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By Robert Rapier on Sep 15, 2009 with no responses

Corn Ethanol Breakthrough?

I just read an interesting story from Reuters courtesy of a reader:

UK technology could turn U.S. ethanol industry green

DUNSFOLD PARK, England (Reuters) – A compost bacteria bred by a British company could be set to transform both the profitability and environmental credentials of the U.S. ethanol industry.

“The application of our technology results in the greening of corn ethanol,” Hamish Curran, chief executive officer of TMO Renewables Ltd said in an interview on Tuesday.

OK, I am listening. Just to reiterate, I don’t think the political support in the U.S. for corn ethanol is ever going to go away, so I would certainly like to see it “green up.” Despite sometimes being viewed as simply “anti-ethanol”, this has been my position for years. (See here or here). So I am certainly interested in technologies that can improve ethanol’s energy balance.

Incidentally, as I frequently do when I hear about a “new” technology, I dug back in my G-mail to see if I had any references to it. I have over 10,000 G-mails archived, so sometimes it is hard to recall if I have e-mails regarding a specific technology. In fact, I have exchanged about a dozen e-mails about TMO Renewables over the past 2 years. I even had some questions answered by their Technical Director over costs and ethanol tolerance of the microbes.

Continuing:

Curran said the TMO technology uses a by-product of the U.S. corn ethanol industry, distillers’ grains (DDGS), converting it into additional ethanol and boosting production levels by about 15 percent.

He said U.S. corn ethanol plants also currently use large amount of energy drying the DDGS before selling it as fodder for livestock.

The TMO process uses the material while still wet, allowing substantial energy savings as well as additional output, raising profit margins by 50 to 60 percent, he said.

Therein lies a potential accounting problem that could result in a conclusion of no greenhouse gas savings. The current energy balances for corn ethanol (the “official” balances calculated by the GREET model, which the U.S. government relies on) already use the DDGS to help improve ethanol’s energy balance. If they consume the DDGS in the process, they may run into a problem based on the way we have historically calculated the energy balances.

Consider this example (for illustrative purposes only, but not far off from the 2004 USDA report on ethanol’s energy balance). Let’s say I put 100 BTUs of fossil fuel into my ethanol production process. In the process, I make 110 BTUs of ethanol and some quantity of DDGS. The way the USDA has accounted for the energy balance is that they assign some quantity of the energy inputs to the DDGS. For instance, let’s say I allocate 45 BTUs of the energy inputs to the DDGS. That leaves 55 BTUs for the ethanol, and voila, my energy balance for ethanol is 2/1 (110 BTUs out/55 BTUs in).

So we now lose the ability to allocate energy inputs to the DDGS because we are now using DDGS to produce ethanol. While the “true” energy return might indeed be better, the previous accounting method may not reflect that because we can no longer split those energy inputs.

Now the energy return might look something like this. If we can produce an additional 15% ethanol in our previous example, we now might have something like 130 BTUs of ethanol out and 100 BTUs of fossil fuel in (in fact there would be additional BTUs needed to distill the new ethanol production, but savings from not having to dry the DDGS). All of the energy inputs get allocated to ethanol now, and even if we presume a generous 25% savings on energy inputs due to not having to dry the DDGS, the prior accounting method that USDA has used may show a drop in the energy return (unless they again change the accounting method). This could result in little or no calculated greenhouse gas savings (since earlier savings were based on the earlier accounting method), and thus no “greening” credit.

This is not to say that this new bacteria may not be well worthwhile. But some people have gotten quite creative with ethanol accounting by using DDGS, and we have long heard how wonderful DDGS is and how it helps out with the ethanol story. This new bacteria may giveth, but it also taketh away a story that the ethanol lobby has come to rely heavily upon.