Is the Biofuels Tank Half-Full or Half-Empty?
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Transcript Is the Biofuels Tank Half-Full or Half-Empty?
Is the Biofuels Tank Half-Full
or Half-Empty?
National Farm Business Management Conference
June 15, 2009
St Louis, MO
Ron Plain, Ph.D.
D. Howard Doane Professor
Dept of Agricultural Economics
University of Missouri-Columbia
http://web.missouri.edu/~rplain
Basics of Ethanol Production
Ethanol is an alcohol made by fermenting
grain and other carbohydrates
This is an old process which traditionally has
been used to produce ethanol for use as a
beverage
97% of U.S. ethanol is made from corn
Rest: milo, wheat, brewery waste, whey, etc
water
A bushel of
corn will
produce
~2.8 gallons
of ethanol,
17 lbs of
CO2 and 17
lbs of DDGS
Laddonia Ethanol Plant
Ethanol Plants Were Very Profitable
In 2006, U.S. plants
produced ethanol for
about $1.34 per gallon.
The average price of
ethanol was about
$2.58 per gallon.
Ethanol Capacity Growth
16
14
Jan. 1 capacity
Under construction
billion gallons
12
10
8
6
4
2
0
1999
2001
2003
2005
Source: Renewable Fuel Association website http://www.ethanolrfa.org/industry/statistics/#B
2007
2009
Formulation of Alcohols
H
H
H
H
O
O
O
O
H-C-H
H-C-H
H-C-H
H-C-H
H
H-C-H
H-C-H
H-C-H
H
H-C-H
H-C-H
CH3OH
Ethanol
H
H-C-H
62,800 BTU
C2H5OH
Propanol
H
84,400 BTU
C3H7OH
Butanol
100,000 BTU
C4H9OH
Methanol
Gasoline is mostly C8H18
Gasoline has 125,000 BTU/gallon
110,000 BTU
Biofuels Policy
Spot Crude Oil Prices 1995-2009
WTI, Monthly Average Price, Cushing, Oklahoma
$/barrel
160
140
120
100
80
60
40
20
Source: U.S. Energy Information Administration
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
0
U.S. Retail Gasoline Prices,
All Grades, All Formulations, 1996-2009
cents/gallon
450
400
350
300
250
200
150
100
50
Source: U.S. Energy Information Administration
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
0
Energy Sources
Source: Renewable Fuels Association
2008
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1980
Billion Gallons
Ethanol Production, 1980-08
Corn ethanol
Cellulosic
2008
2012
Bio-diesel
More non-grain
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2011
2010
40
35
30
25
20
15
10
5
0
2009
Billion Gallons
2007 Renewable Fuels Mandate
Daily Ethanol Production, 2006-09
2006
2007
2008
2009
650
550
2009
mandated
use: avg
685,000
barrels/day
450
350
Dec
Nov
Oct
Sep
Aug
Jul
Jun
May
Apr
Mar
Feb
250
Jan
1000 barrels/day
750
20
18
16
14
12
10
8
6
4
2
0
mandated
use
2016
2014
2012
2010
2008
2006
2004
2002
2000
1998
1996
1994
1992
actual production
1990
Billion Gallons
Ethanol Production, 1990-2016
Beginning in 2015, the U.S. will annually use more corn to
make ethanol than the U.S. produced in any year before 1971
Weekly U.S. Gasoline Prices, 2007-09
$ Per Gallon
4.50
4.00
3.50
3.00
2.50
2.00
Source: U.S. Energy Information Administration
Ap
r
n0
9
Ja
ct
O
Ju
l
Ap
r
08
Ja
n-
O
ct
1.50
Ethanol $/gal
Ethanol-Gasoline Price Relationship
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0 5.5 6.0
Retail Gasoline $/gal
Source: Ron Plain
Weekly Iowa Ethanol Prices, 2007-09
$ Per Gallon
3.00
2.80
2.60
2.40
2.20
2.00
Livestock Marketing Information Center
il
Ap
r
09
Ja
n
ct
O
Ju
ly
il
Ap
r
08
Ja
n-
O
ct
1.80
1.60
1.40
Weekly Gasoline & Ethanol Prices,
Dollars Per Gallon, 2007-09
4.50
3.00
2.80
4.00
2.60
3.00
2.00
Gasoline
Ethanol
2.50
1.80
1.60
2.00
1.40
Source: U.S. Energy Information Administration
Ap
r
Ja
n0
9
O
ct
Ju
l
Ap
r
1.20
Ja
n0
8
1.50
Ethanol
2.40
2.20
O
ct
Gasoline
3.50
Ethanol $/gal
Ethanol-Corn Price Relationship
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
breakeven
1
2
3
4
5
6
Corn $/bu
Source: Ron Plain
7
8
9
Omaha Corn Prices
$ Per Bu.
Weekly Average, 2007-09
8
7
6
5
4
3
Source: LMIC
r0
9
Ap
Ja
n0
9
ct
08
O
Ju
l0
8
r0
8
Ap
Ja
n0
8
O
ct
07
2
Weekly Corn & Ethanol Prices, 2007-09
2.90
7
2.70
2.50
6
1.90
4
1.70
Corn
Ethanol
1.50
3
1.30
Source: LMIC
Ap
ril
Ja
n09
O
ct
Ju
ly
Ap
ril
1.10
Ja
n08
2
$/gallon
2.10
5
O
ct
$/bushel
2.30
Weekly Gasoline & Corn Prices, 2007- 09
5
8
4.5
7
4
3
5
2.5
4
2
Gasoline
Corn
3
1.5
Source: U.S. Energy Information Administration
Ap
r
09
Ja
n
O
ct
Ju
l
Ap
r
2
Ja
n08
1
$/bushel
3.5
O
ct
$/gallon
6
Corn
futures
Crude oil
futures
Impact on feed prices
Forecast
4.5
4.0
3.5
3.0
2.5
2.0
1.5
1.0
0.5
0.0
% corn for ethanol:
2000-01:
6%
2005-06: 14%
2007-08: 23%
2008-09: 31%
08-09
06-07
04-05
02-03
00-01
98-99
96-97
94-95
92-93
2009-10: 34%
90-91
Billion Bushels
Corn Milled for Ethanol
Soybean Meal Prices
$ Per Bu.
Weekly Average, Illinois, 2007-09
500
450
400
350
300
250
200
Source: LMIC
pr
09
A
Ja
n0
9
ct
08
O
Ju
l0
8
pr
08
A
Ja
n0
8
O
ct
07
150
Weekly Corn & Soybean Meal Prices, 2006-09
8
500
7
450
Corn
SB Meal
400
5
300
4
250
3
200
pr
09
9
A
n0
Ja
ct
08
8
O
l0
Ju
pr
08
A
8
n0
Ja
ct
07
7
O
l0
Ju
pr
07
7
A
n0
Ja
O
l0
Ju
A
n0
Source: LMIC
ct
06
100
6
1
pr
06
150
6
2
$/ton
350
Ja
$/bushel
6
ALFALFA HAY - MONTHLY AVERAGE PRICE
Received by Farmers, U.S., Crop Year
$ Per Ton
190
180
170
160
150
140
130
120
May07
JUL
SEP
NOV
2008
Livestock Marketing Information Center
MAR
MAY
JUL
SEP
NOV
2009
MAR
Monthly Corn & Alfalfa Prices, 2007-08
190
180
7.0
Alfalfa
Corn
6.5
6.0
160
5.5
5.0
4.5
150
140
4.0
3.5
3.0
130
2.5
M
ay
07
JU
N
JU
L
A
U
G
S
EP
O
C
T
N
O
V
D
E
C
20
08
FE
B
M
A
R
A
PR
M
A
Y
JU
N
JU
L
A
U
G
S
EP
O
C
T
N
O
V
D
E
C
20
09
FE
B
M
A
R
120
Livestock Marketing Information Center
2.0
$/bushel
$/ton
170
0
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
Northwest Iowa Prices, 2006-09
$ Per Ton
300
250
Corn
Source: LMIC
DDGS
WDGS
200
150
100
50
115
110
105
100
95
90
85
80
75
70
65
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
DDGS Price as % of Corn Price,
Northwest Iowa, 2006-09
Percent
Source: LMIC
10/6/2006
11/3/2006
12/1/2006
12/29/2006
1/26/2007
2/23/2007
3/23/2007
4/20/2007
5/18/2007
6/15/2007
7/13/2007
8/10/2007
9/7/2007
10/5/2007
11/2/2007
11/30/2007
12/28/2007
1/25/2008
2/22/2008
3/21/2008
4/18/2008
5/16/2008
6/13/2008
7/11/2008
8/8/2008
9/5/2008
10/3/2008
10/31/2008
11/28/2008
12/26/2008
1/23/2009
2/20/2009
3/20/2009
4/17/2009
5/15/2009
WDGS Price as % of DDGS Price,
Northwest Iowa, 2006-08
Percent
45
40
35
30
25
20
Source: LMIC
Impact on crop acres
Million Acres Planted by Crop
2006
2007
Change
Corn
78.327
Soybeans 75.522
93.600
64.736
+ 15.273
- 10.786
Wheat
57.344
60.433
+ 3.089
Cotton
Sorghum
15.274
6.522
10.827
7.718
- 4.447
+ 1.196
Oats
4.168
3.760
Barley
3.452
18 crops 255.398
4.020
259.428
-
0.408
+ 0.568
+ 4.030
Million Acres Planted by Crop
2007
2008
Change
Corn
Soybeans
93.600
64.736
85.889
75.878
- 7.711
+11.142
Wheat
60.433
63.047
+ 2.614
Cotton
Sorghum
10.827
7.718
9.414
8.327
- 1.413
+ 0.609
3.760
3.217
- 0.340
4.020
259.428
4.234
264.740
+ 0.214
+ 5.312
Oats
Barley
18 crops
More planted acres drives up:
Seed prices
Fertilizer prices
Equipment prices
Land prices
U.S. Farmland Values, 1950-2008
USDA/NASS
$/acre
2500
2000
1500
1000
500
06
02
98
94
90
86
82
78
74
70
66
62
58
54
50
0
Impact on livestock
U.S. Corn Usage
Feed
Feed
Exports
Exports
Ethanol
Ethanol
Other
Other
2000 crop
2007 crop
U.S. Feeding of Corn, 2005-06
Beef
Poultry
Hogs
Dairy
Other
Source: PRX ProExporter Network
Cost of Slaughter Hog Production
Iowa State University Calculations, 1987-2009
$ Per Live Cwt
65
60
55
50
45
Marketing Month
Source: John Lawrence, Iowa State University
2009
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
35
1987
40
Breakeven Hog Price & U.S. Corn Price
Iowa State University Calculations, 1990-2008
$ Per Live Cwt
57
52
47
42
Corn Price
5
4.5
4
3.5
3
2.5
2
1.5
37
Hog Price & Cost, 1996-2008
60
hog $
$/cwt live
55
cost
50
45
40
35
2008
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
30
2008 hog prices were $2.60 above the 13 year average
2008 production cost was $13.85 above the 13 year average
Choice Steer Price & Breakeven
$ Per Cwt
S. Plains Cattle Feedlots, Monthly
110
105
100
95
90
85
80
Breakeven
Projected Breakeven
75
2004
2005
Source: LMIC
2006
2007
2008
2009
AVERAGE RETURNS TO CATTLE FEEDERS
Feeding 725 Lb. Steers, S. Plains, Monthly
$ Per Head
250
200
150
100
50
0
-50
-100
-150
-200
-250
1999
2000
Source: LMIC
2001
2002
2003
2004
2005
2006
2007
2008
2009
March 2008 Corn Futures
A dime
increase in
the price of
corn
reduces the
value of
feeder cattle
by $6-9 per
head
January 2008 Feeder Cattle Futures
Forecast Change in Meat Production
Type
Pork
Beef
Chicken
Turkey
All Meats
--Percent Change-2007-08
2008-09
+6.40%
-2.45%
+0.53%
-0.46%
+2.07%
-3.88%
+4.94%
-7.14%
+2.90%
-2.85%
Source: USDA/OCE WASDE, April 2009
Impact on Food Prices
Ethanol’s Impact on Food Prices
Less corn for livestock and more for ethanol
Less food and more fuel
Higher food prices and lower fuel prices
Ethanol’s Impact on Food Prices
Primary
Secondary
Through corn products
Through animal products
Tertiary
Through competitive crops
More corn acres = fewer acres for other crops
Food Marketing Bill
18.7
38.5
8
4
3.5
4.7
3.1
3.51.5
4.3 2.7
Source: USDA/ERS data for 2002
3.6
4
Farm Value
Packaging
Transportation
Fuel & Elec
Pretax Profits
Advertising
Depreciation
Interest
Rent
Repairs
Business Taxes
Other
Labor
Impact on Food Prices
In 2002, the farm value of U.S. consumer
food expenditures was 18.7%. Corn
made up 11.3% of that farm value. Thus,
corn, directly and mostly indirectly,
accounted for 2.1% of consumer food
expenditures.
Impact on Food Prices
Since corn only accounted for 2.1% of
consumer food expenditures, doubling
corn prices should raise the cost of food
by 2.1%; tripling the price of corn should
raise the cost of food by 4.2%.
Over time, the price of a
commodity will equal the cost
of production
U.S. Average Corn Price, 1908-2008
Source: USDA/NASS
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
1908
$ Per Bushel
U.S. Average Corn Price, 1908-2008
$ Per Bushel
1942-1972
1908-1942
30 years
35 years
Avg $1.26
Avg $0.78
Source: USDA/NASS
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
1973-2006
34 years
Avg $2.37
1908
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
U.S. Average Corn Price, 1908-2008
What’s the next level?
$ Per Bushel
1973-2006
34 years
Avg $2.37
1942-1972
1908-1942
30 years
35 years
Avg $1.26
2008
2004
2000
1996
1992
1988
1984
1980
1976
1972
1968
1964
1960
1956
1952
1948
1944
1940
1936
1932
1928
1924
1920
1916
1912
Avg $0.78
1908
5.00
4.50
4.00
3.50
3.00
2.50
2.00
1.50
1.00
0.50
0.00
The 1940s step raised corn price 62%; the 70s step 88%.
A 75% step will take corn to $4.15/bu
3.50
90
3.00
80
2.50
70
2.00
60
1.50
50
1.00
40
Corn
Broilers
30
0.00
20
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
0.50
Source: USDA/NASS
Broiler $
Corn $
U.S. Average Corn & Broiler Price, 1960-1985
U.S. Average Corn & Pork Price, 1960-1985
3.50
200
180
3.00
160
140
120
2.00
100
1.50
80
60
1.00
0.50
Corn
Pork
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
0.00
Source: USDA/NASS
40
20
0
Pork $
Corn $
2.50
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
Corn $
3.50
3
3.00
2.5
2.50
2.00
1.5
1.50
1.00
0.50
Source: USDA/NASS
1
Corn
Beef
0.00
0.5
0
Beef $
U.S. Average Corn & Beef Price, 1960-1985
2
19
60
19
61
19
62
19
63
19
64
19
65
19
66
19
67
19
68
19
69
19
70
19
71
19
72
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
Corn $
3.50
16
3.00
14
2.50
2.00
8
1.50
6
1.00
0.50
Source: USDA/NASS
Corn
Milk
0.00
4
2
0
Milk $
U.S. Average Corn & Milk Price, 1960-1985
12
10
Meat Consumption
U.S. Per Capita Meat Consumption
Retail Weight, 1960-2008
Pounds
240
230
220
210
200
190
180
In 2007, the average American consumed 60
pounds (34%) more meat than in 1960
170
160
05
00
95
90
85
80
75
70
65
60
150
Jan 09
Jan 08
Jan 07
Jan 06
Jan 05
Jan 04
Jan 03
Jan 02
Jan 01
Jan-00
Dollars Per Bushel
U.S. Monthly Average Soybean Price
14
13
12
11
10
9
8
7
6
5
4
$ Per Bu.
500
Soybean Meal Prices
Weekly Average, Illinois, 2007-09
450
400
350
300
250
200
Source: LMIC
r0
9
Ap
Ja
n0
9
ct
08
O
Ju
l0
8
r0
8
Ap
Ja
n0
8
O
ct
07
150
Illinois Monthly Soybean Meal Price
450
350
300
250
200
150
2008
2007
2006
2005
2004
2003
2002
2001
100
2000
Dollars Per Ton
400
Cellulosic Ethanol
Cellulosic Ethanol
Cellulosic ethanol is ethanol made from
cellulose. It is the same as grain ethanol:
C2H5OH. The only difference is the source
material.
The interest in cellulosic ethanol comes from
the huge supply of low-value source material:
Wood – trees, limbs, paper, cardboard
Grass - switchgrass, corn stalks, straw, fescue
Distillers Grains
Cellulosic Ethanol
Producing ethanol from cellulose is something
we’ve known how to do for over 100 years
Doing it in a cost-competitive manner is
something we have yet to learn
However, there are many people seeking
research grants who claim to be close to
solving the cost problem
Cellulosic Ethanol
Challenges of cellulosic ethanol
Feedstock
Purity and consistency
Production process
By products
Feedstock for Cellulosic Ethanol
Cost competitive cellulosic ethanol plants
are not likely to be small or operate part time
Other than wood, most feedstock is bulky,
i.e. costly to haul and store
Harvesting is not cheap
Opportunity cost, i.e. impact on soil
Nutrients
Ground cover
Cellulosic Ethanol
Challenges of cellulosic ethanol
Feedstock
Purity and consistency
Production process
By products
Purity and Consistency of Feedstock
The feedstock for a cellulosic ethanol plant
will not be pure cellulose
collect and move a lot of non-cellulose?
corn is consistently ~70% starch
Cellulosic ethanol plant not likely to work
well on all potential feedstocks
Is there any plentiful, uniform, year-round source
material other than wood (and distillers grain)?
Cellulosic Ethanol
Challenges of cellulosic ethanol
Feedstock
Purity and consistency
Production process
By products
Cellulosic Ethanol Production
Two production methods
Hydrolysis – breaks the cellulose chain into
sugar molecules that are then fermented to
produce ethanol, then distilled
Gasification – ligno-cellulose is transformed into
carbon monoxide and hydrogen which are then
fed to a special fermenter or a catalyst bed to
produce ethanol
Cellulosic Ethanol Production
Two types hydrolysis processes
Chemical
Enzymatic
Cellulosic Ethanol Production
Chemical hydrolysis –
Cellulose is mixed with a mild acid under a lot of
heat and pressure, or a strong acid with less heat
and pressure.
Water is then added to form simple sugars.
The acid is then neutralized.
Sugar is separated from the residual materials.
Yeast is added to ferment ethanol which is then
distilled.
Acid + heat + pressure = $
Cellulosic Ethanol Production
Enzymatic hydrolysis –
Following a pre-treatment process, various
enzymes are used sequentially to break cellulose
into glucose molecules, a la rumen bacteria.
The sugar is separated.
Yeast is added to ferment ethanol which is then
distilled.
Availability and cost of the enzymes are the
primary obstacles to enzymatic hydrolysis
Cellulosic Ethanol Production
Gasification –
The cellulose is partially combusted to yield
carbon monoxide, carbon dioxide and hydrogen.
The microorganism, Clostridium ljungdahlii,
converts the CO, CO2 and H into ethanol and
water.
The ethanol is distilled from the water.
An alternative is to use a catalytic reactor to
convert the synthesis gas into alcohol.
Cellulosic Ethanol
Challenges of cellulosic ethanol
Feedstock
Purity and consistency
Production process
Byproduct
Byproduct
Corn ethanol plants produce a byproduct,
DDGS, that is as valuable as the feedstock
For what price will we be able to sell the
byproduct from cellulosic ethanol plants?
Biodiesel
Biodiesel Production
Typically, a fat or oil is reacted with
alcohol that contains a catalyst
(usually sodium or potassium
hydroxide) to produce glycerine and
methyl esters or biodiesel.
Biodiesel Production
Vegetable Oil
Alcohol
recovery
Methanol + Catalyst
Alcohol
recovery
Reactor
Washing
Settler
Purification
Biodiesel
Neutralization
Settler
Fatty acids
Evaporation
Glycerine
Soydiesel
Although soybean oil is a liquid, you
should not blend it with diesel fuel.
The glycerine in soy oil will ruin a
diesel engine.
Soy oil must be transesterified before
blending with diesel fuel.
Economics of Soydiesel
Soy oil is worth 36¢ per pound
Diesel is worth 22¢ per pound
Cost of conversion is 8¢ per pound
There is a federal government subsidy of
13¢ for each pound of soy oil converted to
diesel fuel
Soybean Oil Futures
Biodiesel
The U.S. produces about 3 billion bushels
of soybeans per year.
At 11.3 pounds of oil per bushel, this is
potentially 33.9 billion pounds of soy oil
At 7.4 pounds per gallon, this is 4.6 billion
gallons of soy oil
Feedstock Costs per Gallon of Biofuel
Reduced by Federal Tax Credit
Corn price
Cost/gallon
of ethanol*
Veg. oil
price
Cost/gallon of
biodiesel**
$4.00/bu.
$1.44
$0.40/lb.
$3.00
$5.00/bu.
$1.80
$0.50/lb.
$3.75
$6.00/bu.
$2.16
$0.60/lb.
$4.50
*Assumes 2.77 gal./bu. of corn
**Assumes 7.5 lbs. veg. oil/gallon
Biofuel Conversion Factors, 2012
Crop yield
per acre
Vegetable
oil yield
Biofuel yield
per unit
Biofuel yield
per acre
Ethanol from
corn
158.6 bu.
2.77 gal/bu
439 gal/ac
Ethanol from
sugarbeets
23 tons
24 gal/ton
552 gal/ac
Biodiesel from
soybean oil
42.8 bu.
11.3 lbs/bu
7.7 lbs/gal
63 gal/ac
Biodiesel from
canola oil
1557 lbs.
0.383 lbs/lb
7.7 lb/gal
77 gal/ac
Crop yields and vegetable oil yields from FAPRI Jan. 2006 baseline for 2012.
Biofuel yields are assumptions from various sources
Need for Both Ethanol and
Animal Agriculture
100 million gallon ethanol plant
37 million bushels of corn
80 workers directly employed
37 million bushels corn
Farrow-finish
Or wean-finish
Or beef feedlot
Direct Jobs
800
242
278
Source: Dr. John Lawrence, Head of ISU Beef Center
Impact of Ethanol
Building lots of ethanol plants
Driving up corn prices
More corn acres
Fewer acres of other crops
Record net farm income
Driving up cash rents and land prices
Driving up livestock production costs
Higher prices for other crops
Less meat, milk and eggs being produced
Lots of DDGS will benefit cattle
New grain storage/shipping patterns
The New Ag Market?
Crude oil drives ethanol prices
Ethanol drives corn prices
Corn drives livestock production
Livestock production drives meat
prices
Impact on Rural
Communities
What Ethanol Plants Need
Corn
Water - roughly 4 gallons of water per gallon
of ethanol
Heat – usually natural gas
Roads & Rails
Some space
Ethanol and Rural Jobs
50 million gallon ethanol plant
18 million bushels of corn
35 workers directly employed
18 million bushels corn
Direct Jobs
Farrow-finish
Wean-finish
Beef feedlot
Source: Dr. John Lawrence, Head of ISU Beef Center
400
121
139
Source: USDA/ERS
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
100
90
80
70
60
50
40
30
20
10
0
1986
Billion $
U.S. Net Farm Income 1986-2007
USDA Farm Payments, 2005-16
25
actual
forecast
Billion $
20
15
10
5
Source: USDA/OCE
2016
2015
2014
2013
2012
2011
2010
2009
2008
2007
2006
2005
0
Impact on Environment
Ethanol: energy gain or loss?
The energy gain from ethanol in new dry milled
plants is above 75%. This is higher than in
the past because of efficiency gains
On the farm
Reduced tillage
In ethanol plants
Faster, higher yielding conversion
Greenhouse Gas Emissions
Corn
Biomass
Gasoline
Ethanol Ethanol
--grams of GHG/MJ of energy-Feedstock
+ 4
+ 24
+ 10
Refining fuel
+15
+ 40
+ 9
Vehicle
+72
+ 71
+ 71
Feedstock Uptake
0
- 62
- 62
Land use change
0
+104
+111
Total
+92
+177
+138
Source: Searchinger, et al, Science, February 29, 2008
Source: Takle & Hofstrand, Iowa State University
Recent EPA Decisions
U.S. corn ethanol has a worse impact on the
environment than gasoline due to land use
impact, i.e. more acres being cropped
Brazilian sugarcane ethanol reduces GHG
emissions by 64% compared to gasoline
Impact on Gas Prices
U.S. Gasoline Usage, 1986-07
160
Billion Gallons
140
120
100
80
60
40
20
Source: U.S. Energy Information Administration
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
0
Ethanol Production, 1980-07
7.0
Billion Gallons
6.0
5.0
4.0
3.0
2.0
1.0
Source: Renewable Fuels Association
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
1984
1982
1980
0.0
Gasoline & Ethanol Production, 1986-07
160
ethanol
Billion Gallons
140
gasoline
120
100
80
60
40
20
Source: U.S. Energy Information Administration
2006
2004
2002
2000
1998
1996
1994
1992
1990
1988
1986
0
U.S. Gasoline Usage
142 billion gallons gasoline used per year
Mandating 10% ethanol in all gasoline would
require that nearly half of the U.S. corn crop
be processed into ethanol
If all U.S. corn were made into ethanol, it
would produce 33 billion gallons per year
To replace all U.S. gasoline would require 78
billion bushels of corn annually
78 Billion Bushels of Corn
Record U.S. corn yield is 160 bu/acre
78 billion bushels at 160 bu/acre would
require 488 million harvested acres of corn
Equals 164% of 2007 U.S. harvested acreage
of corn, soybeans, wheat, sorghum, cotton,
rice, sunflowers, barley, oats, rye, peanuts,
tobacco, canola, sugar beets, sugarcane,
potatoes, dry edible beans, proso millet and
hay combined.
Questions?