Ethanol News

Warts and Ethanol

A new reliance on coal could sap green cred from the ethanol industry By Amanda Griscom Little 26 May 2006-Grist Magazine
As ethanol boosterism spreads far and wide — from Bush’s bully pulpit to the New York Times editorial page to green-group press releases — a quietly emerging trend is threatening to undermine the biofuel’s environmental credibility.

How green is this ethanol plant?

More and more ethanol manufacturers are looking to power their plants with cheap coal instead of its cleaner and increasingly expensive competitor, natural gas, thereby potentially limiting ethanol’s environmental benefits. And the Bush administration is doing its part to accelerate this trend. Under pressure from a group of senators and representatives from corn- and coal-producing states, the U.S. EPA is considering a rule change under the Clean Air Act that would relax pollution regulations on ethanol plants, clearing the way for them to burn coal with fewer restraints.

While only four of roughly 100 ethanol plants currently operating in the U.S. are powered by coal (practically all of the rest are fueled by natural gas), some 190 more are under construction or soon to be built. One energy analyst, Robert McIlvaine, president of the Illinois-based research group McIlvaine Company, predicts that “100 percent” of new ethanol plants built in the U.S. over the next few years will be coal-fired, “largely because of the exorbitant cost of natural gas right now, and the comparatively predictable future supply of homegrown coal.” A recent article in the Christian Science Monitor also points out that many ethanol manufacturers are increasingly being drawn toward coal.

But Nathanael Greene, a renewable-energy expert with Natural Resources Defense Council, doesn’t see such a clear-cut trend. “Less than a quarter of the 16-plus ethanol plants that came online last year were coal-fired, even given current natural-gas prices,” he says. He believes that many ethanol-industry leaders will stick with natural gas or opt for zero-emission renewable fuel sources for their plants in order to protect their much-advertised eco-friendly image and avoid the arduous environmental-review process required for coal-plant construction.

Still, some enviros see cause to worry about a tilt toward coal, particularly because ethanol production in the U.S. is already fossil-fuel intensive. Nearly all of the ethanol on the U.S. market today is derived from corn, which tends to require substantial fossil-fuel inputs to grow, harvest, and process. While the eco-utopian promise of cellulosic ethanol — derived from substances such as switchgrass and woodchips that require comparatively negligible fossil-fuel inputs — lingers on the horizon, cellulosic technology is still in its infancy, years away from widespread use. (MORE)
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A thirsty fuel

June 25, 2006-BY DENNIS LIEN, Pioneer Press. Ethanol from corn requires from 4-5 gallons of water for every gallon of ethanol produced. Photo: © 2006 John Blair
Open less than a year, the Granite Falls, Minn., ethanol plant already is looking for help to quench its thirst for water.

So far, it has been pulling all it needs from an underground aquifer. But with supply dwindling, the plant wants to pipe its water from the nearby Minnesota River.

That the Granite Falls Energy plant could run short of groundwater so soon illustrates a problem faced by a flurry of new and proposed ethanol plants that could quadruple annual ethanol production in Minnesota.

Most have been built or are being proposed for south-central and southwestern Minnesota. While rich in the corn used to make the clean-burning, alternative fuel, those areas are short on another key ingredient — water. Moreover, that water isn’t evenly distributed.

With so many plants on the horizon and water shortages possible, the state is ramping up warnings to companies to be extra careful about choosing where to build. Preventing future groundwater depletion ensures water for homes and businesses.

“We want to make sure people address their water supply before they locate the plant,” said Jim Japs, assistant director of the Minnesota Department of Natural Resources’ division of waters. “If they don’t have enough water, they are not going to be able to operate.”

The push to build these ethanol plants has exploded in the past year.

After gasoline prices skyrocketed last fall, Congress passed an energy bill that set minimum levels of ethanol, which is used primarily as an additive to blend with gasoline, driving the demand for the fuel. (MORE)
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Natural Gas to be used in Mt. Vernon Ethanol plant

Good news for local air quality-Cleaner emissions, ease reasons coal was ruled out By CAROL WERSICH Courier & Press staff writer 464-7452 or Wednesday, June 14, 2006
The $125 million ethanol plant proposed for Posey County will be powered by natural gas, not coal.

David Black, representing the plant developer, Dallas-based ASAlliances Holdings, LP, said natural gas was chosen for its cleaner emissions and because it’s easier to acquire permits for its use.

“We believe the coal technology used in the (ethanol) process is still fairly new,” he said.

Down the road, if the quality of the coal technology improves and permits become easier to get, ASAlliances may use it. For now, ASAlliances is more comfortable with natural gas, Black added.(MORE)
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For Good or Ill, Boom in Ethanol Reshapes Economy of Heartland

© 2006 The New York Times.Ethanol has lots of opportunity but carries a huge level of risk as well. This article was reported by Alexei Barrionuevo, Simon Romero and Michael Janofsky and written by Mr. Barrionuevo.
Dozens of factories that turn corn into the gasoline substitute ethanol are sprouting up across the nation, from Tennessee to Kansas, and California, often in places hundreds of miles away from where corn is grown.

Once considered the green dream of the environmentally sensitive, ethanol has become the province of agricultural giants that have long pressed for its use as fuel, as well as newcomers seeking to cash in on a bonanza.

The modern-day gold rush is driven by a number of factors: generous government subsidies, surging demand for ethanol as a gasoline supplement, a potent blend of farm-state politics and the prospect of generating more than a 100 percent profit in less than two years.

The rush is taking place despite concerns that large-scale diversion of agricultural resources to fuel could result in price increases for food for people and livestock, as well as the transformation of vast preserved areas into farmland.

Even in the small town of Hereford, in the middle of the Texas Panhandle’s cattle country and hundreds of miles from the agricultural heartland, two companies are rushing to build plants to turn corn into fuel.

As a result, Hereford has become a flashpoint in the ethanol boom that is helping to reshape part of rural America’s economic base.

Despite continuing doubts about whether the fuel provides a genuine energy saving, at least 39 new ethanol plants are expected to be completed over the next 9 to 12 months, projects that will push the United States past Brazil as the world’s largest ethanol producer.

The new plants will add 1.4 billion gallons a year, a 30 percent increase over current production of 4.6 billion gallons, according to Dan Basse, president of AgResources, an economic forecasting firm in Chicago. By 2008, analysts predict, ethanol output could reach 8 billion gallons a year.

For all its allure, though, there are hidden risks to the boom. Even as struggling local communities herald the expansion of this ethanol-industrial complex and politicians promote its use as a way to decrease America’s energy dependence on foreign oil, the ethanol phenomenon is creating some unexpected jitters in crucial corners of farm country.

A few agricultural economists and food industry executives are quietly worrying that ethanol, at its current pace of development, could strain food supplies, raise costs for the livestock industry and force the use of marginal farmland in the search for ever more acres to plant corn. (MORE)
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The Biofuel Illusion

By Julia Olmstead, AlterNet. Posted July 7, 2006. The focus on biofuels to solve our energy and climate change crises could have potentially disastrous environmental consequences. Photo ©2006, John Blair
There’s been a lot of talk lately about the promise of biofuels — liquid fuels like ethanol and biodiesel made from plants — to reduce our dependence on oil. Even President Bush beat the biofuel drum in his last State of the Union speech.

Fuel from plants? Sounds pretty good. But before you rush out to buy an E-85 pickup, consider:

— The United States annually consumes more fossil and nuclear energy than all the energy produced in a year by the country’s plant life, including forests and that used for food and fiber, according to figures from the U.S. Department of Energy and David Pimentel, a Cornell University researcher.

— To produce enough corn-based ethanol to meet current U.S. demand for automotive gasoline, we would need to nearly double the amount of land used for harvested crops, plant all of it in corn, year after year, and not eat any of it. Even a greener fuel source like the switchgrass President Bush mentioned, which requires fewer petroleum-based inputs than corn and reduces topsoil losses by growing back each year, could provide only a small fraction of the energy we demand.

— The corn and soybeans that make ethanol and biodiesel take huge quantities of fossil fuel for farm machinery, pesticides and fertilizer. Much of it comes from foreign sources, including some that may not be dependable, such as Russia and countries in the Middle East.

— Corn and soybean production as practiced in the Midwest is ecologically unsustainable. Its effects include massive topsoil erosion, pollution of surface and groundwater with pesticides, and fertilizer runoff that travels down the Mississippi River to deplete oxygen and life from a New Jersey-size portion of the Gulf of Mexico.

— Improving fuel efficiency in cars by just 1 mile per gallon — a gain possible with proper tire inflation — would cut fuel consumption equal to the total amount of ethanol federally mandated for production in 2012.

Rather than chase phantom substitutes for fossil fuels, we should focus on what can immediately both slow our contribution to global climate change and reduce our dependence on oil and other fossil fuels: cutting energy use.

Let’s be bold. Let’s raise the tax on gasoline to encourage consumers to buy fuel-efficient cars and trucks. We can use the proceeds to fund research and subsidies for truly sustainable energy.

Let’s raise energy efficiency standards for vehicles, appliances, industries and new buildings.

Let’s employ new land-use rules and tax incentives to discourage suburban sprawl and encourage dense, mixed-use development that puts workplaces, retail stores and homes within walking distance of each other. Let’s better fund mass transit. (MORE)
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Supermarkets and Service Stations Now Competing for Grain

Lester Brown on Ethanol and Food, July 13, 2006, © 2006 Earth Policy Institute. Photo © 2006 John Blair
Cars, not people, will claim most of the increase in world grain consumption this year. The U.S. Department of Agriculture projects that world grain use will grow by 20 million tons in 2006. Of this, 14 million tons will be used to produce fuel for cars in the United States, leaving only 6 million tons to satisfy the world’s growing food needs.

In agricultural terms, the world appetite for automotive fuel is insatiable. The grain required to fill a 25-gallon SUV gas tank with ethanol will feed one person for a year. The grain to fill the tank every two weeks over a year will feed 26 people.

Investors are jumping on the highly profitable biofuel-bandwagon so fast that hardly a day goes by without another ethanol distillery or biodiesel refinery being announced somewhere in the world. The amount of corn used in U.S. ethanol distilleries has tripled in five years, jumping from 18 million tons in 2001 to an estimated 55 million tons from the 2006 crop.

In some U.S. Corn Belt states, ethanol distilleries are taking over the corn supply. In Iowa, a staggering 55 ethanol plants are operating or have been proposed. Iowa State University economist Bob Wisner observes that if all these plants are built, they would use virtually all the corn grown in Iowa. In South Dakota, a top-ten corn-growing state, ethanol distilleries are already claiming over half of the corn harvest.

With so many distilleries being built, livestock and poultry producers fear there may not be enough corn to produce meat, milk, and eggs. And since the United States supplies 70 percent of world corn exports, corn-importing countries are worried about their supply.

Since almost everything we eat can be converted into fuel for automobiles, including wheat, corn, rice, soybeans, and sugarcane, the line between the food and energy economies is disappearing. Historically, food processors and livestock producers that converted these farm commodities into products for supermarket shelves were the only buyers. Now there is another group, those buying for the ethanol distilleries and biodiesel refineries that supply service stations.

As the price of oil climbs, it becomes increasingly profitable to convert farm commodities into automotive fuel, either ethanol or biodiesel. In effect, the price of oil becomes the support price for food commodities. Whenever the food value of a commodity drops below its fuel value, the market will convert it into fuel.
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Ethanol Fever Cooling Off

August 27, 2006 – by James P. Miller, © 2006 The Chicago Tribune. Despite rising demand for the grain-based gasoline additive and soaring prices, some believe share prices are topping out. Photo © 2006 John Blair
Is the ethanol boom about to run out of gas? Investors may want to consider the possibility.

A recent shortage of the corn-derived gasoline additive, combined with record-high oil prices, has had refiners snapping up every gallon of ethanol they can get their hands on. In the process, they have bid ethanol prices up to record levels, though prices have retreated in the last two weeks.

Wowed by the substantial profits ethanol-makers are hauling in, Wall Street has been joyfully throwing money at companies that produce ethanol, in a style that recalls the heyday of the dot-com era.

The shares of industry leader Archer Daniels Midland Co. have nearly doubled over the past 12 months, for example, as investors cheer the surging profit in the company’s ethanol segment.

But there are signs of froth as well. Pacific Ethanol Inc., a Fresno, Calif., company that is constructing ethanol plants but has yet to produce a drop of product, saw its stock price quadruple over the course of five months this year. Pacific shares have since given up some of their gains, but investors who got in during 2005, including the $84 million buy-in by Microsoft Corp. Chairman Bill Gates, still are way ahead.

The gold-rush mentality also has caused major producers to undertake initial public offerings this summer, sometimes at ambitious valuations, and more producers are hoping to get their own IPOs off the ground soon.

In recent weeks, however, investors have been taking a harder look at the rush to capitalize on ethanol’s promise, and ethanol producers’ shares have come under pressure.

Skeptics contend that the boom has sown the seeds of its own bust. High prices have spurred a wild dash to construct new production plants, they say, and as that additional capacity comes on line, what they see as a price bubble will burst. If that happens, the ethanol industry’s brief fling with vast profit margins will be over. (MORE)
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Ethanol-Is it A-Maze-Ing?

October 3, 2006 Wired Magazine.Does the road to energy independence starts in a cornfield in Nebraska? Is Corn or Cellulose the best feedstock? Venture capitalist Vinod Khosla explains why he’s betting on biofuels. Photo © 2006 by John Blair
It may surprise you to learn that the most promising solution to our nation’s energy crisis begins in the bowels of a waste trough, under the slotted concrete floor of a giant pen that holds 28,000 Angus, Hereford, and Charolais beef cattle. But for some time now, I’ve been searching for a renewable fuel that could realistically replace the 140 billion gallons of gasoline consumed in the US each year. And now I believe the key to producing this fuel starts with cow manure – because this waste powers a facility that turns corn into ethanol.

I’m standing on a grassy hill in the middle of an 880-acre commercial feedlot just outside Mead, Nebraska, which is a long way from my home turf of clean labs and wood-paneled conference rooms in Silicon Valley. In front of me are four open-air cattle sheds. Each is the width of a giant barn and a full half-mile in length. From up here, they look more like jumbo-jet landing strips than animal pens. Beyond the sheds are several hundred acres of cornfields, from which much of the animals’ feed is harvested.

It may look like a typical, if huge, cattle feedlot – but for the glittering white four-story structure below that resembles the Centre Pompidou in Paris. Indeed, until recently this operation just off Mead’s County Road 10 was not unlike any other finishing ground for Nebraska’s beef cattle: a last stop before the abattoir. But starting in November, Oscar Mayer will no longer be the marquee product here. A company called E3 Biofuels is about to fire up the most energy-efficient corn ethanol facility in the country: a $75 million state-of the-art biorefinery and feedlot capable of producing 25 million gallons of ethanol a year. What’s more, it will run on methane gas produced from cow manure. The super-efficient operation capitalizes on a closed loop of resources available here on the prairie – cattle (fed on corn), manure (from the cows), and corn (fed into the ethanol distiller). The output: a potential gusher of renewable, energy-efficient transportation fuel.

Of course, 25 million gallons of ethanol is a drop in the tanker when it comes to our 140 billion-a-year oil habit. And ethanol itself is a subject of controversy for all sorts of reasons. Many of the criticisms, while true in some small ways, are aggressively promoted by the oil lobby and other interested parties in an effort to forestall change. Most are myths. Challenges certainly exist with ethanol, but none are insurmountable, and – with apologies to Al Gore – the convenient truth is that corn ethanol is a crucial first step toward kicking our oil addiction. I believe we can replace most of our gasoline needs in 25 years with biomass from our farmlands and municipal waste, while creating a huge economic boom cycle and a cheaper, cleaner fuel for consumers. (MORE)
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Eastern Indiana awash with ethanol production proposals

October 18, 2006 – by Seth Slabaugh, © Muncie Star Press. ‘Nothing’s stopping this plant’ The nation’s largest ethanol plant builder says competition won’t stop Cardinal Ethanol. Editor’s Note-SW indiana faces the same kind of frenzy. Two ethanol plants are planned for Henderson County, KY and two more are planned for Posey County, IN. There is a significant question where all that corn will come from. Photo © 2006 John Blair
WINCHESTER — The Andersons Inc. began site work last month for an ethanol plant in Greenville, Ohio — one county east of here.

U.S. Ethanol Holdings LLC last month announced plans to build an ethanol plant north of Muncie — one county west of here.

Premier Ethanol two months ago began construction of an ethanol plant after a ground-breaking ceremony in Portland — one county north of here.

Lt. Gov. Becky Skillman this week attended a ground-breaking ceremony for the Hartford Bio-Energy ethanol plant in Hartford City — one county northwest of here.

And those aren’t the only ethanol plants either under construction or planned in this region of the state.

With all of that competition, what are the chances that the Cardinal Ethanol plant will be built along Ind. 32 five miles east of Winchester?

“Nothing’s stopping this plant,” Ron Fagen, the nation’s leading ethanol-refinery designer and builder, said in an interview after a ground-breaking ceremony Tuesday for Cardinal Ethanol, a $150 million project.

“They’ve got a good business plan, a good location and a lot of equity,” said Fagen, president of Granite Falls, Minn.-based Fagen Inc. “Equity’s a big deal. It makes it more bulletproof.”

About 200 Cardinal Ethanol founders, directors and investors joined public officials at Tuesday’s ceremony, at which Fagen, Gov. Mitch Daniels and state Rep. Bill Davis, R-Portland, spoke.

The Cardinal Ethanol project stands out because it’s “farmer owned, locally owned,” Fagen told the crowd.

“All of a sudden, outside investors started getting into this business,” he said. “These other guys are building these plants … with 10, 15, 20-percent equity. They’re highly leveraged.”

Cardinal Ethanol, the state’s only grassroots ethanol project, closed its equity drive last month after selling subscriptions to more than 1,000 investors, exceeding its goal of raising at least 45 percent of the project’s cost from investors.(MORE)
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Distillery demand for grain to fuel cars is vastly underestimated

January, 2007 – © Lester R. Brown, Earth policy Institute. World May Be Facing Highest Grain Prices in History
Investment in fuel ethanol distilleries has soared since the late-2005 oil price hikes, but data collection in this fast-changing sector has fallen behind. Because of inadequate data collection on the number of new plants under construction, the quantity of grain that will be needed for fuel ethanol distilleries has been vastly understated. Farmers, feeders, food processors, ethanol investors, and grain-importing countries are basing decisions on incomplete data.

The U.S. Department of Agriculture (USDA) projects that distilleries will require only 60 million tons of corn from the 2008 harvest. But here at the Earth Policy Institute (EPI), we estimate that distilleries will need 139 million tons—more than twice as much. If the EPI estimate is at all close to the mark, the emerging competition between cars and people for grain will likely drive world grain prices to levels never seen before. The key questions are: How high will grain prices rise? When will the crunch come? And what will be the worldwide effect of rising food prices?

One reason for the low USDA projection is that it was released in February 2006, well before the effect of surging oil prices on investment in fuel ethanol distilleries was fully apparent. Beyond this, USDA relies heavily on the Renewable Fuels Association (RFA), a trade group, for data on ethanol distilleries under construction, but the RFA data have lagged behind movement in the industry.

We drew on four firms that collect and publish data on U.S. ethanol distilleries under construction. RFA is the one most frequently cited. The other three firms are Europe-based F.O. Licht, the publisher of World Ethanol and Biofuels Report; BBI International, which publishes Ethanol Producer Magazine; and the American Coalition for Ethanol (ACE), publisher of Ethanol Today. (MORE)
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The darker side of ethanol

August 28, 2007-by Rob Schneider, in the Indianapolis Star. As plans pop up for biofuel plants, neighbors argue they aren’t so green. several are planned for the tri-state including three in Posey County, and two each in Henderson and Daviess Counties in Kentucky.
In rural eastern Indiana, where corn-seed markers dot the roadside, a number of homemade white signs with electric-red letters have started popping up offering another message: “No Ethanol.”

The signs can be found along a small Delaware County road, easily missed if you blink while driving on Ind. 3 to the bucolic community of Shideler, population 3,000, eight miles north of Muncie.

There, homeowners such as Keith and Michelle Beaty say they face the darker side of the renewable fuel ethanol, one that threatens to upend the kind of life that drew them to their home of 10 years.

Concerned about pollution, traffic and, ultimately, declining property values, the Beatys and their neighbors have filed a lawsuit to try to block construction of an ethanol plant in Shideler.
The 100-acre plant would loom over the countryside. Trucks would enter and leave 24 hours a day. Smoke rising from a stack would carry chemicals that pollute the air even as the plant produces a cleaner-burning alternative to gasoline.

“If they build it, I won’t live here,” said Keith Beaty, 40, twisting a line from the movie “Field of Dreams.”

A similar scenario is playing out near New Castle, in Henry County. And the same kind of court challenges are taking place in Illinois and Wisconsin, where corn figures prominently in the state economy.

In many cases, the plants are pitting the desire for new jobs and a strong market for corn farmers in struggling rural areas against the desire to protect the country lifestyle many residents love. (MORE)
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