Saturday, January 22, 2011

Is the Renewable Fuels Standard for corn ethanol sustainable?

Like the word “green,” the word “sustainable” has a lot of cachet these days.

Over the last 10 days I asked a selection of people I met what “sustainability” means. The total number of respondents was 27. Twenty-one were from Nebraska, three from Wyoming, two from Colorado, and one from Quebec, Canada.

Five of the 27 were able to rattle off a pretty fair definition of “sustainable,” saying in essence that it involves replacing what is used in a system so that the system can continue to produce indefinitely.

Twenty-two of the respondents, however, (including a pair of college/university professors) could only come up with vague mumblings about “green”, “the planet”, “global warming”, and so forth. The single most repeated definition was, “sustainability is, like, sustainable. You know?”

So to make sure we’re all on the same page, let’s see how Merriam-Webster’s Collegiate Dictionary, Tenth Edition, defines the word.

sus-tain-able adj (ca. 1727) a: of, relating to, or being a method of harvesting or using a resource so that the resource is not depleted or permanently damaged (techniques/agriculture) b: of or relating to a lifestyle involving the use of sustainable methods (societal).

In very simple terms, sustainability in agriculture is the ability to replace what is used during food production so that food can continue to be produced, and to do so without permanently damaging the production system.

In 2005 congress passed the Energy Policy Act. One of the provisions of that act was the mandate to produce ethanol and other biofuels to be blended with the U.S. fuel supply. This provision, called the Renewable Fuels Standard (RFS), has the force of federal law behind it, and calls for a tiered increase in the quantity of biofuels – mainly ethanol – produced through 2022. In 2008 the RFS was revised and upgraded, calling for the production of 36 billion gallons of “renewable fuel” annually by 2022.

According to the RFS, 31 billion of the 36 billion gallon annual requirement is to be ethanol. Fifteen billion gallons is required to come from traditionally fermented and distilled corn starch each year. Cellulosic biofuel – ethanol produced with feedstocks other than corn – is required to produce 16 billion gallons each year. The remaining five billion gallons is called “undifferetiated advanced biofuel,” described as “…other than derived from corn starch…(including) “cellulosic biofuels, “biomass-based diesel”, and “co-processed renewable diesel.”

Can this corn help to ease fuel prices and reduce our dependency on foreign oil? Can it do so in a sustainable fashion?
Since corn-based ethanol is the subject, we’ll ignore the other fuel types in the RFS and ask this question. Is the 15 billion gallon annual production of corn ethanol sustainable? We’ll look at four areas. What is the present production level, and how does it compare with the mandate? Is there enough farmland to produce the corn required to meet the mandate? Can the required quantity of corn be sustainably and reliably produced without taking corn from the human food stream? And finally, is the RFS likely to be economically sustainable at the consumer level?

We will not look at tax credits for ethanol producers and blenders, nor will we look at the so-called “corn subsidy.” Those are topics for another article.

Production numbers

According to numbers published by the U.S. Energy Information Administration in March, 2010, for the 2009 production year, 10.7 billion gallons of corn ethanol was produced. The RFS called for 10.5 billion gallons, so the goal was exceeded. Or was it? The same publication cited daily production in barrels as 787,000. At 44 gallons per barrel, production totaled 287.25 million barrels, or just over 6.5 billion gallons. What happened to the other four billion gallons? Is this a simple math or unit conversion error? Thus far the answer remains unclear. Was production in 2009 a 4 billion gallon shortfall or did the industry beat the standard by 200 million gallons? Is it possible that the number reported is different than the actual production number?

The numbers for 2010 aren’t in yet, but industry administrators are claiming a 12-month production run of slightly more than one billion gallons over their production target. What the 2010 “target” was is again unclear, and no credible number has been published. Was their target the RFS mandated 12 billion gallons? Or was it a smaller number?


According to the 2007 U.S. Census of Agriculture, U.S. farmland totals 406.5 million acres. In 2007 corn was cultivated on 86.2 million acres and produced 12.7 billion bushels. According to the USDA, 2009 corn production hit 13.2 billion bushels, the highest annual production on record, on 86.5 million acres. Production numbers for 2010 haven’t yet been released, but USDA estimates put the number at 93 million bushels lower than to 2009 number, on roughly the same acreage.

Let’s say for the sake of argument that the 10.7 billion and 13.5 billion gallon ethanol production numbers for 2009 and 2010 are correct. If so, it is just possible, in theory, to eke out enough corn to hit the 15 billion gallon annual RFS mandate, on the same or just slightly more acreage. But is that target reliably sustainable? What happens when the weather doesn’t cooperate? What happens when there is drought, or flooding, or disease or pest problems?

Proponents of the RFS and the mandate to produce 15 billion gallons of corn ethanol annually opine that the solution is to plant more acres of corn. But is upping U.S. corn acreage sustainable? If you count sorghum, soybean, sugarbeet, and even dry bean acres, you could theoretically add about 70.6 million additional acres of high-yield corn cultivation, for a total of nearly 160 million acres. But that’s really all the suitable high-yield corn land available in the U.S. And if you convert all sorghum, soybean, dry bean and sugarbeet acres to corn, the law of supply and demand will become the driving force. As stocks of the non-planted crops dwindle, their value will increase. Farmers, if they remain at liberty to plant the crops which will bring them their highest economic return, will turn away from corn and begin planting the more valuable crops. Corn production will fall off.

Or will farmers remain at liberty?

If the 2009/2010 corn ethanol production numbers are actually lower than reported, the prospect of complying with the 15 million gallon per year mandate begins to look somewhat bleak. Is the RFS really sustainable?

Food vs fuel

Corn ethanol production in 2009 used more than 38 percent of total U.S. corn production for the year. USDA and the ethanol industry report that somewhat more than 40 percent of 2010 corn production went to ethanol plants. The remaining 60 or so percent is used essentially for human consumption. The largest part is fed to animals, which are in turn fed to people. Humans also consume corn in sweeteners, breads, snacks, and other food items. If corn acres and corn production can’t sustainably be increased, can corn ethanol production be increased by diverting corn from the human food stream? Is this a sustainable scheme?

Presently, animal feed demand for corn is sharply down. This is because the numbers of food animals in the U.S. is at a very low ebb. The cow herd is at it’s smallest since 1963, and hog and poultry numbers are at their lowest point in decades. Yet demand for meat remains high and is increasing as the U.S. and much of the world continue to climb out of the recession.

The reduced number of food animals in the production pipeline began driving prices higher last year and will continue to do so for months and years to come. Food animals, like other agricultural crops, cannot be produced overnight.

This food animal shortfall is contributing to rapidly escalating retail food prices, both in the U.S. and around the world, where food prices are back at the same 2008 levels which were described as a crisis.

U.S. food prices were up about two percent in the fourth quarter of last year. But two percent is a drop in the bucket compared to world food prices, which skyrocketed 32 percent in the last half of 2010, according to the U.N. Food and Agriculture Organization’s Index of World Food Prices.

Is diverting food stream corn to ethanol production a sustainable option in the light of rising food prices? Is it politically sustainable with the grim possibility of food riots and even widespread famine just over the horizon?

The thermodynamics of blending gasoline with ethanol

Don’t let the big science word put you off. Thermodynamics is just the study of heat, and heat is what internal combustion engines produce. The heat is converted to locomotive energy, or more simply, it is used to drive the wheels.

Heat is produced by burning fuel and air in the tightly closed environment of the cylinder(s) of the engine. Traditionally, the fuel burned has been gasoline. Most transport trucks and a very small percentage of automobiles use diesel, but diesel is a tangential subject and not important to our analysis of the sustainability of the RFS corn ethanol mandate.

Gasoline is a very good fuel. It’s a hydrocarbon, and as the name suggests it’s made up of hydrogen and carbon. To provide power, it’s is mixed with air and burned in the engine, producing heat (energy) to drive the engine and chemical combustion products which are released through the exhaust system. The combustion products contain hydrogen, carbon and oxygen, mostly in the form of water (H20), carbon monoxide (CO) and carbon dioxide (CO2). Burning gasoline produces a lot of energy, about 115,000 Btu (British thermal units) per gallon, according to data produced by the Oak Ridge National Laboratory (ORNL) in Tennessee. ORNL is one of the main research institutions of the Department of Energy.

In general, gasoline is safe, easy to handle and store, and readily available throughout the world at a reasonable cost. In the decades following WWII, however, gasoline gained the reputation of being a heavy polluter. For various reasons, early gasoline formulations and less sophisticated engines emitted lots of lead, nitrogen compounds and soot, in addition to H2O, CO and CO2. Federal emission and efficiency standards enacted in the1960’s and 1970’s led to the development of cleaner, more efficient engines and fuel formulations, and today, modern gasoline is actually a remarkably clean burning fuel.

Gasoline is such a good fuel, however, that enormous quantities are used around the world (390 million gallons per day in the U.S. alone). At this scale of use, a great deal of carbon is released to the atmosphere, and in recent years concerns have grown as to the effect this atmospheric carbon load has on climate change. Carbon, in the form of carbon dioxide and carbon monoxide, tends to retain heat in the atmosphere in what is commonly called the greenhouse effect. Carbon monoxide emissions also became a concern in urban areas with many automobiles and heavy traffic, where smog and high carbon monoxide levels were a health risk

The combination of environmental concerns and a desire to “free” the U.S. from its dependence on foreign oil prompted, in large part, congress to mandate the RFS. The ethanol produced under the RFS is required to be added to, or “blended” with gasoline.

The mandated introduction of ethanol into the gasoline stream means consumers now have a choice between regular gasoline and a blend of 10 percent ethanol and 90 percent gasoline, sometimes called E-10. Nearly every gasoline retailer in the country offers both choices. Standard engines can burn up to a 10 percent ethanol blend without modification.

An alternative is E-85, a blend of 85 percent ethanol and 15 percent gasoline. Engines capable of burning this blend are specially modified and equip vehicles known as flex-fuel models. Of the roughly 250 million passenger vehicles in the U.S, about 6 million are flex fuel powered.

With the stated purpose of reducing greenhouse gas emissions and freeing the U.S. from dependence on foreign oil, we must now ask whether the RFS has been or will be successful in doing so, and if successful, at what cost to U.S. consumers?

Let’s look first at emissions.

Unlike the hydrocarbon gasoline, made up of hydrogen and carbon, ethanol is an alcohol, composed of hydrogen, carbon and oxygen. Because alcohols have higher octane, or anti-knock ratings than gasoline, ethanol was considered as a replacement when lead anti-knock additives were banned from gasoline in the early 1970’s. While lead was eventually replaced by safer compounds, ethanol was shown to reduce carbon monoxide (CO) emissions, and ethanol additives began to be used in urban areas in the late 1970’s.

Ethanol is able to reduce CO emissions because it features oxygen in each molecule, and when combusted, that oxygen combines with carbon monoxide in the exhaust (carbon plus one oxygen, CO) to form carbon dioxide (carbon plus two oxygen, CO2), a less toxic gas, but one that is said to be a greenhouse gas contributing to global warming.

Now let’s look at the economics of blending ethanol with gasoline.

 What’s the real story on fuel prices? It's more than price per gallon.
At most filling stations, regular and 10 percent ethanol blend (often called premium) gasolines are offered side by side, and the per-gallon price of the ethanol blend is usually, but not always, less than the per-gallon price of regular gasoline. Blended gas appears at first glance to be a less expensive alternative. Is this true? Unfortunately, it is almost always not true.

Ethanol is less energy dense than gasoline. Each gallon of gasoline contains 115,000 Btu (British thermal unit) of energy, compared to 75,700 Btu for ethanol. Therefore, ethanol has only 66 percent the energy of gasoline. The ratio of energy input to work output is constant in an engine. You can think of it as 1:1; for each energy unit you put in, you get one work unit out. Put in less energy, you get less work out. If your car goes 10 miles on one quart of gasoline, it’ll only go 6.6 miles on one quart of ethanol.

Blending gasoline with ethanol dilutes the energy content of the fuel. A 10 percent blend has only .966 (96.6 percent) the energy of regular gasoline. Now that’s not a large energy reduction, only 3.4 percent, but it is significant and adds up over time.

Ethanol blend prices typically run 5-10 cents lower than regular gasoline prices. On Monday in Kimball, Neb., for instance, regular gas was $3.11 per gallon, while the ethanol blend was $3.04. To break even, or to pay the same price per unit of energy, the ethanol blend price would have to be $3.00 (.966 x $3.71). The ethanol blend costs more and yields less energy. Less energy means reduced mileage and range.

To break even, or to get the same bang for the buck, the ethanol blend price has to be the same as the energy ratio, .966. To reduce the price at the pump, the ethanol blend price has to be less than .966 of the cost of regular gas. Ethanol blending doesn’t save the consumer money at the pump unless it beats the energy spread.

The environmental Protection Agency (EPA) recently approved a 15 percent blending rate, so soon consumers might be getting even less while paying more. A 15 percent blend has only .949 (94.9 percent) the energy of regular gas. To calculate the breakeven price, multiply the regular gas price by .949. Using our previous example, $3.11 times 0.949 equals $2.95. Therefore, a 15 percent ethanol blend should cost $2.95 per gallon, simply to provide the same energy for the same price. We'll have to see how the 15 percent blend is priced, but if history is our guide, the new blend is unlikely to meet or beat breakeven price.

The news is even worse for E-85, which has an energy ratio of .711. E-85 was priced at $2.85 per gallon on Monday, 22 cents above the breakeven price of $2.63.

At today’s prices, corn ethanol costs consumers more, and provides less. Is corn ethanol economically sustainable for consumers? It seems not.

Is the RFS mandate of producing 15 billion gallons of corn ethanol sustainable? You be the judge. It might be. But the prospect is looking rather shaky at the moment.

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