Ethanol Production Update

The headlines on the latest Renewable Fuels Association (REA) press release are: October production ties all time high, yearly production, demand for ethanol up more than 25%.

This somewhat contrary to what I have been reading in the popular press, that frequently says demand is down. We are still importing expensive ethanol to meet demand. However, the capacity of new plants probably will double over current capacity in the next two years, making me wonder whether we can absorb that much production, forcing ethanol prices down (that will be good for consumers, but bad for producers).  Further, that production rate will put a strain on corn production forcing prices of corn up and possibly jeopardize our supply of food corn. No significant cellulosic ethanol production will come on stream in the next two years, so that alternative is no relief for corn supplies during that period. We need to put a moratorium on building more corn ethanol plants which only have a small net energy gain, and wait for cellulosic ethanol to become viable. We should stop subsidizing the construction of new corn ethanol plants. 

The data as reported by REA, who I have no reason to disbelieve, are that we are on track to produce 4.9 billion gallons this year, an increase of more than 25 percent from 2005. October demand was 391,000 b/d, up from 278,000 b/d in 2005.  For the year, demand has averaged 339,000 b/d or more than 4.3 billion gallons.  Total demand for 2006 will greatly exceed 5 billion gallons, more than one billion gallons over the requirement of the Renewable Fuels Standard (RFS).

The following table summarizes the October data.

Fuel Ethanol Production	432.9 mg	333,000 b/d
Fuel Ethanol Use	508.5 mg	391,000 b/d
Fuel Ethanol Stocks	432.9 mg	29.5 days of reserve
Fuel Ethanol Exports	0.0mg	n/a
Fuel Ethanol Imports	79.2 mg	n/a

Currently, 110 grain ethanol biorefineries have the capacity to produce more than 5.3 billion gallons of ethanol ethanol.  An additional 79 (81 according to their latest update of their list) construction projects are underway that will add nearly 6 billion gallons of new ethanol production capacity.

According to the REA list the total capacity of the 81 projects is over 6 billion gallons per year. REA says that 5.4 bgy of this capacity will come online in the next 18 months.

Archer Daniels Midland remains the largest producer with 1,070 mgy of capacity at six sites and 275 mgy under construction or planned. VeraSun comes in second and US Bioenergy third, each with less than half of ADM's capacity.

Another interesting fact from the list is how the average plant size is increasing. There currently are ten plants of 100 mgy or over while 28 new plants are of that size. Also currently there are 16 plants of less than 25 mgy capacity while none of the new plants are that small (three plants are planning expansions of less than 25 mgy), although 7 of these small plants are treating waste flows and a couple are pilot plants. The larger plants are presumabaly more profitable than the small plants.

None of the new plants are listed as cellulosic ethanol plants although several have been announced.

Comments

[PO'd Patriot]

Why bother with Ethanol?

http://www.butanol.com

[amazingdrx]

What a huge waste of scarce resources, capital, and political influence.

With no oil independence benefit and an increase in GHGs and decrease in the ability of the soil to absorb GHGs.

It's doubly wasteful considering the recent studies indication wind actually can replace fossil and nuclear for baseload power. and the Altairnano battery progress that makes electric cars practical and cost effective right now.

[Thomas Marihart]

Corn/grain based ethanol today succeeds in taking money from government and VCs and using it to take a previously affordable corn commodity away from those who really need it: Livestock and Dairy Farms.

Making ethanol (gasoline substitute) at the expense of many of the largest sources of FOOD and renewable biomass (poultry/cows/manure/litter) for grass roots renewable energy applications (renewable fertilizer/offsets nat gas use, distributed gas and electricity generation by digestion and gasification) is not too bright fellas.

The manure/litter has multiple levels of value and by causing the corn/wheat prices to spike with low tech ethanol manufacturing will seriously damage many Farms ability to survive over the next few years.

Essentially, this also destroys the manure/litter supply (when Farms go out of business) and a very important commodity that can both fertilize farmland and feed cellulostic ethanol plants in the future is GONE.

When the Farms and the manure/litter supply in an area disappear, and the land returns to traditional farming practices, which must now use fossil fuel (nat gas) derived fertilizer, this will greatly increase, not decrease our dependance on foreign fuel supplies of Natural gas/imported LNG, while reducing only fractionally our use of foreign oil.

Some Farmboy math: [at 130parts/acre year of NH3 (85% nat gas), 400 acres uses about ~25 tons per year of NH3; manure use in the place of NH3 can aviod the use of about 20TPY, or about 850,000cuft/year of nat gas use per 400 acres. In california, 300 parts per acre year is not uncommon...you do the math.

Again, this is not a very bright way to address the foreign fuel issue, and may indeed irreparably damage our existing food production infrastructure, and also our future distributed biomass/power/gas production infrastructure as well.

Bottom line, from here on out, all ethanol plants built NEEDd to be cellulostic based, and could be designed to gasify certain biomass to power the facility(in place of nat gas), and use other biomass/cellulose to make the ethanol (or butanol--even better).

This approach might be alot more prudent longer term and would avoid the current trend of cannibalizing our domestic food production capability just to offset importing a barrel of oil.

I'm not anti-ethanol, just very concerned about the seemingly short-sighted push for non-cellulostic-based ethanol production capability...and its short to med term cost to other vital industries (via escalating commodity prices to them) that can also protect us from using foreign fuel supplies.

If there is a way to cost effectively start with corn/wheat based ethanol and later 'upgrade' it to cellulostic...that would be ideal.

[Peter]

As corn prices increase there will be a growing incentive to use other feedstocks than corn. We need to keep the momentum going in ethanol, and for the moment that means corn fed plants. There is a huge hurdle to overcome in distribution of fuel as well as getting a critical mass of cars that are flex fuel. Without the growth of corn ethanol this will never happen, aborting any chance of getting to more advanced fuel technologies in the future.

As far as food supply goes, there is ongoing work to make the byproducts from ethanol production suitable as better livestock feed. Again, price will be a primary driver for this. Converting partially to renewable fuels in an enormous project that will take years. Ethanol is already partway up the curve, so aborting it will mean starting over.

[George]

Corn/grain based ethanol today succeeds in taking money from government and VCs and using it to take a previously affordable corn commodity away from those who really need it: Livestock and Dairy Farms.

Substitute the word "taxpayers" for "government". Ethanol is just another way to prettify Welfare for Billionaires. (or multi-millionaires, in the case of the poor downtrodden Tom Joad-like "family farmer") The VCs are there because they can smell a gravy train from farther away than most. As for the cows "really needing" corn... that's a topic for another discussion.

[CarFreak]

As a part of the continuous campaign to reduce greenhouse emissions, the California Air Resources Board (CARB) held a meeting in Fresno last June 14 to reformulate the California gasoline blend. The meeting involved ethanol and petroleum producing companies around California as well as the California state government lead by Governor Arnold Schwarzenegger. All parties agreed to increase the ethanol content of the California gasoline by up to 10%.

Once implemented, this new resolution will lead to the reduction of harmful gas emissions. In addition, the new resolution is also expected to lower gasoline prices in California. Good news for our fellow drivers in California, better equipped their cars with fram filters. Other states should also pass a resolution like this.

[colon cleanse]

It is important to maintain good eating habits and do exercises routinely, not only because it makes us physically see more slender and attractive, but because our internal organs work better and feel very well what will be reflected in the appearance and obtain a total welfare.

[Andre Such]

In Brasil ethanol is very used.