The future of grain ethanol

by Meyer Sosland
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Although more than 60% of the world’s ethanol is currently made from sugar, and cellulose is being touted as the future of the industry, experts say demand for grain-based ethanol will continue to grow

by Arvin Donley

In the U.S., maize-based ethanol is being produced in record amounts as the nation seeks to reduce its dependence on foreign crude oil.

The amount of U.S. maize utilized in ethanol has more than doubled in the past five years, rising from 680 million bushels in 2001 to 1.43 billion bushels in 2005. The ethanol industry processed a record 13% of the domestic maize crop last year, which in terms of usage ranks behind only feed/industrial (55%) and exports (17%).

With the U.S. government mandating greater ethanol production as part of its Renewable Fuels Standard, these numbers are sure to rise during the next five years.

But with scientists working hard to develop an ethanol production process using less expensive cellulosic materials, how long will maize and other grain crops, such as sorghum and wheat, remain the primary raw materials for ethanol producers in the U.S. and other countries?

GRAIN VERSUS CELLULOSE
A recently released study by University of Minnesota researchers describes maize ethanol as a "first generation" biofuel that produces about 25% more energy than is needed to grow the crops and turn them into biofuels. The study is more favorable toward maize ethanol than several previous studies, which claim that it takes more energy to produce maize ethanol than the energy it provides. But researchers in the University of Minnesota study maintain that maize ethanol has its limitations, noting that if every acre of maize in the U.S. was earmarked for ethanol production, it would still only supply about 12% of U.S. motoring fuel.

The researchers say that cellulosic material such as switchgrasses, prairie grasses and woody plants harvested on marginally productive agricultural land will have the potential to provide much larger energy supplies with greater environmental benefits. Renewable Fuels Association (RFA) Spokesman Matt Hartwig said scientists are getting closer to finding ways to process celluosic material into ethanol in an efficient and effective manner, but wide-scale commercial production is not imminent.

"It’s still probably five or six years away," Hartwig said. "Nature did not intend that kind of material to break down. Trying to come up with a way to do it and do it cost effectively is the challenge."

The good news for the grain industry, Hartwig said, is even if cellulose becomes the dominant material used to produce ethanol, there still will be plenty of demand for grain-based ethanol, since most researchers agree that even non-food sources of ethanol would fall short of replacing gasoline supplies.

"We don’t view it as an either-or proposition," Hartwig said. "What you’ll see is cellulosic ethanol production alongside (maize)-based ethanol production. What cellulose will do is give another market for another product off that same (maize) per acre."

It’s been debated as to whether existing maize ethanol plants will be able to also process cellulosic material, but Hartwig says process isn’t as different as one might think.

"Once you get the sugars broken down, the process from there is roughly the same — you’re fermenting sugar into alcohol," he said. "The molecule of ethanol from biomass or (maize) is the same. It’s just a matter of how you break it down upstream in the process so you can ferment it. From that point, we’re basically talking about the same process. That’s why we think cellulosic production will come from the guys who are using grain to make it today."

PILOT PLANTS
In testimony before the U.S. Senate Committee on Energy and Natural Resources on June 19, Chris Stadlee, executive vice-president and general counsel of Abengoa Bioenergy Corporation, the largest ethanol producer in Europe, said his company is constructing a commercial demonstration cellulosic ethanol plant in Salamanca, Spain, which is scheduled to begin production by June 2007. Another pilot plant is being constructed in York, Nebraska, U.S.

Stadlee, who also serves as vice-chairman of the Renewable Fuels Association (RFA), noted that there are 101 ethanol production facilities in the U.S., with 32 currently under construction.

"To date, the ethanol industry has developed almost exclusively from fermentation of grain starch, and this production from grain fermentation will continue to grow," Stadlee told committee members. "However, in the near future ethanol will need to be produced from other feedstocks such as cellulose, to provide greater variety and volumes of feedstock and sustain industry growth."

Hartwig said maize stalks, wheat straw and other non-grain materials that remain in the field after harvest could be used in cellulosic ethanol production.

Because of the growing demand for maize-based food products, Hartwig acknowledges that there will be a limit on how much maize and other grain crops can be used for ethanol production.

He said the National Corn Growers Association (NCGA) has estimated that 15 billon gallons of ethanol could be produced from a 15-billion-bushel maize crop, which the NCGA says is likely to occur in the U.S. within the next decade.

"Today, we’re producing 4.5 billion gallons, so we can triple that and then some before we start reaching the barrier where you’re having an impact on other markets for (maize) that you don’t want to have."

THE SUGAR FACTOR
In July, a U.S. Department of Agriculture (USDA) study on converting sugar to ethanol found that ethanol made from U.S. sugar cane and sugar beets would cost about U.S.$2.40 per gallon while ethanol produced from maize costs about U.S.$1.05 per gallon.

But the USDA notes that in other parts of the world, such as Brazil, which is the world’s biggest sugar producer, producing sugar ethanol makes economic sense.

In the case of Brazil, the government has dropped support of sugar prices to support the ethanol industry with mandates for the blending of ethanol with gasoline. In addition, Brazil’s vast land area of cultivatable acreage means that land devoted to sugarcane production for ethanol is not in competition with land devoted for food production. As a result, the cost of producing sugar ethanol in Brazil is in the U.S.68 cents to U.S.95 cents range, according to the International Energy Agency (IEA).

According to a 2003 survey, approximately 61% of the world ethanol production is being produced from sugar crops. Still, grain is the primary raw material for ethanol production in a significant part of the globe.

A 1994 report by the IEA evaluating the costs and benefits of biofuels included an analysis of producing ethanol in the E.U. from agricultural feed stocks. Input requirements and production costs were estimated for ethanol production in the E.U. utilizing maize, wheat and sugar beets as feedstocks.

The results were very similar to those presented in the recent USDA report. Under current technology, ethanol production in the E.U. was less expensive using grain as a feedstock rather than sugar beets. Total ethanol production costs, using 1991 currency, were estimated to range between U.S.$1.84 to U.S.$2.51 per gallon of ethanol using sugar beets, compared with maize at U.S.$1.01 to U.S.$1.39 per gallon. More recent studies estimate that the cost of using sugar beets in ethanol production in the E.U. has risen to U.S.$2.89.

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