Where Will the Ethanol Come From?

In the last 10 days, I have listened to and visited with Brazilian corn, soybean and sugar cane producers, trade association and government officials. These officials were extremely knowledgeable with regard to EPA’s RFS2. They indicated they had submitted substantial amounts of data and had participated in meetings with EPA officials regarding Brazil‘s ethanol industry.

Brazilian officials and producers alike seem to be excited regarding the prospects and opportunities for sugarcane created by RFS2. There is a sizeable section of RFS2 dedicated to sugarcane renewable fuel production.

In 2009, the U.S. was the world’s largest ethanol producer with approximately 12 billion gallons. Brazil, based on what I heard, produced 7-8 billion gallons of ethanol for 2009. In 2008, consumption of ethanol was approximately 10 billion gallons in the U.S. and 5 billion gallons for Brazil. To date ethanol imports to the U.S., according to EPA and the Brazilians, have been small and the volume has fluctuated considerably. The Brazilians hope that opportunity for export increases.

EPA estimates that Brazilian ethanol exports to the U.S. will increase to approximately 4 billion gallons by 2022. EPA suggests that Brazilian sugar cane ethanol could help meet the cellulosic biofuel requirements and this requirement alone would take over 2 billion gallons of Brazilian product. EPA, based on RFS2, apparently assumes a substantial portion of the renewable fuel production will be coming from Brazil.

Even though Brazil and its officials are extremely hopeful regarding the requirements of RFS2 for the foreseeable future, the vast majority of our ethanol will be from corn/starch ethanol. EPA declared that in November, 2009, there were 180 corn/starch ethanol plants in the U.S. with a production capacity of “approximately 12 billion gallons per year.”

In addition, EPA claims there are 27 idled corn/starch plants, which it assumes will be operating again by 2022. EPA assumes that 11 new ethanol plants will come on line by 2022 giving the U.S. a capacity to produce 15 billion gallons of corn ethanol. The additional renewable fuel production which will require 16 billion gallons of fuel has yet to materialize.

Slow start for cellulosic fuel EPA had hoped the U.S. would produce 100 million gallons of cellulosic biofuel by the end of this year. Only 5 million gallons can now be produced.

Several small companies are being awarded multimillion dollar grants in an effort to boost cellulosic ethanol production. You may find some of these examples interesting, if not disturbing. Cello Energy proposed to produce 20 million gallons per year of cellulosic diesel, but has been unable to run on a continuous basis and therefore has been forced to reduce production plans for 2010.

Another company, Range Fuels (again according to EPA), received a $76 million grant in 2007 to produce 40 million gallons of wood-based ethanol, but this was not enough money, so Range was awarded an $80 million loan guarantee in 2009. EPA now says Cello Energy and Range Fuels have delayed or reduced their productions plans for 2010. Enerkem is a Canadian company. EPA says the Department of Energy and the USDA has given this company $50 million to build a 10 million gallon per year woody biomass-to-ethanol plant in Pontotoc, MS.

In attempting to determine where renewable fuel will be produced, EPA states, “…it is clear that we cannot count on demonstration plants to produce at or near capacity in 2010, or in their first few years of operation for that matter.”  EPA also says, “…it is unclear how much we can rely on Canadian plants for cellulosic biofuel in 2010.” According to EPA, the Department of Energy (DOE) and USDA have allocated over $720 million in federal funding to help build pilot and demonstration-scale bio–refineries employing advanced technologies in the United States.

The Brazilians point out sugar cane is replanted only once every six years and produces on average 500-600 gallons of ethanol per acre, while corn produces on average 450 gallons per acre. They believe that efficiency is on their side and if the United States is truly serious about reducing CO2, then sugar cane and its byproducts should be considered as a major component for solving an energy and environmental problem.

Though his column does not explicitly address Virginia, Gary Baise, a Virginia resident and nationally recognized agricultural and environmental expert offers critical insight into issues that impact our state’s agricultural economy. This piece demonstrates moving toward no-or-limited tilling of the land can have a huge impact on the environmental quality of our streams. What has been learned in the Midwest would surely be applied here in Virginia. Reprinted with permission from FarmFutures.com.