Federal subsidies have made growing corn for ethanol a profitable venture for Corn Belt farmers while irking free-market advocates. Now, new technology for processing biomass from widely available plant and tree residue could increase Beltway bickering over ethanol funding.
Nearly all of the ethanol in the United States is currently produced by fermenting the sugars in corn grain, according to Robin Graham, the group leader of ecosystem and plant sciences at Oak Ridge National Laboratory.
Most of that corn is produced in the Corn Belt of the upper Midwest, an area that benefits from the 52 cents per gallon federal tax credit for producing ethanol. Free-market enthusiasts such as the Cato Institute’s Alan Reynolds and the Heritage Foundation have decried subsidizing ethanol production that otherwise would not be economically viable.
“There is no ethanol industry in the USA, but simply a subsidies industry,” said Rogério de Cerqueira Leite, a professor at Brazil’s University of Campinas, in an e-mail. “Corn productivity is low and the energy balance is poor.”
Corn is the favored feedstock for ethanol today because “it is dense and full of energy, and it is grown all over the country,” according to Ralph Groschen, senior marketing specialist for the Minnesota Department of Agriculture. He said that corn is easy to transport while biomass is “fluffy” and takes a larger area for storage.
Groschen said that commercial companies have been cautious in their approach toward biomass-to-ethanol technology. “Everyone is waiting to be the second one in line to build a plant for processing cellulose,” he said.
The economics of ethanol could soon change, as Oak Ridge National Lab’s Graham said that producing ethanol from the cellulose of plants is less costly than using corn grain. The cost of raw materials for biomass-based ethanol could be much lower, since tree and plant residue from clearing lots can be obtained for free, and switchgrass (a perennial crop that grows everywhere east of the Rocky Mountains) and corn stovers (dried leaves and stalks) are inexpensive to acquire, according to Graham.
Using corn grain to produce ethanol is relatively energy-inefficient when compared to utilizing biomass, Graham said. Producing ethanol from corn grain generates about 1.4 times as much energy as the process consumes, when pesticides and fossil fuels are factored in, she said. “The energy yield from cellulosic materials is like 10-to-1.”
Iogen of Ottawa, Canada, and Danish company Novozymes are close to commercializing biomass technologies.
The companies use enzymes to break down the cellulose found in the leaves, stalks and walls of plants into simple sugars that are then converted into ethanol. Iogen will break ground later this year on a demonstration power plant for converting wheat straw and switchgrass into ethanol, according to spokeswoman Tania Glithero. She said Iogen’s current test facility is processing ethanol that powers a fleet of about 90 vehicles.
In April, Novozymes completed a four-year project in conjunction with the National Renewable Energy Laboratory that reduced the cost of using enzymes to convert corn stovers thirtyfold. According to the company, the technology will be tested next year at a processing facility in York, Nebraska.
Unlike corn, biomass can be harvested in quantity throughout the United States, according to Burt English, a professor in the agricultural economics department at the University of Tennessee. English said agricultural waste that comes from yard clippings and clearing trees could be collected from any urban area. Producing ethanol from switchgrass would take some land out of food production and would have “the impact of increasing farm prices and reducing government payments,” he said.
English said the federal government should fund biomass ethanol that could be produced throughout the United States. “The facts point to the conclusion that biomass is a better use of resources,” English said.
In April, a group of 33 governors — including those from Corn Belt states — released a report (.pdf) recommending that the federal government spend $800 million over the next 10 years on biomass research.
Biomass could be converted into ethanol in commercial quantities at a cost equivalent to $25 per barrel of crude oil, or roughly half the current price of imported oil, according to E. Kyle Datta, co-author of Winning the Oil Endgame and managing director of research and consulting at the Rocky Mountain Institute, an energy policy group. Datta said farmers who shift from corn to switchgrass could increase their per-acre profit from about $350 to between $400 and $600.
Commercializing biomass-to-ethanol technology would also have international political ramifications, according to Datta. Producing 2.4 million barrels of ethanol per day would “be a $40 billion per year transfer of wealth from the Middle East to our farmers,” he said. Federal funding of biomass-based ethanol should be less controversial because “instead of six states benefiting, everyone benefits.”
By John Gartner