as of the end of 2007, which I calculate to be (assuming 42 gallons/bbl) 469,667 bpd.

Not sure if this was posted ?

Thermodynamics of the Corn-Ethanol Biofuel Cycle

http://petroleum.berkeley.edu/papers/patzek/CRPS416-Patzek-Web.pdf

Stop press.

Food-based biofuels can spur climate change
http://www.reuters.com/article/environmentNews/idUSN0716998820080207

2 studies conclude that biofuels are not so green after all
http://www.iht.com/articles/2008/02/07/healthscience/biofuel.php