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By Robert Rapier on Apr 17, 2010 with 82 responses

Ethanol Lobby Concerned Over Misinformation

Last week the Renewable Fuels Association (RFA) issued a press release in which they complained of “exaggerations” and “false information” related to claims by Brazil’s ethanol industry:

“Fuzzy Math” and Brazilian Ethanol: The Numbers Don’t Add Up

(April 15, 2010) Washington – In its newly launched public relations campaign, the Brazilian ethanol industry (UNICA) is making exaggerated and in some cases false claims about the benefits of its product over American ethanol. Most glaringly, Brazil asserts its product is always cheaper than that of the U.S. This is simply not true. A comparison of recent ethanol prices clearly shows that E10 (10% ethanol/90% gasoline) made with American ethanol would be 7 cents less at the retail level than E10 made with imported Brazilian ethanol.

If you have spent much time following the RFA, the irony of their press release is almost beyond words. The pot and kettle comparison comes to mind, but seems a bit weak given the RFA’s own claims. More on that in a bit.

“The back-of-the-napkin price comparisons on the “Economic Advantages” section of UNICA’s new web site are quite deceptive and disingenuous,” Cooper said. “By omitting the last 16 months of ethanol pricing data, UNICA is providing readers with the false sense that Brazilian cane ethanol is always cheaper than U.S. grain ethanol. As real data from the market clearly shows, U.S. corn ethanol has been considerably cheaper than Brazilian ethanol for most of the last year – a fact UNICA has apparently intentionally ignored.”

Let’s take that claim first. It is in fact true that today, corn ethanol is selling for less than sugarcane ethanol. But before we take today as representative of the future, one may want to ask why that is. The reason is that corn prices are presently moderate, but also because natural gas supplies are viewed to be ample due to lots of shale gas discoveries. These discoveries have had a moderating affect on gas prices. A couple of years ago when gas prices shot up, it was killing the corn ethanol crowd. Multiple corn ethanol companies cited high gas prices when they filed for bankruptcy:

Pacific Ethanol Files for Bankruptcy and Seeks DIP Financing From Its Prepetition Lenders

Pacific Ethanol, like other ethanol producers that filed for bankruptcy before it, was adversely affected by volatility in corn, natural gas and ethanol prices.

This, you see, is corn ethanol’s dirty little fossil fuel secret. They can claim to be competitive right now because the fossil fuel they are most reliant upon is far below the highs of previous years. They should send a great big thank you note to the natural gas industry for enabling them to be competitive just now.

However, this points to another issue. Corn ethanol prices are closely tied to two commodities: Corn and natural gas. Presently the prices of both are favorable for corn ethanol economics. Sugarcane ethanol is primarily tied to the price of one commodity: Sugar. And over the past year, sugar prices have been extremely high. (As stated before, the sugar industry uses bagasse for power, and is thus not subject to the volatility of the natural gas market).

So then the question becomes whether volatility will be worse in the future on ethanol that is tied to two commodities, or ethanol that is tied to one commodity. It may be that sugar prices are higher from now on, and that sugarcane ethanol’s cost advantage has forever disappeared. But my bet is that as fossil fuel supplies deplete, the corn ethanol industry is going to struggle with high natural gas prices, and we will look back on the present situation as an anomaly.

Back to the RFA’s press release. I have searched for their debunking of fellow corn ethanol lobbying organization (there seem to be quite a few of those) Growth Energy’s recent ad campaign:

Ethanol group launches $2.5 million TV ad buy

“It’s a multi-million dollar campaign to get the facts to the people who have only heard one side of the story until now,” said Tom Buis, CEO of Growth Energy, at a press conference Monday. “We are going on offense and we are going to tell the real story.”

Come on, Tom. One side of the story? Nobody, anywhere can say anything about corn ethanol without you guys going on the offensive and putting out the sort of misinformation in this ad. For example:

One of the spots, titled “America’s Sensible Fuel,” notes “ethanol has contributed $0 to the governments of Iran, Saudi Arabia and Venezuela,” while a separate spot called “America’s Peace Fuel” notes “no wars have ever been fought over ethanol.”

So then have your trucks and tractors been converted such that they no longer use petroleum? Further, doesn’t a lot of oil go into making the vehicles (tires, plastics, paints, etc.)? It isn’t an exaggeration to say that $0 has gone from your industry to Saudia Arabia, it is factually incorrect. Of course the U.S. doesn’t import oil at all from Iran, so you are right on that point. No U.S. oil refinery uses Iranian oil either. But you should probably do some fact-checking before you spend $2.5 million to make factually incorrect statements.

So the RFA seems to have overlooked this one, but how about their own claims? Let’s look at their page:

Ethanol Facts: Energy Security

There is a lot of misinformation on the page, but this is probably the most egregious:

FACT: The production and use of 9 billion gallons of ethanol in 2008 displaced the need for 321.4 million barrels of oil.  It also saved American consumers and taxpayers $32 billion, an average of more than $87 million a day.

Your source on this is John Urbanchek, a consultant to the ethanol industry. You pay him, and he gives you answers that you like. The claim here is that 9 billion gallons of ethanol – 214 million barrels (but with an energy content equivalent to 118 million barrels of oil) somehow magically displaced 321 million barrels of crude oil. Of course as I have pointed out, Mr. Urbanchek’s funny math breaks down when you look at the actual data on oil imports. Mr. Urbanchek’s answer simply does not jive with reality. Yet here you are touting this absurd conclusion, while complaining about misinformation from another organization.

Misinformation indeed. I think the RFA should get their own house in order before accusing someone else of misinformation. I know the nature of lobbies is to present the most one-sided story you possibly can, but then understand that this makes you look especially hypocritical when you start hurling accusations at others.

  1. By Dave Swenson on April 17, 2010 at 10:18 pm

    As I’ve written before, both Growth Energy and RFA will use any number of ostensibly research-based shotgun blasts at their critics. Not only do they continue the canard that you mention of multiplying the energy equivalent of 118 million barrels into 321 barrels, they are also claiming incredible job losses in the grain industries and the ethanol industries were the import tariff removed. Again, their mis-estimates on job consequences are off by a factor of eight or more. The magnitude of misinformation is mind-boggling, yet politicians and the incurious seem to buy their claims time after time.

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  2. By Benny BND Cole on April 17, 2010 at 10:19 pm

    Well, it’s a free country, and lobbyists and trade groups (and political groups) can make claims, no matter how specious. It is annoying that so many groups feel no compunction about even the most ludicrous of claims, or no affinity for the greater national interest.
    Sugar prices have recently been whacked in half, so we may see cheaper sugar ethanol in the future. And, as RR points out, natural gas prices and corn prices have been moderate, helping reduce ethanol prices.
    I am not sure natural gas will become more expensive in the future. The science and engineering of shale gas is improving. Claims are being made about reducing shale gas development costs going forward, down to levels formerly associated with “conventional” natural gas. Global supplies of natural gas seem centuries from being strained.
    Corn? I know nothing, but US corn farmers seem to be able to glut any market.
    But hoping for not one, but two strokes of luck (both natural gas and corn prices stay low) seems a bit of a stretch for a national energy policy.
    The feds should not pick winners.
    I agree that that government has a role to promote a cleaner environment (the free market completely fails at this), and to reduce critical imports from oil thug states.
    A heavy tax on imported oil, or a heavy gasoline tax, plus hefty subsidies for clean cars and trucks (especially PHEVs) would go a long way to achieving those ends, without directly picking winners.
    I am confident the technology already exists for us to obtain higher living standards and cleaner air, even while radically reducing imported oil.
    PHEVs, CNG and methanol all strike me as wonderful technologies. I saw an LPG car today. The sad thing is we have the ethanol lobby battling any options.
    And farm states rarely, if ever, lose a subsidy. Who knows, someday we may be forced to pay the corn and ethanol industries not to distill ethanol, just as we now pay some “farmers” not to grow tobacco.

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  3. By Rufus on April 18, 2010 at 12:58 am

    First, Urbanchek’s numbers are nonsense. No argument.

    The “Emerging” world is getting richer, and sugar is, mostly, grown in two counties (Brazil, and India) with very strange financial/import export systems. The odds are on the cost of sugar rising.

    Corn is steadily increasing in Yield. In 2007 the yield was 150 bu/acre. This year it was 165 bu/acre. I imagine corn will be between $3.50 – $4.00 bushel more often than not.

    In 2012 Poet will begin running their 125 Million gpy (25 mgpy cellulosic, 100 mgpy corn) Scotland, SD facility almost entirely on lignin. Other plants will follow. In fact some, like Chippewa Valley, and Corn Plus, to name a couple, are already using large amounts of biotic substances for power.

    For these reasons, and a few others, I just don’t think Brazil will ever be a large threat to Corn Ethanol.

    I vote to end the blenders credit, and tariffs. Then, we’ll see.

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  4. By Kit P on April 18, 2010 at 10:31 am

    “The feds should not pick winners.”

     

    Read the 2005 Energy Bill. The fed did
    not pick winners. Many options were supported is just that corn
    ethanol responded faster to capture the market. The same for wind in
    Texas and the PNW. The southeast is hot on nuclear power and
    biomass. For those with long memories, you will know that these
    technologies had a head start in the those areas.

     

    If you look at places that demanded
    incentives but failed to capture much market, it is because they are
    business unfriendly. California comes to mind.

     

    The feds fired the starting pistol but
    the winners are determined by those who were ready to run the race.

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  5. By Rufus on April 18, 2010 at 11:52 am

    Well said, Kit.

    Actually, it’s Poet’s “Emmetsburg” plant that will be refitted for “cellulosic,” and Corn.

    Scotland is their hq, and where they have their pilot plant.

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  6. By paul-n on April 18, 2010 at 12:13 pm

    the winners are determined by those who were ready to run the race

    There is no question that the ethanol lobby, by far, has been the most organised competitor in this race.  The fact that they have engaged in some (very) creative marketing should not be a surprise, though it is a disappointment.    They have also directed almost off their “marketing” to people and politicians about the importance of ethanol as an industry, and very little to fuel consumers about ethanol as a fuel (i.e. there has been relatively little marketing of E85, by the ethanol lobby).  But this is not really that surprising either- they realised their best chance for success was to get the government on their side, before the consumers, and, so far it has worked, very well.

    It is too bad that success in the alternative fuels/energy race is in large part determined by who does best with government, rather than who does best in the market, as there are some very good technologies (e.g. methanol) that may be left behind for this reason.  

    All that said, there are standards, of sorts, about truth in advertising, and the ethanol industry is not exempt from those, and if they have crossed the lines, then they should be held accountable.  Who will do that is a whole different question,  RR’s post here is a start, will be interesting to see what their response is.

     

     

     

     

     

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  7. By K Cozeman on April 18, 2010 at 12:42 pm

    To hear an ex oil company employee like Rapier exclaim, “You pay him, and he gives you answers that you like” is hilarious. You would know Robert. The height of the double standards that pervade your blog.

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  8. By Rufus on April 18, 2010 at 12:49 pm

    You want to see how far out of the hands of the ethanol refiners the market is?

    Ethanol Rack Rates for April 15, 2010

    http://e85vehicles.com/e85/ind…..l#msg24342

    The surrounding states of Ms, Tn, and Ga are about $1.74.

    Al is $2.54

    Tx is $0.75 less than the next door state of Louisiana.

    This is a nascent industry, folks.

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  9. By takchess on April 18, 2010 at 1:05 pm

    A comment, I’d like to apply to this and your last post. The US should promote the energy businesses with in the US be they wind, geothermal, hydro, conservation, solar, nuclear, coal, biofuel, natural gas or petroleum. I know that the biofuels, at the moment, are not extremely meaningful in terms of energy self sufficiency but it is important to strive to have a bigger piece of this pie.

    We will eventually work out all the false claims and puffery and measure them against the pros and cons of various energy sources.

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  10. By paul-n on April 18, 2010 at 1:21 pm

    Rufus, with respect, ethanol is not a nascent industry, it has been around for 30 yrs, and has been a major fuel industry for the last decade.  Last year, it produced 10bn gallons, making it (at least) a $15bn industry.  I would hardly call that nascent.  What I would call nascent is their distribution, since it has not prevented these large price variations.

    It is in the interest of any industry to ensure their customers can get their product without being overcharged along the way.  The ethanol industry needs to spend some effort on it’s distribution – of they rely on the oil industry to do so, then they get what they get.

    By way of example, if they did a deal with Wal-Mart, to supply neat ethanol to their gas bars, which is then blended on the spot for E10 and/or E85, I’ll bet they would have the same supply price in all those states you mentioned.  And I’d also bet that Wal Mart would be happy to claim the tax credit, rather than the oil companies.  And maybe, in true Wal-Mart style, they would pass that saving on to their customers.  You would see a lot more E-85 being sold if that was the case.

     

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  11. By rrapier on April 18, 2010 at 1:40 pm

    To hear an ex oil company employee like Rapier exclaim, “You pay him, and he gives you answers that you like” is hilarious. You would know Robert. The height of the double standards that pervade your blog.

    Ah, the anonymous drive-by smear. Got to love them. No substance at all. Does not address the article at all. Just a smear.

    If you are ever interested in hanging around to detail some of these double-standards, I would be happy to take you on. I was never paid by the oil industry to write anything. Urbanchek is certainly paid to come up with positive answers for the ethanol industry, and this absurdity shows that he is willing to sacrifice credibility in order to so.

    RR

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  12. By rrapier on April 18, 2010 at 1:49 pm

    Kit: Read the 2005 Energy Bill. The fed did not pick winners.

    You are wrong about that. First, we have plenty of legislation in addition to the 2005 Energy Bill that has singled out the technologies the Fed thought would make it. The Fed has picked technology winners again and again. They do so by very narrowly defining which biofuels can receive various credits.

    A specific example for you. Biodiesel made from soybean oil using methanol in the reaction qualified for the full subsidy. Renewable diesel via hydrocracking – with a better energy return and a superior co-product in propane – was specifically excluded in a case where ConocoPhillips was jointly developing it with Tyson Foods. Congress said “No subsidies for oil companies” and specifically denied them that tax credit.

    That is picking technology winners. You are stacking the deck away from one alternative technology toward another.

    RR

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  13. By Rufus on April 18, 2010 at 2:16 pm

    Paul, I remember I started paying attention to ethanol in 2005 when I became aware that Global Oil Production had plateaud out. At that time the “big talk” was that ethanol would be able to produce enough product to replace MTBE in a couple of years. That was about 190,000 bpd, IIRC. I don’t remember exactly, but I think it was 2006 that they achieved that goal.

    Now, 4 years later, they’ve built enough refineries to be producing 818,000 bpd. (the average refinery turns out about 4,000 bpd, I think.)

    In the meantime, they’ve had a once in a generation flood in the Midwest that caused some really dumb traders to run the price of corn to the moon (only to have it crash back to earth once it became obvious to those speculators that have never seen a farm that you lose crops to “drought,” not water,) Multiple bankruptcies from rookie operators that, likewise, had no clue about farming, and shorted corn all the way to the “Top,” and Then Locked-In, and, an incredibly brilliant campaign put against them by an Unholy Alliance of Oil Companies, Livestock Producers, Food Processors (that just loved that “subsidized $2.00 corn,) and faux-environmentalists, financed the the former Conspirators.

    All the time trying to learn how to run ethanol plants. They been bizzy.

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  14. By John Walker on April 18, 2010 at 3:58 pm

     

    regarding your observation:

     ”The claim here is that 9 billion gallons of ethanol – 214 million barrels (but with an energy content equivalent to 118 million barrels of oil) somehow magically displaced 321 million barrels of crude oil.”

     

        214 million barrels of ethanol does NOT have the energy content of 118 million barrels of oil.  Heat value (low) of ethanol 75,700 BTUs per gal, gasoline 115,000 BTUs per gal.  THe ratio is .658, not the .617 (118/214) you used.

     

     In your calculations you didn’t consider that only .81 gallon of gas is refined from 1 gallon of crude. And the energy content ratio you used was wrong but more important is thatt the energy content is not applicables here as ethanol is blended at 6% to 10% and the difference in mpg is sllight at that blend level ..so using the Heat Value ratio is not valid.

     

    My calculations:

     NOTE:     1)  for every gallon of crude you get .81 gallons of refined crude. (Wang, Argonne National Laboratory)

                    2) Energy content is not relevant here as almost all the ethanol used is blended at about 6% to 10% by volume.  The difference in mpg is varies from -2% to +1% depending upon the car its used in.  The net effect is barely measureable. 

     

     Now, using 9 billion gallons (2008: 9,236,934,000 gallons) of ethanol, first, note that for every gallon of crude you get .81 gallon of gasoline refined.

      So, 9/.81 = 11.1 billion, divide by 42 = 264,550,265.  This is NOT the 321 million barrels they came up with. How did they come up with this figure. 

     Interestingly enough, the gallons of ethanol produced in 2009 was 10,758,264,000.  Performing the same calculations as above gets you 316 million barrels.  Could someone have been working with a rounded 2009 figure? 

     

      But if you use the 2008 figures correctly computed you arrive at 264,550,265 barrels of crude displaced.

     

     

     
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  15. By Rufus on April 18, 2010 at 5:11 pm

    John, I can’t let you get away with One thing. Cars get about 20% less mileage on ethanol. Just because you cut it down to a 10% blend, and reduce the loss to 2% per blended gallon doesn’t mean the “20% loss per gallon” isn’t there.

    As a result, you have to subtract about 53,000,000 barrels from your 2008 numbers. The Good news is we have some much better engines “on the way.”

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  16. By Oxymaven on April 19, 2010 at 8:39 am

    I’ve no problem with any advocacy group making any kind of claim about the benefits of their product since I’ve long since learned to view those claims with great suspicion. What is scary is that the politicians and agency leadership (mostly USDA, but also DoE in the Bush era ) seem to actually believe the claims, and make little effort to understand what the facts are. Politicians like Sen Grassley of Iowa often just parrot RFA talking points and repeat the same exaggerations / distortions – that is one of the reasons why our national energy policy gets so screwed up – people who vote on billions of dollars of subsidies and grants actually believe some of the nonsense. USDA and DoE (and EPA) should be very active in analyzing these kinds of advocacy group claims and informing the public about what is real and what is no but usually they seem to stay silent on the sidelines. What is also very scary is that we’ve been discussing these same issues for about 5 yrs. There are a lot of complicated factors with biofuels, like life cycle GHG assessments, sustainability etc that need a lot more analysis and discussion, but basic issues like this – energy security and job creation – are not anywhere near as complicated, can be readily quantified, and we shouldn’t have to waste time in valuable forums like this debating them yet again.

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  17. By Wendell Mercantile on April 19, 2010 at 9:38 am

    What is scary is that the politicians seem to actually believe the claims, and make little effort to understand what the facts are.

    Oxymaven,

    It’s not even a case of them believing. I’m sure most — not all, but most — of the poltiicos are smart enough that they don’t really believe most the claims. What it is is politics — pure and simple: Twenty-one farm states and 42 farm state senators looking out for their constituents, and all the backroom deals and political huggery-muggery that comes with that.

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  18. By Kit P on April 19, 2010 at 10:44 am

    “Twenty-one farm states and 42 farm
    state senators looking out for their constituents, ..”

     

    That is there job Wendell. It would be
    nice if the senators from the left coast and New England would focus
    on ensuring an adequate supply of energy instead of telling other how
    not to do something.

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  19. By Wendell Mercantile on April 19, 2010 at 11:14 am

    That’s what I said Kit P. — it’s all political. It’s their job whether what is good for their constituents (in this case King Corn) artificially distorts or has consequences in the rest of the country or not. I live in one of the 21 farm states and we — for the most part — have perfectly sensible and pragmatic politicians who go all loopy whenever it comes to a Farm Bill, corn ethanol, or King Corn.

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  20. By Kit P on April 19, 2010 at 11:40 am

    “it’s all political”

     

    So what? We live in democratic
    republic. This form of government seems to work pretty well compared
    to the other types. The question is the overall energy policy
    satisfactory? Wendell you make a very weak case on corn ethanol. I
    know you do not like it but I have yet to hear why.

     

    I have lots of opportunity to study
    energy policy of different states. Count your blessing that you do
    not live in California or New York. Of course maybe Wendell would
    like politics there because they do not much done except finger
    pointing at those who do get things done.

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  21. By rrapier on April 19, 2010 at 11:50 am

    214 million barrels of ethanol does NOT have the energy content of 118 million barrels of oil.

    It most certainly does. Ethanol is 76,000 BTU/gal, crude oil is 5.8 MMBTU/barrel = 138,000 BTU/gal. So your first claim is demonstrably wrong.

    Heat value (low) of ethanol 75,700 BTUs per gal, gasoline 115,000 BTUs per gal. THe ratio is .658, not the .617 (118/214) you used.

    John, there are multiple problems with your assumptions and calculations. The claim was based on “barrels of imported oil displaced.” That’s your biggest problem; you also said “oil” and then used just gasoline’s energy content.

    In your calculations you didn’t consider that only .81 gallon of gas is refined from 1 gallon of crude.

    Again, the claim was barrels of oil.

    Now, using 9 billion gallons (2008: 9,236,934,000 gallons) of ethanol, first, note that for every gallon of crude you get .81 gallon of gasoline refined.

    Wrong again. You get about 0.45 gallons of gasoline from a gallon of crude. The rest of the products (like heating oil, diesel, and jet fuel) add up to more than 0.55 gallons because of refinery processing gain:

    Breakdown of Products from a Barrel of Oil

    So once again, the original claim is grossly in error. The number is what I said it was.

    Performing the same calculations as above gets you 316 million

    barrels.  Could someone have been working with a rounded 2009 figure?

    As noted, that is in error. So perhaps it isn’t that they were working with 2009 numbers, perhaps they were just in a rush to please the ethanol industry that hired them, but really got creative with their calculations. No matter how you slice it, the numbers are wrong and the ethanol lobbying has touted them since they were released. So it is hypocritical for them to criticize another lobby over “misinformation.”

     

    RR

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  22. By Benny BND Cole on April 19, 2010 at 1:43 pm

    OT, but a little related, as we have been discussing ethanol, and opportunity costs.
    “World’s biggest gas exporters meet to cut glut”
    This is a headline today. That’s natural gas.
    So, here we are in 2010, deep into the putative era of “Peal Oil,” and we have OPEC willfully cutting production by 4 mbd to prop up prices, and natural gas nations looking to somehow cut production as well.
    This, despite the fact that many major oil-producing nations–Iran, Iraq, Mexico, Venezuela, Libya, Nigeria–are so corrupt or poorly managed that their production is artifically low. Indeed, with the exception of Canada and Norway, it is hard to think of an oil-exporting nation that is hitting its potential.
    Almost all are crimping production, either through plan (OPEC) or curddy management (Mexico, Venezuela, Nigeria etal).
    Goign to ethanol, when there may be perennial and domestic gluts of natural gas, strikes me as a poor, non-market choice.

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  23. By Rufus on April 19, 2010 at 3:08 pm

    The world is what it is, Benny. BTW, Norway is in serious decline, and Canada’s conventional oil production is declining. Another little factoid: Canada “Imports” a Million Barrels of Oil/Day (mostly from N. Africa,) and, no one I’ve ever read believes that, in the “Real” World, either Mexico, or Venezuela will ever stop their decline. Now, Brazil seems to be becoming a little more cautious on their Deep Water prospects.

    Our own “Deep Water” projects aren’t doing nearly as well as projected with both Thunder Horse, and Neptune producing well below expectations.

    The DOD “Joint Operating Environment” Report says Global Oil Production falls off a cliff in 2012, and we could be looking at Shortages of as much as 10 Million bpd by 2015.

    Time is short, Benny. I’ve read about the Great Depression, and my father lived it. It’s Not a pretty story.

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  24. By takchess on April 19, 2010 at 3:40 pm

    I thought this was an interesting example regarding Energy Statistics and Numbers being confusing . This link applies to Oil Reserves which looks great at face value .

    http://scarcewhales.blogspot.c…..-wait.html

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  25. By Wendell Mercantile on April 19, 2010 at 3:44 pm

    Not a pretty story.

    Rufus~

    I thought you were going to build a still in your garage and become self-sufficient with respect to liquid motor fuels?

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  26. By Rufus on April 19, 2010 at 4:56 pm

    I’m still studying, Wendell. I really want to use cellulosic feedstock (I figure I can get those for free.) I’ll probably get moving a little faster when gasoline goes back over $3.50. :)

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  27. By Wendell Mercantile on April 19, 2010 at 4:59 pm

    If you are going to use cellulosic stock, better to go the gasifier > syngas > methanol route, than spinning your wheels trying to break down the cellulose into something you can ferment and turn into ethyl alcohol.

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  28. By Rufus on April 19, 2010 at 5:21 pm

    Don’t you ever read, Wendell? Novozymes, and Dupont-Danisco have just quite possibly driven the stake into the heart of the gasifiers.

    I don’t know why you hate ethanol so much, but it’s clearly affected your reasoning.

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  29. By Wendell Mercantile on April 19, 2010 at 5:42 pm

    Don’t you ever read…

    Point me in the right direction and I’ll be happy to read about them.

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  30. By Rufus on April 19, 2010 at 6:22 pm

    Jeez, Son; we’ve covered this at great length on this blog. Just google Novozymes, or DDCE, Dupont-Danisco, Poet Project Liberty, Genera (Vonore, Tn,) to name a couple of topics.

    Also, Inbicon, Butalco, and Dong Energy

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  31. By paul-n on April 19, 2010 at 6:45 pm

    Rufus,

     They have just opened their “pilot” plant, and expect to have “full scale commercial production by 2012″.  So this represents the first real move from bench scale to something larger – the same step where many promising technologies stumble.  Let’s hope that their system works, and is economic, but for now, they are at the starting line to prove that, not the finish.  

    As for gasification, it has many benefits/applications, but so far, making ethanol does not appear to be one of them, at least not economically.

    Ultimately, it comes down to how many$ does it cost to produce a liquid fuel that can replace a gallon of gasoline.  Even corn ethanol is yet to prove it can be competitive, without subsidy, and you have stated your support for continuing tax credits for cellulosic (which I agree with), but that in itself suggest it will no be competitive for some time yet.

    It doesn’t really matter how it compares to the alternatives, it matters how it compares to gasoline, and cellulosic is still an (economically) unproven horse in that race.  But there’s no question the race is getting interesting.

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  32. By Rufus on April 19, 2010 at 7:45 pm

    Paul, I’d say that, right now, the race between “corn” ethanol, and gasoline IS neck-and-neck, but cellulosic is somewhere around seventy five, or eighty cents “off the pace.” It looks to me like somewhere around $3.50 gasoline cellulosic becomes a “playah.”

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  33. By Rufus on April 19, 2010 at 7:55 pm

    I think, one thing we sometimes miss about cellulosic, though, is that it can be produced in just about Every county in the U.S, and used locally. This probably gives it a $0.10 to $0.20 edge over it’s competitors, right there.

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  34. By paul-n on April 19, 2010 at 8:58 pm

    Rufus, 

    Agreed that, if it works, the fact that cellulosic can be made anywhere is a bonus.  Given that there is already a more than $0.75 spread in the ethanol price in various States, I know which ones I would be choosing to go into the cellulosic business! 

    As for corn, we’ll know for sure if it is competitive if/when the gov removes the VEETC.

    Here is an interesting question, regarding cellulosic.  Assuming that it proves economical with wood waste, not just corn cobs, I wonder how long it will take before we see some pulp mills converting to ethanol plants?  I know my local one looked into doing a wood to methanol process, and it looked feasible at the time, but since then NG prices have halved and pulp prices have increased, so it has been shelved.  But for any process involving lots of wood waste, pulp mills are set up for it, and are already close to the wood supplies.

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  35. By Benny BND Cole on April 19, 2010 at 9:03 pm

    Rufus-The End of the World due to running out of oil–the same story I heard when I was graduating from college, and back then we used typewriters, and rotary telephones. Pencils! Erasers! The U.S. mail!

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  36. By Rufus on April 20, 2010 at 12:36 am

    This:

    http://corncommentary.com/

    is why I really don’t believe Brazilian Cane ethanol will be able to compete with corn. This guy will, single-handedly, plant 5,000 Acres of Corn in a Week. That will produce 850,000 Bushels. Which will yield 2.5 Million Gallons of ethanol plus 13 Million 500 Thousand Pounds of high quality Cattle Feed (DDGS.) Plus 140,000 gallons of corn oil.

    Do you have any idea how many peasants swinging machetes it would take to produce this?

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  37. By Rufus on April 20, 2010 at 12:48 am

    Paul, it seems like a natural, doesn’t it? Especially those small sawmills down in the South (although, many of them have shut down, I think.)

    Fermentation, and distillation is so easy, I can squint my eyes, let my mind wander a bit, and see Thousands of very small stills all over the country, especially in the South. But this industry (such as it is) is so strange, and the politics can get so bizarre that I wouldn’t honestly bet a plugged nickle on Anything. As You said upthread, “It’ll be interesting.”

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  38. By russ-finley on April 20, 2010 at 12:54 am

    I sat down last night and created my own anti-propaganda propaganda film:

    Corn Ethanol Cataclysm

    Fight fire with fire, I always say…

    Biodiversivist

    [link]      
  39. By Rufus on April 20, 2010 at 1:42 am

    Don’t quit your day job.

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  40. By moiety on April 20, 2010 at 3:18 am

    -I would suggest splitting to a thread on cellulosic ethanol.

     

    Anyway Rufus your point on 70 to 80 cents is meaningless as it is based on pilot plant experience. The fact is cellulosic ethanol is not there yet; it is not even a competitor.

    Indeed I am not the only person advocating this. A little document involving EUBIA under EU FP6 project from 2007 states that

    The costs  of  large  scale  production  are  said  to  be  8-12  years  away  from  realisation.

    http://www.erec.org/fileadmin/…..ow_res.pdf

     

    Note that large scale product would in reality be a production size that may compete with the current size of corn ethanol; still a small player against current fuels.

     

    Having pilot plants and even the first or several examples of an industrial plant does not lead to viability. I am looking right now at the PERP report from CHEM systems on Adipic Acid production from 98/99-3 and also its report from 03/04 and 08/09. A new process came circa mid 90′s based on phenol dehydration that was more selective that was more energy efficient and much simpler in design.

    Intro http://www.chemsystems.com/rep…..8-3toc.pdf

    It has not displaced the dominant process despite having considerable support and production volume. A commercial ethaol unit can be built in 2012 but you will not see a real breakthrough in the market (versus corn) until at least 2015. In other words don’t count your chickens…

     

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  41. By Rufus on April 20, 2010 at 9:25 am

    They cut the cost of producing Cellulosic by 50% in One year.

    An EU report from 2007? Right.

    As Paul put it, with today’s laws cellulosic will not compete with corn. It will compete, to “some” extent with gasoline. Many of us are coming to the conclusion that the choice will be more one of “Can Drive, Can’t Drive.” If the DOD “JOE” Report is accurate and the world is 10 mbpd short on oil by 2015, whether cellulosic costs $0.40 more than corn ethanol won’t be of any great importance.

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  42. By Wendell Mercantile on April 20, 2010 at 10:30 am

    Rufus~

    I thought you had some new revelation about Novozyme or Danisco you could share. I’ve read what you’ve posted before. Lot’s of promise, but so far that’s all — promise. I do hope they pan out. I’ll be a firm supporter of alcohol from cellulose if the breakthrough happens.

    To repeat, I’m not anti-ethanol. Only anti-corn ethanol, and that’s because of the Corn Belt politics, cronyism, backroom deals, and disregard for the adverse effects of industrial corn monoculture that have always been part of King Corn and Big Ag. The main push for corn ethanol never had anything to do with science, good thermodynamic principles, or even energy independence, it was always about depleting resources in order to expand the commodity market for corn.

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  43. By Rufus on April 20, 2010 at 11:04 am

    Wendell, Jeff Broin’s family has been building stills, and producing ethanol for 30 years, I guess. When others got trapped by corn prices, and went bankrupt, he continued to produce 1.3 Billion gallons of ethanol “Profitably.” How good is his system? When the roads to one of his Iowa plants flooded, the manager was able to operate the plant for two days from his home computer. He’s Good.

    Now, after studying Cellulosic for Several years he’s putting quite a bit of his own time, and money in with some government money on the bet that he can produce cellulosic for $2.35, or less, per gallon. I am Loathe to bet against him.

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  44. By moiety on April 20, 2010 at 11:59 am

    Rufus will no doubt provide his links.

     

    A far as I
    was aware Novozyme has said that they can reduce the use of the enzymes
    by 80% (over the last 2 years from ~$4.5/galEtOH to $0.5/galEtOH) and
    say that with this will bring the cost of cellulosic ethanol to
    $2.00/gal or lower (from ~$8/galEtOH to $2/galEtOH) or so.

    They
    are advocating that Enzymes are the main cost in cellulosic ethanol at
    the moment.

    http://www.greencarcongress.co…..00216.html

     

    Dupont
    and Danisco/Genencor are making similar claims saying that a 30 time
    decrease in enzyme cost with a mild alkaline pretreatment plus work on
    an new ethanologen with process and integration design work. This will
    allow them to become profitable at a feedstock cost of $75 per dry
    tonne.

    Robbing one of Roberts references this might be hard. See
    press releases around their cellulosic pilot plant in Tennessee.

    http://hayandforage.com/mag/fa…..es_high/ 

     

    So both stories do not match and we still have a feed
    stock issue. My point still stands (feed stock is the reason why the phenol process is not dominant in the acid example)

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  45. By moiety on April 20, 2010 at 12:50 pm

    Double post

     

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  46. By Benny BND Cole on April 20, 2010 at 12:56 pm

    OT-
    This odd ittle story ran in the NT today. Suggests we can blend natural gas into diesel fuel. As noted, the USA has gluts of natural gas, and will for 100 years. So, if we can make use of the NG, we can gain energy independence, and save ourselves boodles of money, while cutting money flow to thug states.

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  47. By Benny BND Cole on April 20, 2010 at 12:57 pm

    Oh, here is the link http://greeninc.blogs.nytimes……esel-fuel/

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  48. By rrapier on April 20, 2010 at 1:14 pm

    Suggests we can blend natural gas into diesel fuel.

    Benny, someone yesterday wrote and asked me to comment. Here is what I wrote back to them:

    Looks like in situ hydrotreating. It may be feasible, but the energy balance won’t be good. Further, the volume may expand, but the energy content per gallon is going down. Better off to just use the diesel and the natural gas directly as fuels.

    [link]      
  49. By Rufus on April 20, 2010 at 2:25 pm

    Looks like you pretty well covered it, Moiety. Don’t forget the work Butalco has done with yeast. Inbicon is important inasmuch as they are the “first mover,” and are expanding their footprint (ie, obviously profitable.)

    What caught me by surprise is the Large amount of lignin co-product. Inbicon, and others are selling the pelletized lignin (or, using it themselves) for electricity generation, whereas Poet figures it can pretty much run a 125 million gpy ethanol plant off of the lignin from the production of 25 mgpy “corn cob” ethanol.

    My particular theory would involve thousands of small (10 Million gpy, or smaller) refineries that would allow all of the feedstock to be grown within a 2.75 mi radius. I kind of expect feedstock to end up in the $65.00/ton range. Note, transportation costs will be a very important factor in a low-value feedstock like switchgrass, poplar, et al. This is another reason I believe the very small, localized refineries will have a shot.

    A farmer could probably make a profit growing, and selling switchgrass for $45.00, or $50.00/ton if he only had to transport the product two, or three miles, And, if he wasn’t using “prime” land to do it.

    Is it likely that “My” vision will take root? No. Not really. The politics, and Money just aren’t lined up right. They’re all on the Other side. It’s just a thought.

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  50. By Wendell Mercantile on April 20, 2010 at 2:56 pm

    Note, transportation costs will be a very important factor in a low-value feedstock like switchgrass, poplar, et al.

    For what it’s worth, on Sunday I saw an 18-wheeler with a flatbed trailer pull out of a corn field near here with about 16 huge (maybe 3′ x 3′ x 6′) bales of corn stover stacked neatly in layers on the trailer. Have no idea where he was headed, but I couldn’t help thinking, “Now why is someone paying that guy to haul that load of baled corn stover somewhere.” It got my curiosity up.

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  51. By Rufus on April 20, 2010 at 3:17 pm

    baled up? Hmm.

    Maybe someone’s doing a little research on “stover to ethanol?” I haven’t been on a farm in 40 + years, but I doubt they would “bale” it if they were going to make silage from it.

    Most of the research I’ve seen puts the max stover that should be removed at about 33%. I have my doubts about the corn stover thing. It’s understood by all that “cobs” return very little value to the soil; but the idea of taking “stover” is not being very well received, I don’t think.

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  52. By Wendell Mercantile on April 20, 2010 at 3:39 pm

    but I doubt they would “bale” it if they were going to make silage from it.

    You don’t make silage from dried corn stover. It has to be green and have moisture in it so it will ferment in the silo. Most of the nutrition in silage also comes from the immature ears of corn, not from the stalk and leaves of the corn plant.

    Baling stover would be essential before transporting it to reduce the volume. The bales I saw were all tightly compressed. Putting stover loose in the back of truck wouldn’t work. There is a coal-fired power plant near me that has been talking about using corn stover to supplement the coal. Maybe this was part of that experiment.

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  53. By moiety on April 20, 2010 at 4:14 pm

    Wendell

     

    http://www.biomassmagazine.com…..le_id=3319

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  54. By Benny BND Cole on April 20, 2010 at 4:38 pm

    Thanks for the response RR.

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  55. By Rufus on April 20, 2010 at 5:24 pm

    :)

    Jeez, is it “Spring,” already? You’re right, of course, Wendell. That’s probably what they’re doing.

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  56. By Benny BND Cole on April 20, 2010 at 7:51 pm

    As a washed-up econmist, I have to protest ideas like “the world will be 10 mbd short by 2015.” This means you, Rufus.
    You see, we have something called the “price signal.” If demand exceeds supply, the price goes up, both tamping down demand (slowly in the case of oil) and boosting supply (slowly, in the case of oil). The price goes up until until demand equate to supply.
    There is no “shortage.”
    I concede to their being “shortages” of such items as food and water. If people are starving, then the free market means nothing. Health care is tricky issue also.
    But oil? We only have supply and demand.

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  57. By Rufus on April 20, 2010 at 9:19 pm

    Supply, Demand, and the biggest, most powerful Cartel the world has ever known – OPEC.

    Take it up with the DOD, Benny. I was just quoting their “Joint Operating Environment” Report.

    BTW, Benny, we saw that “Price Signal” at work in 2008. $147.00/barrel, wasn’t it? Before it threw us completely into Recession.

    And, btw, Benny, where was that “Boosted” Supply? We produced less oil, globally, in 2007/2008 than we did in 2004.

    And, what’s the price, today? $84.00/bbl? That is one heck of a lot more than 2004. Shouldn’t that good ol’ “Supply” be right on up there? Look at the Wikipedia “Megaprojects” data, Benny. We’ll bring just about enough oil online this year to match the decline from existing wells. We’ll miss it by a little bit next year, and in 2012 We Fall “Off the Cliff.”

    And, That, Benny, is an absolute certainty.

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  58. By paul-n on April 20, 2010 at 11:32 pm

    Rufus, I’ll believe your cellolosic process can work when it can turn a bale of this into ethanol…

    Luc and Fred stand behind their baler and among harvested baler answering questions from 3 AESB Land Management staff standing to the left of the machine

    This a from a farm in Quebec that has modified their round baler to handle willow and aspen – those are some mean looking bales!

     

    More info here

    http://www4.agr.gc.ca/AAFC-AAC…..p;lang=eng

     

    Now, the wood has a raw energy content of about 20GJ/ton, and Dupont-Danisco are saying they can get 90gal/ton.  So, 90 gal of ethanol has an energy value of 6.5GJ, losing 2/3 of the feedstock energy.  So if you are burning the residuals (13.5GJ/ton of feedstock) for your distillation, you want to be using them to generate electricity first, otherwise your are losing a lot of fuel value.  Of course, you have to dry the residuals before you can burn it, and the waste heat from your engine/generator could do this, and distill the ethanol, if you are set up very carefully.

    The real advantage to this, is that it can be done on a small scale.  I would look at making it so small, that it is portable, and then you take it to your cellulose source.  Transport it to the farm, instead of transporting the feedstock, put the ash back into the field from whence it came.  Then, instead of needing to bale like this, you can use a silage type chipper/shredder in the field, and put that into your process front end.

    I know you love the enzyme process, but here’s a link to a simple description of the old school way of doing it on the farm, with concentrated acid.

    http://journeytoforever.org/bi…..wdust.html

    Don’t try that at home…

     

     

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  59. By Rufus on April 21, 2010 at 9:02 am

    Great links, Paul; Thanks.

    Yeah, it didn’t take me long to decide I didn’t want anything to do with that Sulfuric Acid pretreatment.

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  60. By Benny BND Cole on April 21, 2010 at 12:42 pm

    Rufus-

    You should know by now that the DOD issues report after report after report in a constant attempt to justify having a Cold War military apparatus in a world without a Cold War.

    Jeez, they still talk about the need for the US Navy to keep global shipping lanes open–against who? China, the big exporting nation? Russia, the oil- and resource-exporting nation? Just who is going to block shipping lanes? Yet the US Navy is gaurding the Straits of Malacca and Terra del Fuego and who knows what. (The irony is that surface ships are easily sunk).

    No doubt DOD has issued yet another fear-mongering scenario about the future. What a surprise.

    I concede it may take a sustained period of higher oil prices to obtain results–the problem is, every time oil prices get high, they ultimately collapse. And then the globe goes back to its old ways (except for Europe–they have been reducing oil demand for thee decades, and that process may soon accelearte, thanks to CNG and PHEVs).

    Doom scenarios? How about this scenario: Demand for oil in the USA is cut in half due to higher prices in the next 10 years, while Iraq stabilizes and produces 12 mbd? That’s a 20 mbd swing–and oil producers get crushed again by plummeting prices.

    And please Rufus, never again quote the DOD. They are a public agency trying to justify their existence. In the private sector, you have to justify your existance by selling a good or service onthe open market.

    The DOD has to justify its existence by scaring you.

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  61. By Rufus on April 21, 2010 at 4:50 pm

    Benny, how could we cut our oil consumption in half short of having the Greatest Depression in the History of Mankind?

    The idea is to keep fuel prices somewhat affordable, and, thus, stay “Out of Recession.” And, if you look at the Megaprojects Data you will see that we’re going to have to depend on something other than “Mo Oil” to do it.

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  62. By Benny BND Cole on April 21, 2010 at 7:11 pm

    Rufus-
    Cut oil consumption in half? I thought you are the guy saying we could have ethanol stills coast to coast, in every backyard. Moonshine or drive your car.
    Add that to mandated PHEVs, and we are home free in 10 years.

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  63. By Rufus on April 21, 2010 at 8:25 pm

    Well, yes, Benny; that’s exactly what we want to do. Cut Oil consumption in half by replacing the “Need” for oil in just the way you mentioned. eg Ethanol, Biodiesel, PHEVs, EVs, CNG for city fleets, more rail, etc.

    That’s NOT the same thing as cutting oil demand in half by Greatly Increasing Costs of transportation.

    One way keeps transportation affordable, and leads to a constantly improving standard of living. The other guarantees Impoverishment for all.

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  64. By Kit P on April 21, 2010 at 9:53 pm

    It would appear that that Benny does
    not understand that world’s ocean are a very large area and world’s
    navies are tiny in comparison. The US Navy works with most of the
    other world navies to keep sea lanes and still piracy is a problem.

     

    Then it only takes a few diesel subs to
    disrupt shipping.

     

    “The irony is that surface ships are
    easily sunk”

     

    Yet it does not happen all that often.
    It does require a certain amount of skill and knowledge to sink a
    ship. This knowledge includes know that withing a few days nuke
    carrier will be making sure you do not sink anything ever again.

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  65. By od on April 21, 2010 at 11:44 pm

    The DOD report actually wasn’t very scary. They claim there could be shortgages, however, they would be temporary. They don’t imply there is in fact a long emergency breathing down our necks. It seemed pretty optimistic to me, but what do I know.

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  66. By Rufus on April 22, 2010 at 10:25 am

    Jeff Broin is now saying $2.00 (he was saying $2.35, or less.) This is significant. Broin is the Primo operator in the space. He’s conservative, and he’s met Every goal he’s set. When High corn prices, and subsequent low gasoline prices were bankrupting a large portion of the industry he trucked right on through it.

    http://ethanolproducer.com/art…..le_id=6559

    Now we have Novozymes, Dupont-Danisco, and Poet – all saying they can produce cellulosic for $2.00/gal. I just gotta bet they can.

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  67. By moiety on April 22, 2010 at 12:00 pm

    They say that they can in the future. All of this is based on piloting and claims that are contradictory to each other i.e. Dupont and Novozymes. Maybe in 2012 maybe

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  68. By Rufus on April 22, 2010 at 12:42 pm

    Moiety, don’t forget Inbicon. They’re operating at a “commercial” level, now, I think. I’m not for sure that Novozymes, and Dupont-Danisco aren’t, basically, using different language to say the same thing.

    It looks to me that there are, probably, fewer things that can go wrong scaling “enzymatic” vs scaling gasification. You’re, really, just adding a “pretreatment” step.

    Jeff Broin has proven himself to be awfully competent. I would say the odds are awfully good that he’ll be able to do exactly what he says he’ll do.

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  69. By Wendell Mercantile on April 22, 2010 at 5:18 pm

    Ethanol, Biodiesel, PHEVs, EVs, CNG for city fleets, more rail, etc.

    Rufus~

    You always forget to mention methanol. ;-)

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  70. By Rufus on April 23, 2010 at 10:47 am

    I just can’t see methanol going anywhere, Wendell. Kind of like CNG cars. Actually, I have my doubts about pure electrics, also, but threw that in there for the heck of it. :)

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  71. By paul-n on April 23, 2010 at 12:33 pm

    Rufus,

     

    You can;t see it (methanol cars) because they aren’t here (N. America) yet.  But China is placing a huge bet on methanol, from coal to methanol;

    http://www.rsc.org/chemistrywo…..110901.asp

    I point this out because China is the fastest growing vehicle market for GM, VW, etc, so they are all making vehicles that can run on methanol (as M85).

    Since flex fuel vehicles can run on M as easily as E (or both), the only thing missing here is to supply/blend the fuel.

    My guess is that if gasoline gets, and stays, above $4/gal, we will start to see methanol become available.  Expect the oil companies with NG interests (such as Exxon) to start doing this.

    Of course, at >$4 we will see more use of ethanol as E85 and CNG (though mainly for fleet vehicles), and I think that is where methanol will start too.

    It’s all about the price – if everyone knows it is going to stay high, these alternatives will be pursued.  The oil industry will do its best to convince people that high prices are just an aberration, but I think they are here to stay.

    As for electrics, well, I tend to agree.  There is some pent up demand, and I’m sure the first 10-20,000 will sell well to those who can afford them and want to parade them as a green status symbol.  But for anyone who needs one to save on gas money, they are better off to just buy an efficient small car (Corolla, Civic, Fit, Focus, Smart, etc) and I think that reality will set in, as the electrics are just the same cars, at more than twice the cost.

    One final thought, regarding high gas prices. If E85 starts to become cheaper, it may also spark an aftermarket in flex fuel conversions of existing vehicles. And even people who don;t have them, but have older, out of warranty vehicles, will start to refuel with part E85 to make their own blend of E20/E30, which really doesn’t hurt an engine at all.

    All that needs to happen is for the ethanol industry to bypass the gasoline retailers and set up more of their own E85 stations.  In these days where your iphone can tell you where the stations are, you don;t need them everywhere to build up a customer base.

    Gasoline, and gas stations have had the retail market to themselves until now – from here they can only start to lose market share – the sooner the better, in my opinion.

     

     

     

     

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  72. By Wendell Mercantile on April 23, 2010 at 12:41 pm

    I just can’t see methanol going anywhere…

    Who knows? With the catalyst of government mandates and subsidies, there’s no reason methanol couldn’t do just as well as — or even outshine — corn ethanol. Plus it has the big advantage that we wouldn’t be diverting food stocks to fuel as with corn ethanol — we can make methanol from our vast reserves of coal, from natural gas, or by putting bio-based trash and cellulosic feedstock into gasifiers. And as a motor fuel, methanol can do anything corn ethanol can do. The only reason Indy cars switched from methanol to ethanol was as part of a Big Ethanol PR campaign.

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  73. By Rufus on April 23, 2010 at 1:23 pm

    Ah, you guys might be right. But, I still doubt it. It just looks to me like the train has done left the station, and it’s running on ethanol.

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  74. By paul-n on April 27, 2010 at 12:05 pm

    Rufus, 

     

    The (corn) ethanol train may have left the station, but it looks like the cellulosic one isn’t going anywhere just yet;

     

    http://minnesota.publicradio.o…..c-ethanol/

     

    You said earlier that Jeff Broin has hit every target he named, but according to this, he is having to push back the start for his cellulosic operation.  

    Interesting comment from the banker there too.

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  75. By Kit P on April 28, 2010 at 6:45 pm

     

    Wow an engineer links NPR. Rufus you
    have been been trumped. If you are French it is time to surrender.

     

    Fortunately American engineers do not
    give up so quickly. I like to choke every time they claim to be an
    unbiased source of news.

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  76. By rrapier on April 29, 2010 at 4:21 am

    By the way, someone sent me a note on the Obama visit. Here is what they wrote:

     

    Obama will visit a POET corn ethanol plant in Macon, Missouri, on Wednesday. See http://bit.ly/bPgKYW and http://bit.ly/9fgZmA.

    The Macon POET plant started operations in May 2000 and is said to be a
    46 million gallon/year plant, employing 42 people with a payroll of
    $1.8 million (average salary of $45K/year). See http://poet.com/inspiration/sh……asp?id=42

    If we presume it operated at its
    installed capacity since inauguration, then they’ve benefited a great
    deal from the VEETC for ten years.  The VEETC is now 45 cents per
    gallon but used to be 54 cents per gallon back in 2000. So, my back of
    the envelope calculation is that the VEETC support for POET’s Macon
    facility cost close to $250 million during the ten years. Your guess is
    a good as mine on what they keep vs what the blender gets, but either
    way, the taxpayer paid for that subsidy, which encouraged this Macon
    facility to operate.

    But that’s not all, given this Macon plant meets the 60MGY “small producer” tax credit (known as SPETC, http://www.ethanolrfa.org/page…..tax-credit),
    it should be getting its maximum benefit of $1.5 million a year in
    SEPTC, which ironically is close to what POET says the plant’s payroll
    is. So, the hardworking guys at this plant are in essence paid-for-by
    the US Treasury and then we subsidize the owners with the VEETC!

    No wonder POET’s magazine wrote, “since it started, the facility has
    continued to be very productive, and has given its owners a tremendous
    return on their investment.” With this much money from the gov’t who
    can’t show “tremendous returns.” See http://www.poet.com/vital/2009…..he-way.asp

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  77. By Kit P on April 29, 2010 at 8:10 pm

    When NRP interviewed with the mayor of
    this small town he discussed many aspects of the economy like sales
    tax receipts.

     

    So I want to thank RR for all the great
    links pointing to all the benefits that an multi-product biorefinery.
    Not just the 42 people on the POET payroll who pay taxes, there are
    the farmers, truck drivers, mechanics and so forth.

     

    Productive people being more
    productive.

     

    “average salary of $45K/year”

     

    I wondered how far that would go in a
    small town. I pulled up the real estate listings. More than half of
    the 81 houses were not less than $100k.

     

    When it comes to the criteria of
    quality of life, this place gets 100%.

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  78. By paul-n on April 29, 2010 at 11:51 pm

    So it would seem that NPR is OK to quote, after all.

     

    Now that we are all on the same page with that source, we can look at the matter at hand.

    Productive people being more
    productive.

    They are productive only if your definition is “when paid for by the taxpayer”, but anything can be productive by that definition.

    I am sure the mayor of that town loves the fact that his tax receipts are, effectively, paid for by the nation’s taxpayers at large – what town wouldn’t want that? 

    Any business, and town, can be prosperous given enough taxpayer money.  The prosperity of the nation, however, is worse off for it, and only gets worse the bigger the ethanol industry gets.  

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  79. By russ on April 30, 2010 at 2:53 am

    İ guess the ‘paid for by the tax payer’ definition of ‘productive’ means that the politicians in Washington are among the nations most productive then.

    İ have always been under the impression that to be productive something/someone should be net positive and not depend on handouts.

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  80. By Kit P on April 30, 2010 at 8:16 am

    “So it would seem that NPR is OK to
    quote..”

     

    I was quoting the mayor. Second, I
    followed up a story I heard with more research. I do not have a
    problem with journalist reporting stories, just when they come to
    conclusion that they are not qualified to come to.

     

    Bias also comes in the selection of
    stories. On the 60th anniversary of VJ day, NPR ran a
    story about allegations of rape in SF Bay area. I grew up with
    people that I called dad and uncle who were stationed at Pearl Harbor
    in December of 1941. Bias also comes in the selection of who who
    interview. If it sounds like anti-American communist propaganda and
    the interview writes for Pravda in the 702 or China Daily News, maybe
    it is anti-American communist propaganda.

     

    So young engineer be skeptical and have
    a questioning attitude. Your journalist do not.

     

    “anything can be productive by that
    definition”

     

    Do know what ‘production’ means PaulN?
    What you mean I think is profitable.

     

    “paid for by the nation’s taxpayers
    at large”

     

    You are jumping to conclusions.

     

    “The prosperity of the nation,
    however, is worse off for it, and only gets worse the bigger the
    ethanol industry gets.”

     

    At totally unfounded claim. Want a
    partial list of energy production that was a expensive to start with
    but became the lowest cost sources of electricity? Hoover Dam, Grand
    Coulee Dam, Bonneville Dam, Ice Harbor Dam, 104 US nuke plants.

     

    So PaulN I think you are being short
    sighted. Energy project are capital intensive by their nature and
    heavily regulated. Try being less shallow. Maybe you find it
    interesting.

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  81. By paul-n on April 30, 2010 at 2:50 pm

    Want a partial list of energy production that was a expensive to start with
    but became the lowest cost sources of electricity?

     

    I have no problem with those things, as it was known, at the outset, that they would be low cost of production, once built.  

    But what is the ethanol industry’s plant to become the lowest cost producer?  Quite simply, they don;t have any intention of doing so, that is why they continue to lobby for a production subsidy.  

    Government investment in appropriate infrastructure pays off for decades, centuries even.   The ethanol industry says they will collapse the moment the subsidy is pulled, so I cannot see that there is any long term value for the people from this.  The money would indeed be better spent on rail electrification, replacement of heating oil furnaces/boilers or other oil abatement projects than ethanol.

    Paying the ethanol tax credit is about the most short sighted use for scarce government capital that i can think of – once the money stops, what benefits will remain?

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  82. By Kit P on April 30, 2010 at 6:17 pm

    “But what is the ethanol industry’s
    plant to become the lowest cost producer?”

     

    PaulN sounds like the anti-nukes I have
    been listening to for 30 years. It takes no effort to be against
    something. Just make up a list of reasons to be against something.
    No reason to check them out either.

     

    Now PualN if you look around you will
    see we are doing all the other things you mentioned.

     

    “short sighted”

     

    Considering your extreme lack of
    understanding of past and present energy issues, your opinion on
    foresight is questionable.

     

    The California ISO has a new look. It
    is now showing wind contribution (?). I will wait for a few days
    before commenting on that. I have been watching for a long time.
    It is the time of year when the California governor confuses
    unemployment with conservation.

     

    http://www.caiso.com/outlook/S…..tatus.html

     

    “Renewables Watch provides important
    information about actual renewable production within the ISO grid as
    California moves toward a 33 percent renewable generation portfolio.”

    http://www.caiso.com/green/ren…..sWatch.pdf

     

     

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