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By Robert Rapier on Jul 7, 2010 with 63 responses

Fun with Numbers: The New USDA Report on Corn Ethanol

The EROEI of Ethanol

Over the past decade, the United States Department of Agriculture (USDA) has published several papers in which they investigated the energy return of corn ethanol. The energy return on energy invested (EROEI) is simply the value of the energy outputs for a process divided by the energy inputs into the process. In simple terms, if a process required 1 BTU of energy to produce 2 BTUs of ethanol, the EROEI is 2.

EROEI is calculated by taking the value of the energy outputs and dividing them by the energy inputs.

However, in reality it is somewhat more complex than that. The way the energy inputs and outputs are allocated can have a very big influence on the answer. Just by changing the nature of the allocation – as I will show below – you can sharply change the EROEI value.

There are caveats one should apply when using EROEI. First, EROEI is most useful when fungible energy types are involved. One wouldn’t typically use 1 BTU of gasoline to make 1 BTU of ethanol, but it might be economically attractive to turn 2 BTUs of coal into 1 BTU of ethanol (EROEI = 0.5). Second, there is no time factor involved in EROEI calculations, so it is possible for a lower EROEI process to be more attractive than a higher EROEI process if the former returns the energy over a shorter time interval.

There are also often byproducts to consider. When a gallon of ethanol is produced, some byproducts are also produced. The main byproduct is the remnants of the grains used to produce the ethanol. There are several versions of the byproduct depending on the exact process, but Distillers Dried Grains with Solubles (DDGS) is probably the most common. Each gallon of ethanol produced results in approximately 6.25 pounds of DDGS as a byproduct.

So if it takes 1 BTU of energy to produce 1 BTU of ethanol and some quantity of DDGS, how do you account for the energy content of the DDGS? The way the USDA has accounted for this has evolved over the years. One way would be just to calculate the energy content of the DDGS. This has problems in that DDGS is not typically used for producing energy. Another method is to calculate it on a replacement value basis. As DDGS is produced, something else of similar nutritional value was in theory displaced in the market. The replacement value considers the energy it would have taken to produce the replacement, and credits that energy to the energy balance of ethanol.

The 2002 USDA Report

In 2002, the USDA published The Energy Balance of Corn Ethanol (1). The authors estimated the energy inputs required to produce one gallon of ethanol. They calculated that across nine major corn producing states the average input was 77,228 BTUs to produce 83,961 BTUs of ethanol (the higher heating value, or HHV* of ethanol).

The USDA inflated their EROEI by subtracting the byproduct from the input side.

If the outputs are 83,961 BTUs of ethanol plus 14,372 BTUs of byproducts and the inputs were 77,228, I would calculate the energy return as 1.27. However, the authors reported: “We show that corn ethanol is energy efficient as indicated by an energy output:input ratio of 1.34.” Why the apparent discrepancy? Because instead of adding the byproduct to the output side, they treated it as an offset to the energy inputs. In other words, they said “Since we got 14,372 BTUs of byproducts, our inputs were really 77,228 BTUs minus 14,372 BTUs, or 62,856 BTUs.” Using the lower input allowed them to report a higher energy balance of 1.34. However, 1.34 was NOT the actual output:input ratio.

Imagine if financial returns were calculated in this manner. Say you invested $100, and got a return of $35 cash plus goods (byproduct) that you valued at $30. What is the return on investment? Most people would say that you got a total return of $65 on the investment of $100, for a total return of 65%. Or we could say the cash return is 35%. But if we utilize the USDA’s ethanol accounting, we would use the $30 co-credit to offset our initial investment. We could then argue that we only “really” invested $70 to get a cash return of $35, for a cash return of 50%. So, the answer to the question – “When can a $35 return on a $100 investment amount to a 50% return on investment?” – is “Whenever we apply the rules the USDA uses for ethanol accounting.”

That’s not to say it’s the “wrong” way to do it, but it is certainly a method that inflates the energy returns for ethanol. In the example above, the $35 cash return is analogous to ethanol production, and you can see how a 35% return gets inflated to 50%.

The 2004 Report: More Creativity

In an update two years later (2), the authors of the 2002 report noted that the report had a number of critics:

It is argued that USDA underestimates energy used in the production of nitrogen fertilizer and the energy used to produce seed-corn, over estimating the energy allocated to produce corn ethanol byproducts. They also argued that USDA excludes energy used in corn irrigation and secondary energy inputs used in the production of corn, such as farm machinery and equipment and cement, steel, and stainless steel, used in the construction of ethanol plants.

They sought to address some of the criticisms with an update in 2004. They acknowledged that certain energy inputs had been previously underestimated. They noted that the estimate of the energy required to produce a pound of nitrogen fertilizer had been underestimated in the 2002 report by 25%. In addition, they had initially assumed that the energy required for seed corn production was 1.5 times that of producing regular corn. In the 2004 report they said that it actually requires 4.7 times as much energy to produce seed corn. They pointed out that they did not include any secondary energy inputs (such as the energy to actually produce an ethanol plant) in either their 2002 or 2004 paper:

Energy used in the production of secondary inputs, such as farm machinery and equipment used in corn production, and cement, steel, and stainless steel used in the construction of ethanol plants, are not included in our study. Available information in this area is old and outdated. Pimentel, in his latest report (2003), used the 1979 Slesser and Lewis to estimate the energy used in the production of steel, stainless steel, and cement.

So they pointed out that Professor Pimentel used 1979 data, but in their calculations they used no data. That caveat in the 2004 report is always overlooked when the energy returns are reported.

In light of all of the corrections to the 2002 report, one might presume that the energy return had been corrected downward. But amazingly, despite having underestimated key energy inputs in the earlier report, in 2004 they reported the energy return at 1.67, much better than the 1.34 in their 2002 report.

Had the industry made such enormous strides in two short years? No, the reported increase was due to a change in the way they allocated the energy inputs. In contrast to the previous replacement method, starting with the 2004 report they applied the following logic:

Only starch is converted to ethanol. On the average, starch accounts for 66 percent of the corn kernel weight (15 percent moisture). Therefore, 66 percent of energy used to produce and transport corn to ethanol plants is allocated to ethanol and 34 percent to byproducts.

Again, there isn’t a perfect method here for allocating energy inputs, but this one seems fairly arbitrary. One thing the change did do was dramatically increase the apparent energy balance. Using the method from the 2002 report would have caused the EROEI to drop because of the corrections that were made, but by shifting more of the energy inputs into the byproducts the 2002 reported energy balance of 1.34 became an EROEI of 1.67 in 2004.

With an accounting change, the USDA reallocated energy inputs and showed a spike in the energy return.

This resulted in a general impression among many that the ethanol industry had made great strides in increasing their energy efficiency when the truth was just an accounting change. If we simply go to the numbers, we find the following from the 2004 report. Ignoring byproduct credits, they have energy inputs of 72,052 BTUs to produce 76,375 BTUs of ethanol (they also changed from using higher heating values in 2002 to lower heating values in 2004), for an energy return on energy invested (EROEI) of 1.06.

In 2002 they estimated a byproduct value at 14,372 BTU/gallon of ethanol. If we add that to the BTUs of the ethanol they reported in the 2004 report, we get (76,375 + 14,372) BTUs out, or 90,747 BTUs out. Given their input of 72,052 BTUs, then their EROEI with byproducts is 90,747/72,052, or 1.26. (Actually, by going to lower heating values the previously reported 14,372 BTUs for byproducts would have also dropped, but there isn’t enough information available to calculate by how much.  Needless to say the EROEI based on the replacement methodology would have been lower in the 2004 report were it not for the accounting change).

The 2010 Update

Now in 2010, the USDA has released an update to their earlier reports (3). The new release is 2008 Energy Balance for the Corn-Ethanol Industry. One of the authors is Hosein Shapouri, who was the only author also listed on the previous two reports. The most interesting aspect of the report – which has gotten quite a bit of attention among ethanol proponents – was that the energy return for ethanol is now reportedly over 2 to 1:

A dry grind ethanol plant that produces and sells dry distiller’s grains and uses conventional fossil fuel power for thermal energy and electricity produces nearly two times more energy in the form of ethanol delivered to customers than it uses for corn, processing, and transportation. The ratio is about 2.3 BTU of ethanol for 1 BTU of energy in inputs, when a more generous means of removing byproduct energy is employed.

Of course I went straight to the numbers, and here is what they said. There have indeed been reported improvements in the efficiency of the corn ethanol process. The 2004 report estimated 72,052 BTUs to produce a gallon of ethanol, but the latest report estimates 53,785 BTUs to produce a gallon of ethanol. They then allocate 20,409 BTUs to the byproduct in the 2010 report, once again subtracting that from the energy inputs. This inflates the energy return by pretending that only 33,375 BTUs were required to produce the ethanol.

While the 2010 report saw a substantial EROEI increase, it was inflated to an even greater number because of the USDA's accounting method.

If we return to the method employed in the 2002 report, we find that 53,785 BTUs of inputs produced 76,375 BTUs of ethanol and 14,372 BTUs of byproducts (presumably, the value of byproducts per gallon of ethanol production wouldn’t change much) for a total output of 90,747 BTUs. That results in an energy return of 1.69, ironically almost the same number they had reported in the 2004 report when they changed their accounting methodology.

Methodology Comparison

So if we keep the accounting methodologies consistent, here are the ethanol-only energy returns (ethanol output/total energy input) from the raw data in the USDA reports:

2002 – 1.09
2004 – 1.06
2010 – 1.42

Here are the ethanol plus byproduct energy returns (ethanol plus byproduct output/total energy input):

2002 – 1.27
2004 – 1.26
2010 – 1.69

Here are the ratios from utilizing the USDA’s 2002 methodology (subtracting byproducts from the inputs) across all three reports:

2002 – 1.34
2004 – 1.32
2010 – 1.93

Finally, the ratios that the USDA highlighted and reported across all three reports:

2002 – 1.34
2004 – 1.67
2010 – 2.34

Conclusions

That is a respectable improvement to be sure, but we should keep in mind that they have admittedly not accounted for certain inputs (the secondary inputs they mentioned in the 2004 reports). But it also begs the question of whether the USDA’s methodologies are unbiased, or whether there is a consistent pattern of favoring calculation methods that inflate ethanol’s energy return. (If the EROEI for gasoline was calculated in this manner, it would be greater than 10:1 because fuel gas is generated in the process that is fed back into the refinery).

One final word about energy allocations for byproducts. If the idea is to find a scalable replacement for gasoline, consideration must be given to the amount of byproducts that result as the scale of fuel production is increased. At some point, the byproducts can saturate the market, which can cause other unintended consequences. This is the case with biodiesel and the glycerin byproduct that results; biodiesel producers often have a hard time getting rid of the byproduct.

For that reason, when I consider ethanol as a replacement contender for gasoline, I am more interested in the expenditure of energy to produce ethanol, and less interested in how creative we can get with allocating energy inputs to byproducts. In any case, what was approximately one BTU of ethanol output for one BTU of fossil fuel input in 2002 is now 1.4 BTUs of ethanol out for 1 BTU in, with the caveat that secondary inputs have not been considered.

References

1. Shapouri, H., J.A. Duffield, and M. Wang. 2002. The Energy Balance of Corn Ethanol: An Update. AER-814. Washington, D.C.: USDA Office of the Chief Economist.

2. Shapouri, H., J.A. Duffield, and M. Wang. 2004. The 2001 Net Energy Balance of Corn Ethanol. Washington, D.C.: USDA Office of the Chief Economist.

3. Shapouri, H., P. Gallagher, W. Nefstead, R. Schwartz, S. Noe, and R. Conway. 2010. 2008 Energy Balance for the Corn-Ethanol Industry. Washington, D.C.: USDA Office of the Chief Economist.

* The higher heating value of a substance that produces water vapor when combusted – such as ethanol – presumes that the water is condensed and the heat recovered. In practice, this doesn’t happen as the water exits the vehicle as vapor. So in practice, the lower heating value is the important value for understanding how much energy is available for fueling your car.

  1. By Benny BND Cole on July 7, 2010 at 1:48 am

    Another excellent post.
    I am not a fan for EROEI for many of the reasons posted by RR. Palm oil plantations, for example, sell palm fronds for use in medium-density fibreboard, and also burn plant matter to fire boilers. As RR notes, you get cattle feed left over from ethanol production.
    That is why we have a price mechanism. The miracle of the price mechanism handles all these details and answers the question of whether an activity should be undertaken (issues such as pollution of national security concerns should be handled through taxes).
    Maybe ethanol has a low EROEI or a high EROEI. Who cares? If an exceptionally valuable byproduct resulted from the process, and ethanol factories could make a go of it despite a low EROEI, then great. Energy is not the coin of the realm–money is. Labor is valuable, capital is valuable–many things in addition to energy.
    That is why subsidies are usually a bad idea.
    I concede there is a complicating factor is this situation–dependence on erratic thug states for oil. Our national security is jeopardized by this situation.
    We have endured economy-bruising price spikes, and out-and-out blackmail in the last 30 years, and probably will again. Tight oil supplies also give power to rank NYMEX speculation and manipulation.
    One could argue we finance terrorism through oil purchases, and then spend trillions fighting terrorism –but making enemies along the way through our militarism.
    But rather than favor any particular domestic energy industry, it would probably be better to tax imported oil, or favor all domestic industries. I also like taxing gasoline much more heavily.
    But get used to ethanol. Words chiseled into granite may slowly fade away (anyone reading old gravestones has seen this), but farm programs are enduring, reborn every two years by a Congress infested with 42 farm-state Senators.

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  2. By Walt on July 7, 2010 at 7:58 am

    Robert Rapier said:

    But it also begs the question of whether the USDA’s methodologies are unbiased, or whether there is a consistent pattern of favoring calculation methods that inflate ethanol’s energy return. (If the EROEI for gasoline was calculated in this manner, it would be greater than 10:1 because fuel gas is generated in the process that is fed back into the refinery).
    One final word about energy allocations for byproducts. If the idea is to find a scalable replacement for gasoline, consideration must be given to the amount of byproducts that result as the scale of fuel production is increased. At some point, the byproducts can saturate the market, which can cause other unintended consequences. This is the case with biodiesel and the glycerin byproduct that results; biodiesel producers often have a hard time getting rid of the byproduct.

    For that reason, when I consider ethanol as a replacement contender for gasoline, I am more interested in the expenditure of energy to produce ethanol, and less interested in how creative we can get with allocating energy inputs to byproducts. In any case, what was approximately one BTU of ethanol output for one BTU of ethanol input in 2002 is now 1.4 BTUs of ethanol out for 1 BTU in, with the caveat that secondary inputs have not been considered.


     

    An excellent article making it clear that “financial engineering” is more important than “chemical engineering”.  This is so disappointing to read, and certainly begs the question.  This week there was a local news broadcast on the suffering of the local milk producers due to low prices, and how they need help from Washington to be able to produce milk whether it makes money or not to survive.  They need subsidies to keep producing the milk so they can likely take to a local disposal well or landfill since demand is down, but production needs to remain the same to survive.

    I’m not a farmer or rancher, but admit it must be miserable when you have lots of production and no buyers for your products.  They had the same problem here several years ago with cherry production, and several farmers got together and came up with hundreds of ideas to turn those cherry’s on the ground into all sorts of different cherry products for domestic sales and export.  It worked nicely.

    In our case, I will take all the glycerine for our biodigester process to make higher quality biomethane, and make it faster.  Don’t ask Washington to have me pay for disposing of it with higher taxes and subsidies (or nifty financial engineering), but give it to me and I’ll sell the methanol to the biodiesel plant in the southern part of the State who does not want to pay high import prices with high freight rates which keep going up due to the higher fuel costs!  These guys are also going to Washington to see about subsidies and money for HELP!!!

    After reading the article above…it really begs the question what is going on.

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  3. By jfinlayson on July 7, 2010 at 8:35 am

    Robert Rapier said:

    One final word about energy allocations for byproducts. If the idea is to find a scalable replacement for gasoline, consideration must be given to the amount of byproducts that result as the scale of fuel production is increased. At some point, the byproducts can saturate the market, which can cause other unintended consequences. This is the case with biodiesel and the glycerin byproduct that results; biodiesel producers often have a hard time getting rid of the byproduct.

    Good point.

    The biodiesel/glycerin byproduct issue is an interesting analogy.  It has led to a steep drop in glycerin price (even going negative), and shuttered glycerin factories.  This in turn appears to be driving innovation to take advantage of this cheap new feedstock:

    http://www.physorg.com/news134…..64047.html

    http://www.glycosbio.com/technology/

    After that, who knows?  If successful (and that’s always a big if), firms like Glycos Bio may erase the glycerin glut. I hope they aren’t counting on being paid to take glycerin in their business model, the way cellulosic ethanol startups sometimes count on tipping fees in theirs.  Hard to predict who will be paying whom (and how much) to move glycerin in the long term.  Might the same be true of ethanol byproducts?

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  4. By Wendell Mercantile on July 7, 2010 at 10:04 am

    For that reason, when I consider ethanol as a replacement contender for gasoline, I am more interested in the expenditure of energy to produce ethanol, and less interested in how creative we can get with allocating energy inputs to byproducts.

    Me too. I’d also like them to expand the perimeter that goes around the energy inputs. They need to include the embodied energy in the infrastructure and operating machinery of farms and ethanol distilleries. At least Pimental tried to include that embodied energy, even if his data was outdated.

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  5. By Nathan Schock on July 7, 2010 at 10:17 am

    Robert,
    I thought a few comments from an ethanol producer might provide some helpful context:

    First, our plants produce two primary products: fuel (ethanol) and animal feed (mostly DDGS). Because we are producing (at least) two products, the energy inputs have to be allocated among those products in order to get a true EROEI. While there are different ways to do it, some portion of the energy inputs used to produce and transport the corn have to be allocated to the animal feed. In addition, some of the energy use at the plant is devoted to drying our animal feed so it would be inaccurate to allocate all of the energy use to ethanol production.

    Second, we view the animal feed, of which we sell many varieties, as a co-product, not a byproduct. These are not just remnants. Because of the high-protein nature of our animal feed, farmers can mix it with more forage which allows for additional decreases in corn use. How do you account for that in EROEI?

    Third, on market saturation, the animal feed can enter some markets where corn can’t. For instance, China maintains quotas on corn imports but does not for DDGS. For that reason, DDGS exports from the U.S. to China have expanded greatly in recent years.

    Obviously, there are dozens of different ways that you can calculate EROEI, but no matter how you calculate it, the progress has been impressive. And this number will improve in the future. We are constantly developing new technologies that make ethanol production even more efficient than it is today.

    Nathan Schock
    POET

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  6. By Wendell Mercantile on July 7, 2010 at 10:35 am

    Because we are producing (at least) two products, the energy inputs have to be allocated among those products in order to get a true EROEI.

    Nathan,

    You are actually not producing two products. The grain already had considerable value as animal feed before it went into your distillery.Your milling, mashing, fermenting, and distillation process does nothing to change the fact that the grain was already animal feed before you even touched it.

    The energy embodied in distillers grain carried through your still, you added (or produced) nothing more than what was already there when it came from the corn field. Your distillers grain is not a co-product, it is a waste product, that still contains embodied energy from the synthetic nitrogen fertilizer the farmer applied.

    Fortunately, there is a use for that waste product.

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  7. By Nathan Schock on July 7, 2010 at 11:06 am

    Wendell Mercantile said:

    You are actually not producing two products. The grain already had considerable value as animal feed before it went into your distillery.Your milling, mashing, fermenting, and distillation process does nothing to change the fact that the grain was already animal feed before you even touched it.


    Wendell,

    Yes, the grain had considerable value as an animal feed prior to entering our biorefinery, but it leaves as a different, and sometimes more valuable, product. Your point would be like saying there is no value in a T-bone because you could have just brought home the whole cow.

    Some of our products (http://www.dakotagold.com/prod…../index.asp) come from our proprietary fractionation process. These have very different characteristics than the grain we started with. Even the DDGS are different. If you are in Mexico and looking to purchase high-protein animal feed, you have two options: ship grain which is about one-third protein or ship DDGS which concentrates the protein. Without ethanol production, no one is going to take the time to fractionate that kernel. (BTW, our production process doesn’t use heat, so we have a better animal feed co-product than most).

    I didn’t get into the detail in the previous post, but we are also extracting specialty proteins that can replace synthetic petroleum-based proteins. We have extracted oil for use in biodiesel production. We capture the C02 in several of our plants and sell that. In the past, ethanol plants produced only ethanol and sold the wet distillers grains to local feeders. Today’s plants produce multiple products and will produce even more in the future. That’s part of the reason why the EROEI has improved and will continue to improve.

    My primary point is that if you are looking at the EROEI of a process, you have to take into account all of the products that come out of it, not just take one in isolation.

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  8. By Jim Takchess on July 7, 2010 at 12:25 pm

    You are actually not producing two products. The grain already had considerable value as animal feed before it went into your distillery.Your milling, mashing, fermenting, and distillation process does nothing to change the fact that the grain was already animal feed before you even touched it.

    Sounds like having your cake and eating it too. (which is a good thing).

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  9. By Perry on July 7, 2010 at 12:41 pm

    “The grain already had considerable value as animal feed before it went into your distillery.”

    And it took a considerable amount of energy to produce it. That energy is counted in the EROEI of making ethanol, so it’s only fair to count everything. Total energy in, and total energy out.

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  10. By Mercy Vetsel on July 7, 2010 at 12:51 pm

    Excellent article. While you go out of your way to generously allow that the USDA’s crazy logic is a valid, albeit inconsistent, I wouldn’t be so charitable. They know these results won’t include the footnotes, I’d call this a blatant lie, especially given the following paragraph:

    Only starch is converted to ethanol. On the average, starch accounts for 66 percent of the corn kernel weight (15 percent moisture). Therefore, 66 percent of energy used to produce and transport corn to ethanol plants is allocated to ethanol and 34 percent to byproducts.

    To extend your financial metaphor, this would be like a manufacturing company calculating their net profit margin on a product saying that since every 100 pounds of product generates 50 lbs of scrap byproduct, they’re only allocating 67% of the costs to the product. By volume or weight, most of the product pumped out of oil wells in the U.S. is water, so I guess the USDA needs to multiply the EROI by ratio of water to oil.

    What kind of dishonest clowns produce this garbage? And what type of fools do they take us for? This reminds me of the crazy DOE/EPA calculations where they say that the Leaf gets 367 mpg. We know that a BEV is 3 or 4 times more energy efficient than an ICE, so how does 30 or 40 mpg times 3 or 4 become 367? Well, they simply double-count the greater efficiency of the electric motors.

    So 100+ mpg equivalent efficiency isn’t enough? Our government has taken to telling us tall tales. Soon I expect to read that DOE releases stating that energy secretary Chu is 9 feet tall and flies to work by flapping his arms.

    -Mercy

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  11. By Wendell Mercantile on July 7, 2010 at 1:32 pm

    …but it leaves as a different, and sometimes more valuable, product.

    Without ethanol production, no one is going to take the time to fractionate that kernel.

    Nathan,

    You state that it leaves as a more valuable product, but then say that no one would take the time to fractionate the kernel if not for ethanol. If no one would take the time to do it, exactly how valuable can it be?

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  12. By Perry on July 7, 2010 at 1:44 pm

    Crude oil can be burned without refining. Does that mean we don’t count the EROI of byproducts when gasoline is made?

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  13. By rrapier on July 7, 2010 at 2:17 pm

    In addition, some of the energy use at the plant is devoted to drying our animal feed so it would be inaccurate to allocate all of the energy use to ethanol production.

    Hi Nathan, and thanks for dropping by. I don’t disagree with allocating some energy into the byproducts (I had actually written co-products throughout the article, but the USDA article used “byproduct” so I changed it for consistency). But I think it is a great stretch for the USDA to subtract those credits from the inputs. The truth is, you can’t actually take 1 BTU of energy and produce 2.3 BTUs of ethanol. You can take 1 BTU of energy and produce 1.4 BTUs of ethanol plus some DDGS. In my opinion – however the DDGS credit is accounted – it should go on the product side and not be subtracted from the input side as that presents an inaccurate picture.

    For instance, China maintains quotas on corn imports but does not for DDGS. For that reason, DDGS exports from the U.S. to China have expanded greatly in recent years.

    Of course then we will have to allocate energy to ship it to China. ;)

    Obviously, there are dozens of different ways that you can calculate EROEI, but no matter how you calculate it, the progress has been impressive. And this number will improve in the future.

    I agree that the drop in the inputs has been impressive, but I don’t expect that kind of progress over the next decade. The reason is that distillation and drying are very mature industrial processes. As the corn ethanol industry was built up, it was inevitable that these processes would be optimized for the industry. But once you have optimized these processes, there isn’t much more efficiency to be squeezed. I will be stunned if you manage to shave another 20,000 BTUs/gal off of the inputs in the next 10 years.

    RR

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  14. By rrapier on July 7, 2010 at 2:30 pm

    Crude oil can be burned without refining. Does that mean we don’t count
    the EROI of byproducts when gasoline is made?

    Certainly not in the same way the USDA is accounting for ethanol. If we did that, we would subtract the fuel gas that is produced from the inputs. We could actually refine gasoline with the fuel gas that is produced as a byproduct, thus creating an infinite EROEI for gasoline.

    And Maury, we still need to have a little talk.

    RR

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  15. By doggydogworld on July 7, 2010 at 3:46 pm

    One can cross-check co-product claims with simple economics. What is the market price for the DDGS produced from a bushel of corn vs. the price of the original bushel? If the DDGS price is 34% of the original corn then I think it makes perfect sense to subtract 34% of the energy invested into the corn from the input energy. You legitimately have two parallel product streams in this case.

    But if the DDGS which come from a bushel of corn only fetches 5% of the original corn price then DDGS is just a waste byproduct and it is disingenuous to subtract any input energy.

    Process energy is a little trickier because some operations (e.g. drying) apply only to DDGS. But without ethanol production there would be no need for drying. Before diving into that, I’d like to hear about DDGS pricing vs. original corn pricing. We have people here with a good feel for those numbers, so let’s hear them!

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  16. By rrapier on July 7, 2010 at 3:47 pm

    Excellent article. While you go out of your way to generously allow that the USDA’s crazy logic is a valid, albeit inconsistent, I wouldn’t be so charitable.

    Hi Mercy,
    It was much debated behind the scenes just how far to go in pointing the finger at those involved in this USDA paper. Personally, I think an agenda is showing and their allocation method is inappropriate, but what I decided to do was just lay all the numbers out there and let readers come to conclusions. As I told Sam Avro, the editor here, “We have some pretty smart readers who can come to those conclusions on their own.”

    RR

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  17. By rrapier on July 7, 2010 at 4:00 pm

    doggydogworld said:

    One can cross-check co-product claims with simple economics. What is the market price for the DDGS produced from a bushel of corn vs. the price of the original bushel? If the DDGS price is 34% of the original corn then I think it makes perfect sense to subtract 34% of the energy invested into the corn from the input energy. You legitimately have two parallel product streams in this case.

    But if the DDGS which come from a bushel of corn only fetches 5% of the original corn price then DDGS is just a waste byproduct and it is disingenuous to subtract any input energy.

    Process energy is a little trickier because some operations (e.g. drying) apply only to DDGS. But without ethanol production there would be no need for drying. Before diving into that, I’d like to hear about DDGS pricing vs. original corn pricing. We have people here with a good feel for those numbers, so let’s hear them!


     

    I can always count on you to inject some truly thoughtful comments into the debate.

    From http://www.ams.usda.gov/mnrepo….._gr225.txt report on July 6 (yesterday) 

     

    DISTILLER’S DRIED GRAINS: Eastern Corn-belt was steady to 6.00 higher from 95.00-124.00 per ton; Chicago area was steady from 110.00-112.00 per ton; Lawrenceburg, IN was steady at 105.00 per ton; Nebraska was 2.00 lower to 5.00 higher from 83.00-100.00 per ton; Minnesota was 5.00 higher from 92.00-100.00 per ton; Kansas was steady to 3.00 higher from 85.00-108.00 per ton. Iowa was steady to 4.00 higher from 85.00-110.00 per ton. Northern Missouri was 2.00 lower to 4.00 higher from 106.00-113.00 per ton.

    Corn is currently bringing about $3.70 per bushel, which is $132 per ton. As far as the DDGS yield goes,

    you are going to get about 600 pounds of DDGS per long ton of corn. So for $132 of corn, you will get $34 of DDGS – 26% of the original price of the corn.

    However, I still don’t think it makes sense to subtract that energy from the input, as that implies something that isn’t true. If I do this, I might conclude that my ethanol energy balance is 2.3/1, when in fact I can’t take 1 BTU and produce 2.3 BTUs of ethanol.

    RR

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  18. By doggydogworld on July 7, 2010 at 4:07 pm

    OK, the USDA says DDGS is running around $100/ton or a nickel per pound:

    http://www.ams.usda.gov/mnrepo….._gr225.txt

    That’s 90 cents worth of co-product from a bushel of corn, assuming each corn bushel yields 18 pounds of DDGS. Corn is running 3.70/bu, so the DDGS is worth about 25% of the original corn. A real analysis would look at pricing over time to smooth out price volatility, but I’m lazy. Other co-products probably kick this up close to 30%. So it’s legitimate to subtract 30% or so the energy embedded in the corn from the energy input side of the equation.

    I’m less inclined to subtract 30% of the process energy. The process energy does not really add value to the food product. You would not spend the energy to dry DDGS if you weren’t making ethanol. Therefore I tend to allocate all or almost all process energy to ethanol.

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  19. By Wendell Mercantile on July 7, 2010 at 4:44 pm

    …the USDA says DDGS is running around $100/ton or a nickel per pound:

    What gives, that’s less than a pound of oatmeal costs (~ $0.80 per lb). At $100/ton, you’d think Kellogg’s and Post would be buying distillers grains to make high-protein corn flakes and grits from it.

    For a supposed high-protein product, it doesn’t sound as valuable as Nathan makes it sound.

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  20. By doggydogworld on July 7, 2010 at 5:00 pm

    I think oats are closer to $0.08/lb than 0.80.

    Does exporting DDGS to Mexico and China mean wevre saturated the US market? I still wonder if POET is using some of the co-product as fuel (along with corn cobs) at Project Liberty. It would make the energy balance numbers match what they’ve announced pretty cleanly and would probably make economic sense. Not only do you avoid having to dry a nickel/pound product but you also displace expensive natgas.

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  21. By Wendell Mercantile on July 7, 2010 at 5:19 pm

    I think oats are closer to $0.08/lb than 0.80.

    I was using the Quaker Oats retail price for oatmeal at a grocery store. You’re right about bulk whole grain oats. July oat futures are $2.48 / bushel with about 32 lbs of oats to a bushel. That’s slightly less than $0.08/lb.

    I still don’t know why Kellogg’s and Post aren’t buying up distillers grains to use making high-protein breakfast cereal. Sounds like a bargain at $0.05/lb.

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  22. By Nathan Schock on July 7, 2010 at 6:20 pm

    Wendell Mercantile said:

    You state that it leaves as a more valuable product, but then say that no one would take the time to fractionate the kernel if not for ethanol. If no one would take the time to do it, exactly how valuable can it be?


    Wendell,

    A biorefinery can cost upward of $200 million or more to construct and the fractionation milling process can cost tens of millions depending on the size. If that adds a few cents per lb, it makes the product more valuable but doesn’t justify the capital expense.

     

    Mercy Vetsel said:

    To extend your financial metaphor, this would be like a manufacturing company calculating their net profit margin on a product saying that since every 100 pounds of product generates 50 lbs of scrap byproduct, they’re only allocating 67% of the costs to the product. By volume or weight, most of the product pumped out of oil wells in the U.S. is water, so I guess the USDA needs to multiply the EROI by ratio of water to oil.

    Mercy,

    I guarantee you that manufacturing companies WILL account for the value they receive for selling the scrap metal in the overall cost of the product.

    doggydogworld said:

    I’m less inclined to subtract 30% of the process energy. The process energy does not really add value to the food product. You would not spend the energy to dry DDGS if you weren’t making ethanol. Therefore I tend to allocate all or almost all process energy to ethanol.

    doggydogworld,

    Wet DGS sell for about a third of what dried DGS sell for. If they didn’t sell for more, we wouldn’t use the energy to dry them.

     

    I’m having a hard time understanding what everyone here is so up in arms about. If you want to calculate EROEI, you have to take into account the multiple products produced. It seems to me (although I don’t spend much of my time calculating EROEI) that there are two ways to do it: you either figure out how much of the energy that goes into the process is necessary for the DDGS or you figure out how much energy it would take to produce an equivalent amount of grain that the DDGS displace. Take your pick.

     

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  23. By Benny BND Cole on July 7, 2010 at 8:43 pm

    I hate to write anything that encourages the corn crowd, but over at Biofuels Digest comes a story that rising crop yields may change the playing field.

    “Monsanto has projected that corn yields will reach an average of 300 bushels per acre by 2030, and Ceres CEO Richard Hamilton has stated that he is comfortable with a range of 12 tons per acre for switchgrass yields by 2022, based on current trends.

    In the US, 2020 corn acreage is estimated at 87.9 million acres, and if this acreage holds, by 2030 the US can be expected to produce, according to Monsanto projections, up to 26.37 billion bushels of corn, or roughly 13.1 billion bushels more than today. Monsanto’s increased yield vision does not necessarily involve a freakish level of nitrogen juicing of the Midwest, but rather a series of genetic enhancements through breeding that may, in fact, reduce overall fertilizer despite the boon in production…”

    http://biofuelsdigest.com/bdig…..al-report/

    This could be hype. But I have noted similar trends in palm oil–yields keep going up, in the case of palm oil, about 4 percent a year. At some point, a bad idea becomes an okay idea. Inputs have been going down, too. Man is creative, inventive, smart–we get batter even at doing wrong things.

    What if, in 25 years, yields on corn, palm oil and pongamia pinnata have all doubled and tripled?

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  24. By Takchess on July 7, 2010 at 9:57 pm

    OT but since you wrote about climategate in the past

    http://www.treehugger.com/file…..ntists.php

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  25. By OxyMaven on July 7, 2010 at 10:44 pm

    Over time, bad ideas can become ok, and the USDA net energy report admits that the corn ethanol was an ‘energy sink’ sometime before the 1990′s. Clearly a bad idea then, and one of the reasons why it would have been stupid to turn to ethanol in the late 1970′s and 1980′s (and 1990′s?) in an effort to reduce our oil imports.

    I’m much less confident of 300 bu corn in 2030, and don’t think we should make energy policy in 2010 based on those kind of claims. Maybe we could be like Brazil and figure out how much corn to use for ethanol based on how well the crop does each year.

    I don’t quibble too much with these USDA results, especially since they are using 2005 corn production data, and it’s pretty clear that there have been substantial improvements in that arena in the last 5 years. I do find it curious that rely on data from only 16 ethanol plants, and make absolutely no effort to show that those plants are representative of current total production. That is a critical piece of information for any basic survey, and it reflects very poorly on USDA that they don’t do it. The whole ‘report’ looks kind of rushed to me.

    I also would like to know how the USDA handles corn production inputs in years like 2009 when much of the crop had to be either replanted, and/or have supplemental nitrogen applied because of the widespread flooding, and then had to have a lot of extra drying since much of the crop was harvested late and had high moisture contents. Also, there are current reports that a good bit of the 2009 crop is lower quality, and it is requiring more bushels per gallon of ethanol. Seems like that would be something the USDA (and DoE, and EPA) should be figuring out.

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  26. By Mercy Vetsel on July 7, 2010 at 11:21 pm

    I guarantee you that manufacturing companies WILL account for the value they receive for selling the scrap metal in the overall cost of the product.

    I think you misunderstand the problem with their approach. It’s not that they are including the energy value of the byproducts, but that they are using the weight of the byproduct to allocate the energy input.

    That makes absolutely no sense. They might as well have used the numbers of letters in the names of the byproduct.

    Let’s say that you are calculating return on invested capital. You invest $100 to get 100 pounds of product worth $120 and 50 pounds of scrap worth $20.

    Your return is ($140 – $100) / $100 = 40%.

    Unless you are an USDA accountant. Then you use an utterly arbitrary measure — the respective weights — to allocate $67 of your $100 as input to make the product and allocate the other $33 to the production of scrap, so your ROIC for the product is now ($120 – $67) / $67 = 79%.

    Of course you can’t make the product without also making the scrap and the overall return on the entire process is still 40%, but when you are making up numbers it doesn’t really matter whether those numbers mean anything.

    That kind of nonsense would have gotten even an Enron accountant fired.

    -Mercy

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  27. By Wendell Mercantile on July 7, 2010 at 11:30 pm

    A biorefinery

    Nathan~

    Why do you call it a “biorefinery” instead of a distillery? After all, you do call the fraction of the corn kernel you can’t distill into ethyl alcohol “distillers grains.”

    If it’s not actually a distillery, shouldn’t you instead be calling the leftover product “biorefiners grains?”

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  28. By Walt on July 8, 2010 at 6:02 am

    Robert Rapier said:

    It was much debated behind the scenes just how far to go in pointing the finger at those involved in this USDA paper. Personally, I think an agenda is showing and their allocation method is inappropriate, but what I decided to do was just lay all the numbers out there and let readers come to conclusions.


     

    This is what concerns me since fewer and fewer commentators (and investigative reporters) are prepared to draw conclusions.  It is one thing to openly condemn a technology sector for inaccurate press statements and claims (which is often taken out of context), but another to take all the published data and systematically show a pattern of inaccuracy.  The devil is always in the details as Robert has accurately outlined.

    I can see why the issue was “debated behind the scenes just how far to go” since the overly obvious financial engineering to make things appear different than they really are is often never exposed, or if it is, the debate rages how far to call them to the carpet.  If too much is said, you might make a list of the 10 worst of this or that, or haters of this or that from the attack crowd.

    On the other side, mistakes can be made and those can be corrected with a retraction.  The more I dig into the numbers, not just the science, it makes my stomach turn how real innovation and substantial technical improvements are ignored in favor of “marketing” and “deception”.  The problem is rampant on Wall Street and in Washington and slowely moving to the heartland and across this country.  What I’ve seen by the BP coverage and the obvious issue being debated behind the scenes of just how far to go disclosing facts and exposing errors is becoming lengendary.  I don’t know how the Gulf will effect energy policy, but the more I see the reports coming out of Washington to justify where our money is going and how it is engineered for the media, I cannot help but think very serious energy problems are coming much faster than I anticipated.

    I’m glad this forum is pulling out the numbers…which is how our engineers work day after day…to disclose these concerns.  Healthy and honest debate is good for the industry…but there is a problem here that cannot be overlooked in Robert’s article.  The more I keep reading about these issues and how things are calculated to raise money (forget press releases which are a non-starter with me) or obtain financing from Wall Street, the more I wonder where all this is headed?  I’m not as confident as I was 2-3 years ago in the debate.

     

     

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  29. By Walt on July 8, 2010 at 6:03 am

    Nathan Schock said:

    I’m having a hard time understanding what everyone here is so up in arms about. If you want to calculate EROEI, you have to take into account the multiple products produced.


     

    So close to the trees you cannot see the forest.

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  30. By Benny BND Cole on July 8, 2010 at 4:12 pm

    Paul N-

    I don’t think we have to compare corn to anything–I think the price mechanism will do it for us.

    I do have to concede there might be such a thing as long-term free market failure.

    Let us suppose that corn yields do reach Monsanto’s braggadocia 300 bushels per acre in 2030, on less inputs. It is not crazy–corn yields have been rising by 2 percent a year for generations.

    At that point, according to you, we will be getting roughly 60 gallons of ethanol for every one gallon of diesel or gasoline used.

    Since diesel and gasoline are largely derived from imported (and unreliable) oil, this might actually be an okay result.

    And we never would have gotten there without government mandates and subsidies. Same way the Internet might never have gotten off the ground without DoD funding.

    I sense there other areas where private investors simply can’t think 20 years ahead. The payoffs are too uncertain. I hate to say government is the answer, as we all know how government gums up everything. But…..

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  31. By Walt on July 8, 2010 at 6:23 am

    I thought I would make my point so even a 6th Grader can understand it clearly.  I just read this moments ago after my last point, and thought how many will stay silent month after month with pleas for cooperation from Washington like this:

    “No one can convince us that rocks in the water are more dangerous than
    oil. That is absolutely ridiculous. The only people who believe that are
    the bureaucrats in Washington, D.C. who can’t see the oil, smell the
    oil or touch the oil.”

    http://beforeitsnews.com/news/…..e_Way.html

    Of course I don’t know if someone in Washington believes that rocks are more dangerous than oil to Louisiana, but you can bet someone did a calculation using their own methodology at the Army Corp of Engineers, and the decision is final…unless it is overturned by the final executive in Washington.

    I’m loosing confidence in our energy policy, and government to solve these problems…yet everyone runs to them for money and help.  Why?  Would it be because money can buy you happiness in DC?  I’m beginning to wonder!

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  32. By Wendell Mercantile on July 8, 2010 at 9:39 am

    I’m having a hard time understanding what everyone here is so up in arms about. If you want to calculate EROEI, you have to take into account the multiple products produced.

    Nathan~

    And one also has to take into account all the energy that goes into those products. And that should necessarily include all the embodied energy in the steel and concrete in an ethanol distillery (i.e. biorefinery), all the embodied energy that goes into the infrastructure and ag machinery on a corn farm, and all the embodied energy that goes into the transportation infrastructure that distributes corn, corn products, and ethanol. As far as I can tell, the latest USDA report didn’t even include as an input the energy needed to produce the hybrid seed corn farmers use.

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  33. By bryanb on July 8, 2010 at 12:18 pm

    This is getting further away from the gist of the EROEI discussion, but OxyMaven’s comment about corn yields should be explored. I’m curious how corn starch and protein yields have changed with the increasing crop yield. I found one report that concluded that more N fertilizer increases protein yield but decreases start yield. Are corn crops being planted and fertilized to optimize starch production these days? Would increasing the ratio of starch to protein (decreasing DGS yield) affect the economics of ethanol production in a good, bad or neutral way? I’m not a farmer but I live in TX and read how wheat prices are lower because the protein content is lower because/even though wheat yields are up.

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  34. By doggydogworld on July 8, 2010 at 12:38 pm

    Robert Rapier said:

    However, I still don’t think it makes sense to subtract that energy from the input, as that implies something that isn’t true. If I do this, I might conclude that my ethanol energy balance is 2.3/1, when in fact I can’t take 1 BTU and produce 2.3 BTUs of ethanol.


     

    Here’s how I’m starting to think about it. You have three equal cornfields: A, B and C. You put the corn from A and B into a black box, add energy and out comes pure ethanol. No waste or coproducts. You simply sell the corn from field C as food. Your ethanol EROEI looks like this:

    Eout = ethanol

    Ein = energy put into fields A and B + energy added to black box

    EROEI = Eout / Ein

    You obviously do not count the energy invested into field C as an ethanol energy input. Agreed? Now let’s change one tiny thing and say the black box sits astride your only road, so the corn from field C must pass through the it on the way to market. There is no extra processing, the corn from field C comes out exactly as it went in. Does the EROEI math change? Of course not.

    I think this simplified model best represents current ethanol production. Reality is obviously more complicated, but I contend the outcome is the same as above. We put food from three fields into a black box, add energy and get back one field of food and two fields of ethanol. The proper EROEI calculation is thus the same as above:

    Eout/Ein = Eethanol / (EfieldA + EfieldB + Eblackbox)

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  35. By Wendell Mercantile on July 8, 2010 at 12:43 pm

    Interesting comment BryanB. That raises the issue of whether a farmer could raise a designer crop of corn if he knew it was all destined for an ethanol plant, versus going to Kellogg’s to be made into corn flakes, or to an ADM plant to be made into HFCS, or to the local hog farmer for rations.

    POET would probably like corn with more starch and less protein. I’m sure a hybrid seed company could genetically modify corn to optimize it for ethanol production, as opposed to corn optimized for making tortillas, polenta, or HFCS.

    Instead of corn being fungible and all mixed together at the grain elevator, perhaps companies such as POET could contract with specific farmers to raise corn specifically designed to be fermented and distilled into ethanol.

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  36. By doggydogworld on July 8, 2010 at 1:32 pm

    Nathan Schock said:

    Wet DGS sell for about a third of what dried DGS sell for. If they didn’t sell for more, we wouldn’t use the energy to dry them. 


     

     

    Sure, but you are only reversing damage you caused to the original food when making ethanol. If you weren’t running the corn from field C through the black box and turning it into near-worthless wet DGS then you wouldn’t need to spend energy drying it. Since drying only reverses damage caused by ethanol production the drying energy gets charged to ethanol.

    If DDGS were truly a premium miracle food the equation would change. We could allocate some of the black box energy toward “upgrading” the corn from field C into DDGS superfood. But market prices show DDGS is no more valuable than corn (in fact, a bit less). There is thus no “food upgrading” and my simplified model applies:

    Ein = 2/3rds of field energy + all process energy = 10k btu/gal + 40k btu/gal = 50k btu/gal (roughly)

    EROEI = Eethanol / Ein = 76k/50k = 1.52

    Note that EROEI would probably improve if you didn’t dry the DGS. Since wet DGS is basically worthless we now must count energy from all three fields toward Ein. But we save the drying energy, which I’ll guesstimate at 10k btu:

    Ein = all field energy + reduced process energy = 15k btu/gal + 30k btu/gal = 45k btu/gal

    EROEI = Eethanol / Ein = 76k / 45k = 1.69

    I can make an argument that 1.69 is a better measure for the “true” ethanol EROEI but it gets convoluted. For example, if DDGS are necessary to cost-justify the plant or if the drying energy comes from waste heat then the argument falls apart and we’re back to 1.52.

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  37. By paul-n on July 8, 2010 at 3:53 pm

    “Fun with numbers” would seem to be an appropriate title for this post.  Yet again we are discussing ethanol EROEI – the amount  of time spent and words written on this topic far outweigh its actual importance.  But since this is the topic of the day, I will have my say too.

    Thanks RR for the post, and thanks also to Nathan for your comments – it is a refreshing change to have a real opinion from a real person in the ethanol industry,  who is willing to put their name to what they say, rather than comments from anonymous ethanol supporters writing under psuedonymns. 

    I don’t agree with the way the USDA’s accounting for the of the co-products here.  If we are looking at them as animal feed (as we should), then is seems to me the way to allocate energy inputs to the DDGS is like this;

    Whatever is the energy used to grow one BTU (calorific value as feed) of corn, is the amount of energy that is credited to each BTU of DDGS created, because that’s what it is if we are not diverting the corn to the distillery first.

    Then, we can allocate part of the energy for corn production to the DDGS, but NONE of the energy at the distillery, as NONE of it would ever have been used if we were just feeding the corn directly.

     

    So with that in mind, here is my version of corn EROEI;

    Base case is to grow and harvest corn directly for animal feed, as is widely done. This takes 41,000BTU/bushel (nine state average, 2005, from USDA numbers), and one bushel has 392,000BTU calorific value (7000BTU/lb), so it takes 0.105BTU energy to produce one BTU of corn.

    The USDA then proceeds on the basis of per gallon of ethanol, allocating 1/ 2.76 of the energy input, to get 14,866BTU to produce the corn to make one gallon of ethanol.  Now, they say that 66% of the (dry) weight is starch, and becomes ethanol, so we’ll use 66%x14,866=9811 BTU of energy input to GROW the corn fraction used for ethanol.

    Now, at the distillery, ALL of the energy used goes against ethanol, because if we weren’t distilling it, NONE of this energy would be used.   This includes the enrgy to dry the DDG’s, because if they hadn’t been distilled, they would not need drying.

    SO, according to the USDA report, the distillation process, including drying, takes 40,019BTU.  I will ignore the farm machinery energy, as this should be in production, and the fuel distribution, as al fuel needs to be distributed, and if they used their ethanol locally, the distribution energy would be very small.

    So we now have 9811BTU to grow the distilled portion, and 40,019BTU to distill, for a total of 49,830BTU of energy input.  The energy in one gallon is 76,300 BTU so the real EROEI is then 76,300/49,830=1.53.

     

    But the bigger question is, what does this mean, is that 1.56:1 good, or bad?  The objective is to produce liquid motor fuel, and most of the energy input is electricity and natural gas (though it could also be coal, or biomass).  The interesting number to me is what is the liquid fuel return on investment?

    There is only 5.81gal of diesel and 1.92 gal of gasoline used, per acre, to grow the corn, which works out to 2200BTU per gallon of ethanol, for a liquid fuel return ratio of 34:1. 

    So, if the idea is to use corn ethanol to reduce oil consumption, clearly, it does (whether it does so economically is whole different question, of course).  However it increases the use of other, non oil, energy sources.  If waste heat, or solar, were used in the distillation process, the total fossil fuel EROEI would increase, because we use less natural gas, but the liquid fuel return ratio would be unchanged.

    As Rufus has said before, corn ethanol is effectively a gas to liquids scheme, though a somewhat indirect one.  What we should now do is compare with direct gas to liquid pathways (gas to methanol, or to DME) for both EROEI and economics.

    Then we will know whether we are better off to leave the corn as animal feed, or not.

    One final thought – while there is a very good reduction in oil use from corn ethanol, the large amount of non oil energy used means that there is only a marginal decrease in CO2 emissions, compared to burning oil.  If coal is used for the distillation process, the CO2 emissions would be higher than the oil it is displacing.  This is why we should be very clear on what are the goals of these programs.  I am all for displacing oil, displacing CO2, for those that consider it important, is much, much harder to do.

     

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  38. By paul-n on July 8, 2010 at 6:31 pm

    Benny,

    There already some places that get 300bu/acre yield, under very idealised conditions, so it can be done.  However, i think the corn growers will run out of water before that becomes the average yield.

    But, yes, the liquid fuel inputs would not change much for the higher yield, so it makes the production side more energy efficient.  Also, if the yields get up to that, corn will be even cheaper than it is now, so the ethanol product would be cheaper too.  Agreed that the price mechanism, if the politicos can keep their hands off it, will do the selecting for us, but I’d still be interested to see a comparison of GTL with ethanol – maybe there’s a future topic for RR?

     

    @ Doggy – you came up with pretty much the same method, and result as I did – didn’t see yours before posting mine!  Agreed that the obvious improvement is to not dry the residual grains – but it is not worthless – just feed it directly to stock.  This sort of thing favours small, localised/ on farm distilleries, that are near a feedlot/piggery/dairy farm or some such animal operation – which is Rufus’ plan.

    The USDA’s report said that 51% of the energy in a dry mill operation is drying the DDG’s, which is 20,400BTU’s so if you take that out, completely, the total energy inputs become 30,000BTU for 76,300BTU of ethanol, or an EROEI of 2.54:1

    If we just discard the residuals, and attribute 100% of the production energy for corn to the ethanol, we then have 14866+19,600=34,500BTU, and the EROEI is 2.21

    So, in the process of creating a useable co-product (DDG’s) so much energy is used, that even with the USDA’s rubbery figures, their EROEI (2.3:1) is scarcely better than  if you just discarded the residuals.  

    Of course, economically, you are better off to dry the grains.  You need 20,000BTU’s to dry 1/3 of a bushel of DDG’s (17lbs).  So to dry one ton of it, you need 2.6 million BTU’s, or about $15 of nat gas, to create one ton of product at $100.

    And that comes back to my central thesis, that you are turning cheap nat gas in to expensive liquid fuel.  Ethanol at $1.60/gal is $21/million BTU’s, and natural gas is around $4/MMBTU, so anything you can do to turn one into the other, is worth looking at.  

    It just may not be worth subsidising…

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  39. By Kit P on July 8, 2010 at 9:01 pm

    “although I don’t spend
    much of my time calculating EROEI”

     

     

    Neither do I Nathan. EROEI
    is an invention of the anti-s be it anti-nuclear or anti-ethanol.

     

    This old guy remembers corn
    rotting on the ground in Indiana because there was not energy to dry
    it. My senior project was studying the feasibility of using waste
    heat from a power plant to dry grain. A few years later, the
    shipyard I was at closed for a while because of a natural gas
    shortage.

     

    Americans are mostly
    insulated from energy shortages but bad things happened when there is
    not enough energy. Next winter’s emergency wood pile is stacked and
    waiting. E10 and corn is an insurance policy against being held
    hostage to oil cartels.

     

    Tell the navy and marines
    how you do not like open sea lanes. Tell your utility how you do not
    like you your electricity is made. Tell farmers how they are doing
    it wrong.

     

    Nathan it is clear the corn
    ethanol industry is doing a great job and a better job every year.
    All you can do is explain what you are doing for those who are
    interested in hearing both sides.

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  40. By Rufus on July 9, 2010 at 5:59 am

    Poet burns “storm-felled trees” to power Chancellors, SD ethanol plant. What’s the EROEI of that?

    http://www.rhapsodyingreen.com…..plant.html

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  41. By Takchess on July 9, 2010 at 6:25 am

    http://www.technologyreview.co…../#comments

    On Salt and Soils. note link in comments.

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  42. By Wendell Mercantile on July 9, 2010 at 9:40 am

    Poet burns “storm-felled trees” to power Chancellors, SD ethanol plant. What’s the EROEI of that?

    Rufus~

    As an energy input, it’s whatever the caloric (Btu) value of those trees represents. It doesn’t matter whether they buy natural gas, or use wind fallen trees in the calculus of energy in and energy out.

    Obviously there is a big economic difference, and probably even an environmental difference. But in an “energy out” vs. “energy in” comparison, the source of the energy makes no difference.

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  43. By paul-n on July 9, 2010 at 11:10 am

    Rufus, was wondering when you’d appear – all this discussion about ethanol without you seems strangely quiet!

    Good to see they are using (waste) biomass there. From POET’s page it looks like they are also using wood waste and methane gas from the local landfill – both good moves.  

    The EROEI is, technically, the same as using NG for the boiler.  If they are successful in replacing all NG with biomass, then great, the EROEI is still the same, but the fossil fuel EROEI improves dramatically (though the liquid fuel EROEI is unchanged).

    What I think they really should be doing is using their steam to first generate electricity, and then send the spent steam on to their process. Superheat the steam before the turbine, and then you have saturated steam coming out, which is ideal for process heat.

    Assuming they use 30,000BTU’s of steam per gallon of ethanol, and at 100million gpy, they could easily be generating 20MW of electricity, worth $10m per year, and this from waste!  This would not, strictly speaking, improve their EROEI, but it would improve their profitability.

    As an afterthought, the 100mgpy of this plant also gets them (indirectly) up to $45m from the Feds in terms of the ethanol subsidy.  That is much easier than doing electrical co-generation!

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  44. By paul-n on July 9, 2010 at 11:24 am

    Also noticed this on POET’s website;

    We are also proud to be a part of Growth Energy which encourages a positive perception of our plant and industry. Growth Energy promotes the expansion of the use of ethanol in gasoline and the importance of decreasing our dependence on foreign oil through smart policy reform and a proactive grassroots campaign.

    Hmm, an industry group which has its primary function of encouraging a positive perception of the industry.  This means that, obviously, no one would reach a positive perception on their own!  

    Promoting the expansion of ethanol by policy reform, which means mandates and subsidies, and no mention of promoting expansion by finding new markets, encouraging innovation, etc. Not to say these things aren’t happening, but clearly the focus is on lobbying for greater mandates so people have to use ethanol,  rather than finding ways for for them to want to use ethanol.

    As an example, the town of Chancellor, where the 100m gpy is produced, has only ONE E85 station.  The nearby town of Harrisburg, where the trees are coming from, and everyone seems so supportive of the whole concept, has ZERO E85 stations.  Clearly, these towns are benefitting handily from the (subsidised ethanol) industry, but don’t even want to use it’s own product.

    If the people of ethanol country in S.D. aren’t embracing ethanol fuel, why should the rest of the country have more forced upon them? (Growth Energy’s proposed 15% blend mandate).

    I think the Feds should tell Growth Energy to take a hike,  and come back when they have at least one state, or even county, that has a substantial ethanol economy (i.e. uses more ethanol than gasoline +diesel fuel).  Only then is decreased dependence on imported fuel truly demonstrated.

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  45. By Thomas on July 9, 2010 at 11:47 am

    Finally looked up that new 2011 Buick Regal.  The turbo-charged model will start arriving in August 2011. Also: “Until now, normally aspirated flex-fuel engines typically have gotten about 15 percent worse fuel efficiency on ethanol. The Regal engine should cut that deficit to the mid-single digits and future versions should be just about even.” That’s a GM executive, see source below. So from 15% fuel economy drop to maybe 5,6, or 7%? “Mid-single digits” isn’t going to make a difference on TV adds or the showroom floor.  Seems like they are just throwing a bone to the ethanol crowd, at minimum risk.  The engine is from an existing Saab model and has been in Chinese Regals since late 2008.  If the U.S. car market is white hot for FFVs why did GM sit on this for almost three years?  The Volt should be out by then, it will be interesting to compare sales. 

    http://www.autoblog.com/2010/0…..this-fall/

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  46. By Rufus on July 9, 2010 at 1:16 pm

    I’ve been solving “other” World problems this week.

    I’ve been beaten up for the last two years for saying the EROEI of Ethanol is in the 2.2 to 2.3:1 range.

    Thomas, reading your link I come up with late August for the arrival of the “2011″ 2.0 L Buick Regal.

    Hopefully, with the arrival of some cars with more ethanol-efficient engines, the industry will do a little better job of promoting/building out E85.

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  47. By rrapier on July 9, 2010 at 1:30 pm

    I’ve been beaten up for the last two years for saying the EROEI of

    Ethanol is in the 2.2 to 2.3:1 range.

    That’s because it is incorrect. The one thing that should be readily apparent from this essay is that the real EROEI isn’t in that range. Or, putting it another way,  you can’t take 1 BTU of energy and produce 2.2 BTUs of ethanol, which is what that EROEI would imply. I think the true EROEI is in the 1.4 to 1.6 range (again with the caveat that not all energy inputs have been considered).

    RR

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  48. By Oxymaven on July 9, 2010 at 1:39 pm

    I’m basically a fan of corn ethanol as a starter biofuel that can help show the way to other alt fuels that can help supplement gasoline. But 15 billion gallons is plenty for now. If yields & efficiencies continue to rise, I’m fine with slowly increasing that cap, especially if they stop the VEETC.

    NCGA annual corn yield contest winners have been at >300 bu corn for over 20 years, but those are 10 acre plots of high inputs, usually irrigated, and have not changed all that much in 2 decades (still usually <350 bu), so I’m not sure that we should expect every acre of corn in the US to get to 300 bu (and that is probably impossible in states like MN, SD and WI unless global warming helps them out). I also wonder sometimes if the advocates of endless higher corn yields aren’t somewhat like the Wall Street bankers who saw endless higher housing prices . . .

    RE E85 – why would a brilliant GM executive say that E85 FFVs only show a 15% drop in mileage, when it has been proven over and over and over that it is 26%. That is scary ignorance. Can’t wait for the new Regal to hit US shores and have that myth destroyed.

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  49. By Rufus on July 9, 2010 at 1:41 pm

    I find it interesting that Iowa, a state of 3 Million people (that would be expected to use approx 1.35 Billion gallons of gasoline) produces 3.3 Billion gallons of ethanol. Even after allowing for approx 20% less efficiency in the present fleet that comes out to about 2.65 Billion gal of gasoline equivalencey, or 833 gal of gas equiv/capita.

    If the State of Iowa instituted a Tax of $0.01 per gallon, and directed the money to the building out of Blender Pumps (figure $50,000.00 per pump,) that would pay for 660 Blender Pumps “This” year.

    With half of the vehicles from the Detroit 3 being flexfuels in 2012 the Surge in local demand would surely increase the price of ethanol at the refinery-gate enough in Iowa to more than “Recoup” the One Penny/gal investment.

    The Refiners could accomplish this on their own with a “Check-Off” Program. More than a few ethanol supporters are getting a bit irritated at the laziness of the distillers, and their affection for the government teat.

    I, for one, am having a hard time working up much support for, either, extending the blenders credit, or for approving E15, as things now stand.

    Nathan, are you listening?

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  50. By rrapier on July 9, 2010 at 1:49 pm

    I find it interesting that Iowa, a state of 3 Million people (that would
    be expected to use approx 1.35 Billion gallons of gasoline) produces
    3.3 Billion gallons of ethanol.

    I was on a radio show yesterday in the Midwest, and this is essentially what I said. I argued that the Midwest could use much greater penetration of E85, because that market alone could absorb 100% of today’s ethanol production close to home. I also said that I hoped John Deere was working on tractors that could run off of ethanol. I said this partially in response to a question about the proposed ethanol pipeline. I asked why you would do something like that when there is so much untapped market so close to the source of production.

    RR

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  51. By Wendell Mercantile on July 9, 2010 at 2:16 pm

    Thanks for the poke Rufus, you made me think of a question for Nathan:

    Nathan,

    Why isn’t POET building a chain of E85 refueling points along major Interstate highways through the Corn Belt such as I-80 across Iowa and Nebraska, I-35 running south from Minnesota through Des Moines, and I-90 and I-94 across Minnesota and the Dakotas? If I drive a flex-fuel car from Chicago to Cheyenne, why can’t I find POET filling stations along the Interstate at which to buy E85?

    If you guys believe in ethanol and want to sell it so badly, why not set up your own chain of ethanol filling stations and market it directly to the consumer? That’s what companies such as Phillips 66, Texaco, Marathon, and Sinclair had to do to expand their market for auto fuel.

    Why do you expect government programs and mandates to make it happen, instead of establishing your own distribution network and marketing as the oil companies had to do in their formative years?

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  52. By paul-n on July 9, 2010 at 3:35 pm

    Rufus, hope you got your other world problems solved, but if you are good at it, and need more of them to solve, I can throw a few your way.

    While I am no fan of the VEETC, I am fine with the E15 (speaking purely from opinion here, as since I am in Canada I don’t get any of the costs or benefits of this).  Which suggests that what Congress should do is give them their E15, and take away the credit – I would be interested to see what the ethanol industry’s response would be to this.

    I am also with Wendell in questioning why there aren;t more efforts made by the ethanol producers (other than Valero) to retail their own product.  I am amazed that Chancellor has only one E85 pump in a town that produces 100mgpy of ethanol.  That is enough ethanol for the annual driving needs of 133,000 cars – why are they not using more?

    Do all the Poet employees drive E85?  They should set up their own pump at the distillery gate and sell from there.

    Wendell is right about the reason why the oil companies set up their own retail, the ethanol industry can play that game too, and in the midwest, there should be enough public support to make it work.  

    It is madness to be shipping ethanol to Hawaii, or even California, when it is not being used in the midwest.

     

     

     

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  53. By Wendell Mercantile on July 9, 2010 at 5:04 pm

    Rufus~

    I found just the car for you, a real flex-fuel car that can run on either wood or charcoal. Image is of a German Adler from WW II with a wood gas generator attached to the back:
    Flex-fuel car for Rufus

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  54. By russ-finley on July 9, 2010 at 7:37 pm

     

     

    Oxymaven said:

    I’m basically a fan of corn ethanol as a starter biofuel that can help show the way to other alt fuels that can help supplement gasoline…

    ..Can’t wait for the new Regal to hit US shores and have that myth destroyed.

    Corn ethanol is not creating infrastructure that can be used by “other alt fuels.” It is creating infrastructure only for ethanol–E85 gas pumps, storage tanks and flex fuel cars. It may be paving the way for cane ethanol.

    Most consumer’s want the cheapest fuel possible, regardless of source–as long as the fuel replacement runs in their cars without complication or additional cost. Converting all of our cars into flex fuel ethanol designs is probably barking up the wrong tree. If methanol or biodiesel or whatever ends up winning the game, corn ethanol will go down in history as a gargantuan financial blunder that delayed implementation of more efficient oil replacements.

    The Regal will cost about $28K and is hoping to get 18 mpg city on E85, consuming more fossil fuel and producing more GHG than a Prius. Not what I would call particularly revolutionary.

    Biodiversivist

     

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  55. By russ-finley on July 9, 2010 at 7:58 pm

    Using voluntary surveys instead of actual distillery fuel and electric bills is another weak link in this study. The incentive to fudge data is certainly present.

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  56. By Wendell Mercantile on July 10, 2010 at 10:50 pm

    …we view the animal feed, of which we sell many varieties, as a co-product, not a byproduct. These are not just remnants. Because of the high-protein nature of our animal feed…

     

    Nathan~

     

    Does the byproduct of ethanol distillation have any protein in it that wasn’t there when the corn was delivered to your stills? If it doesn’t, what value have you added to make it a co-product and not a by-product?

    I contend that calling distiller’s grains a “co-product” was nothing more than a brilliant move on the part of the corn ethanol wordsmiths and marketing mavens.

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  57. By Bob Schmidt on July 12, 2010 at 9:32 am

    Dry distiller’s grain contains, in addition, the dead yeast from fermentation. Yeast is a high quality (complete) protein often used in body-building products.

    http://agbiopubs.sdstate.edu/a…..x14030.pdf

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  58. By Wendell Mercantile on July 12, 2010 at 12:18 pm

    Dry distiller’s grain contains, in addition, the dead yeast from fermentation.

    Thanks Bob, that’s a positive contribution, but not all that different from what cattle farmers have been doing for centuries when they chop silage and let it ferment to condition it and increase the nutritional value for their livestock. After all, ruminants evolved to eat grass and plant material — not grain, whether whole kernels or distiller’s grain.

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  59. By Paul Michael Whitake on April 2, 2011 at 1:50 pm

    Benny BND Cole said:

    Another excellent post.
    I am not a fan for EROEI for many of the reasons posted by RR. Palm oil plantations, for example, sell palm fronds for use in medium-density fibreboard, and also burn plant matter to fire boilers. As RR notes, you get cattle feed left over from ethanol production.
    That is why we have a price mechanism. The miracle of the price mechanism handles all these details and answers the question of whether an activity should be undertaken (issues such as pollution of national security concerns should be handled through taxes).
    Maybe ethanol has a low EROEI or a high EROEI. Who cares? If an exceptionally valuable byproduct resulted from the process, and ethanol factories could make a go of it despite a low EROEI, then great. Energy is not the coin of the realm–money is. Labor is valuable, capital is valuable–many things in addition to energy.
    That is why subsidies are usually a bad idea.
    I concede there is a complicating factor is this situation–dependence on erratic thug states for oil. Our national security is jeopardized by this situation.
    We have endured economy-bruising price spikes, and out-and-out blackmail in the last 30 years, and probably will again. Tight oil supplies also give power to rank NYMEX speculation and manipulation.
    One could argue we finance terrorism through oil purchases, and then spend trillions fighting terrorism –but making enemies along the way through our militarism.
    But rather than favor any particular domestic energy industry, it would probably be better to tax imported oil, or favor all domestic industries. I also like taxing gasoline much more heavily.
    But get used to ethanol. Words chiseled into granite may slowly fade away (anyone reading old gravestones has seen this), but farm programs are enduring, reborn every two years by a Congress infested with 42 farm-state Senators.


     

    An overriding reason for avoiding corn ethanol is the disater it is causing to the population of the third world, forcing food prices up denying them ability to buy enough to stay alive.!!! Lets not forget the producers cutting down the rain forests to get on this stupid gravy train!  You may have noticed the riots in the arab world – and note food prices have been the catalyst!!  Gore’s friends want to even increase the amount of Ethanol in fuel from 5% to 10%.  Don’t the greens care about our fellow members of the himan race starving!

    Michael

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  60. By Marcel F. Williams on June 27, 2011 at 11:25 pm

    Why use food to produce ethanol when you can use urban and rural garbage to produce methanol that can either be used as an alternative fuel for automobiles or can be converted into high octane gasoline using the MTG technologies that have been around for decades?

    Biowaste is something that is found in every urban and rural human community on Earth which means that practically every community on Earth could potentially be a carbon neutral transportation fuel producer by producing methanol.

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  61. By Wendell Mercantile on June 28, 2011 at 12:31 am

    Why use food to produce ethanol when you can use urban and rural garbage to produce methanol that can either be used as an alternative fuel for automobiles or can be converted into high octane gasoline using the MTG technologies that have been around for decades?

     

    Why?  Because of Corn Belt politics, back room deals, and political shenanigans.

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  62. By paul-n on June 28, 2011 at 1:19 am

    Marcel, as much as I like the idea of turning waste (or any other organic material) into methanol, there is just one problem – and that is that no one is doing it, and there does not seem to be a robust process for doing it.

    We can;t expect it to happen in the US because of afore mentioned corn politic, but that doesn;t stop China or Japan, or anyone else, from doing it.  Yet, to date they haven’t.  Even in China, the most energy hungry country in the world, where they already make methanol from coal, they aren’t doing it.

    So, show me a process, ready for commercialisation, that can do it, and then lets talk.

     

    And, once we have methanol, lets not waste more money and energy turning it into an inferior fuel like gasoline – methanol as a liquid fuel is just about the best there is – its just that gasoline was (is no more) cheaper.  

     

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  63. By Wendell Mercantile on June 28, 2011 at 10:40 am

    The Argonne National Laboratory has also pitched in with a new article in Wired, called, “Five ethanol myths, busted”

    http://www.wired.com/autopia/2…..-busted-2/

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