Posts Tagged ‘ethanol’

Obama got a little jab in at Romney in a speech in Iowa:

Noting that the Republican candidate has criticized wind energy, saying a windmill can’t be put on top of a car to power it, Obama had a zinger.

“I don’t know if he’s actually tried that,” Obama said. “I know he’s had other things on his car.”

I’m not going to comment on the Seamus thing because I think it’s dumb, but I am going to defend Romney here because he’s right. He’s making a distinction that most people seem to forget when they’re talking about alternative energy sources, the difference between electricity and liquid transportation fuels. I hear this mistake constantly from folks on the left, and it annoys me to no end. Energy sources such as wind and solar generate electricity, which you can’t use to drive around in your car unless you own an electric car, which most folks do not. And so we need to distinguish between alternative electricity sources and alternative liquid fuel sources (biodiesel or ethanol, for example). Those two can be used to drive around in your car.

So when you hear people say things like “we shouldn’t do biodiesel / ethanol because we should do wind / solar instead”, they’re comparing two things that shouldn’t be compared. That is not a criticism of wind energy because we need electricity too. It’s just an important distinction to make. We need both electricity and liquid fuels, but when we talk about alternative energy everyone seems to think that their favorite source should be done at the expense of all others, ignoring the important distinction. We can and should do both.

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Back in January I made a very simple case for ethanol, and then I mentioned that I would write a post on why I don’t think that corn ethanol increases the price of food. I started putting together data to make my case, but never had a chance to finish it up. Well I finally did, and so here we go.

As the argument goes, making ethanol out of corn raises food prices because, instead of eating the corn, we’re burning it. But ethanol is made out of yellow corn, which is not used in food for people (that’s sweet corn). So a more persuasive form of the argument is that making ethanol out of corn raises food prices because, rather than feeding the corn to cows, we’re burning it. That raises feed prices, due to  competition for corn supplies and thus an increase in the price of corn (ie an increase in the price of feed) which gets passed along to the consumer at the grocery store. When we’re talking about ethanol raising food prices the story is really about corn used (or not) for animal feed.

Here’s the amount of corn ethanol we’ve produced in the US in the past 20 years:

Prior to the 1990’s, basically no one was making fuel ethanol out of corn (or anything, for that matter) in significant quantities. Corn ethanol didn’t really get going until the late 90’s and grew explosively in the past decade.  Last year, we made about 14 billion gallons, which is only 1 billion gallons away from the upper limit allowed by the EPA. With such rapid growth, where did all the corn come from and what does that mean for food?

As it turns out, the amount of corn harvested in 2010 was nearly double what was harvested in 1993. So did we plant twice as much corn? No! Instead, crop yields (bushels of corn harvested per acre planted) increased significantly, and the land dedicated to corn production increased by only 20%. Further, the total amount of cropland in the country remained flat over the time period, which suggests that no new land was brought into production:

But was doubling our corn harvest enough to make up for the demand caused by ethanol production? Well, in a word, yes. In 2010, and extra 4.5 billion bushels of corn were converted into ethanol than in 1993. But the corn harvest increased by 6.1 billion bushels over that time frame, leaving an extra 1.6 billion for other uses. And in fact, no major corn consuming sector saw a decrease in the amount of corn they utilized. Here’s the amount of corn used in ethanol production, animal feed, exports, and all other industrial uses (starch, sweeteners, beverage alcohol, etc):

But pay particular attention to the feed category, because as I mentioned that’s the one we care about when it comes to the question of food vs. fuel. More corn is fed to animals after the “ethanol boom” than before it. But what about that downwards slope starting in the mid ‘00s, coinciding with the really rapid part of ethanol’s expansion? Doesn’t that show that actually we’re feeding less corn? Well, no. This is because when you make ethanol out of corn, you also make something called DDGS. DDGS is all the parts of the corn left over that didn’t get fermented away, plus all the yeast cells that did the fermenting. This is important because DDGS is high in protein and fat, which means you can feed it to cows. In fact, DDGS is such a good feed that you can give a cow less DDGS than you would corn to achieve the same result. In practice, about one third of the corn that goes into an ethanol plant winds up as DDGS, and 1 kg of DDGS fed to a cow is equivalent to feeding 1.2 kg of corn. So, in reality, 40% of the corn that goes into an ethanol plant still winds up getting used as feed. We can ferment our corn and eat it too! Here’s what the above graph looks like when you account for the corn returning to feedlot as DDGS (the light blue line, on top):

When we account for the DDGS being returned, feed corn has increased by 25% since 1993! Now that I’ve shown that feed doesn’t face the significant competitive pressures that the food vs. fuel myth implies that it does, what about food prices? As my benchmark food price, I’m using the food component of CPI, over the two decades 1990 – 2010. Remember, the argument goes that ethanol increases the price of corn and thus the price of food so if this is true we would expect to see that the prices of corn and food would increase (at least partially) together. Here’s a comparison of the monthly change in the prices of food and corn over 20 years:

Can you spot a trend? I can’t. There’s no correlation between the two data sets. But monthly price data are noisy, so let’s take a look at the yearly changes:

Here we can see that there is a very weak correlation. A simple linear regression predicts that if corn prices double we can expect to see a 1.6% increase in the price of food, which is less than inflation. Of course the correlation is so weak, and the fit so poor, that the predictive value of the trend line is essentially worthless. However, if an increase in corn prices caused an increase in food prices as the food vs. fuel argument claims, then we should see a strong positive correlation. It’s simply not in the data.

Finally, let’s take a look at the actual changes in food prices. Luckily for me, NPR published a piece on food prices just the other day, so now I don’t have to go digging for the data. Instead, I’ll shamelessly steal theirs:

Between 1982 and 2012, a time span that has seen the amount of fuel ethanol produced increase over 1000 times, food prices have dropped. Significantly. The biggest decreases amongst meat have come from chicken and beef, both of which are fed with corn.

(Data sources: USDA NASS, BLS, FRED)

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Robert Rapier passes along a bar napkin calculation showing that 1000 acres of miscanthus (a plant you can make ethanol from) production would fill 55 seconds of US oil demand.

I don’t feel like checking RRs numbers right now, I just want to pass along a note of caution about numbers like these. I can use this kind of calculation to make any liquid fuel technology look bad, because US oil consumption is just too high. And no single tech, not cellulosic ethanol, grain ethanol, butanol, biodiesel, or anything else will single handedly replace oil.

RR is right to carefully scrutinize producers claims, because there is a lot of misinformation out there. A lot of promises have been made and broken, and that harms the biofuels industry on the whole.

But these kinds of numbers, while good to provide perspective on the scale of our problem, can themselves be misleading. So keep that long lost shaker of salt handy.

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Biofuels Digest emailed this out this morning. It’s a good point:

Thought of the Day

“Isn’t it a little strange, that a company which monetizes the social habits of teenage girls (Hello Facebook!), is more valuable than the future of food, materials and energy?

“Without exaggeration almost everything we touch, wear, eat, drive, etc. depends on chemicals and fuels. Yet, right now the market capitalization of the entire publicly traded sector for renewable fuels and chemicals is down sharply to ~$2.5B (not including corporate subsidiaries, ethanol, sugar, etc.).

“Facebook of course is expected to price soon around ~$100B. That’s not quite in the league of ExxonMobil, but it’s close to BP, and right there with the combined value of Dow Chemical ($39B),DuPont ($48B) and Archer Daniels Midland ($22B).

“Does this make any sense? If Facebook disappeared tomorrow the world would go on. If petroleum disappeared tomorrow would there even be an economy?”

Sam Nejame, Promotum.com

Interesting, though, that when talking about renewable fuels, Sam excludes ethanol, the most widely produced and used renewable fuel in the US and globally by a very wide margin.

At any rate, I continue to believe that Facebook is massively over-valued. That isn’t to say it’s a bad company, but $100B?

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Some gullible people gave these guys a whole lot of money:

E-Fuel, a privately held, Los Gatos-based developer of technology for producing ethanol at home, has raised $2.6 million in venture debt, the company disclosed in a new filing with the Securities and Exchange Commission.

To catch you up, E-Fuel is a company that has developed an all-in-one, personal use, miniature ethanol plant. They’ve been peddling this thing for years, and my head hit the desk this morning when I found out they’re still taking money from people. Here’s the latest claim:

The MicroFusion Reactor operates as a continuous process, in which every 2 minutes the cellulosic material in the reactor’s chamber is completely processed and ready for fuelprocessing. Its method of wood hydrolysis dissolves any wood or other cellulosic agricultural material in a manner that is residue free, according to E-Fuel.

The machine’s output is comprised of sugar water and lignin powder. The sugar water is fermented by the MicroFueler into ethanol, while lignin is a substance used in the pharmaceutical industry as an ingredient in various cancer-fighting drugs, among other things.

According to the company, with its reactor, ethanol production costs can be as low as $0.56 per gallon, when combined with the energy saving effects of the MicroFueler and“GridBuster,” a wet ethanol-powered generator with a heat recovery feature developed by E-Fuel.

Complete conversion of wood to fermentable sugars. In 2 minutes! Look, a lot of people have been working on figuring that out for a good 20 years. If these guys could actually do that, they would be building out hundreds of millions of gallons of wood to ethanol plant capacity as we speak, and they would be the biggest names in renewable energy. But they aren’t, because you can’t convert wood to sugars in 2 minutes in a reactor designed to go in consumers’ garages. Or in any reactor at all, for that matter, as far as I’m aware. At least not in any technically or economically feasible way.

And to ice the cake, it’s output is sugar water (that gets fermented to ethanol, that part is reasonable if they could actually get that far) and lignin powder. Lignin is kind of like the glue that holds wood together, and will be the main by-product from this system. I haven’t bothered to check if it is actually a pharmaceutical ingredient, because I can tell you right now that no one will be able to successfully sell their lignin residue to Merck.

And the final claim, a production cost of $0.56 per gallon!! That is just absurd absurd absurd. You can’t make corn ethanol for that price, and it is much, much easier to do.

I really just wanted to write this to vent, because these guys piss me off. They certainly aren’t the only people in the biofuels industry that make outlandish claims about their magic new technologies, but they are the most egregious I have ever encountered.

But I guess they’re doing something right. So ladies and gentlemen, I’d like to let you all in on a new investment opportunity! I am in possession of a bag of magical beans that, when planted in the proper location, will grow into a golden unicorn that shits rainbows. All this can be yours, for only $2.6 million!

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Kevin Drum highlighted the video below looking into biofuels from algae. I want to make a few points regarding this, because there’s alot here I think people don’t understand:

First off, the chart at the 2 minute mark. We see that it takes far less land to make an equivalent amount of oil from algae than from corn or soy. Well, OK, but lets unpack that a bit. When we grow corn to produce biofuels, we do a few things. First, we have to get the corn out of the field. Then, we have to get at the part we make the biofuel out of, the starch. Then we make the biofuel, which is ethanol. For algae based biofuels, we have an analogous process. First, we have to get the algae out of the water. Then, we have to get at the part we make the biofuel out of, the oil. Then, we have to make the biofuel, which is biodiesel.

So what’s my point? Well, getting corn out of the field is really, really easy. Getting algae out of the water is really, really hard. In fact, no one knows how to do it efficiently yet. You can centrifuge it, filter it, or you can even feed it to fish and collect the algae-containing fish poop (seriously). But it isn’t efficient.

Next, we have to get at the part we make the biofuel out of. In corn, thats the starch. We can either purify the starch and ferment only it (thats called wet milling) or we can just grind up the whole corn kernel and ferment the whole thing (thats called dry grind). In either case, not so hard. Algae though is a different story. Once you’ve gotten your algae out of the water, you have to get your oil out of your algae. To do that you have to break open the cell, and extract the oil. People have used supercritical carbon dioxide (that’s what Garden State Bioenterprises wants to do, I believe), they’ve used hexane, and other methods, but again, none of that is efficient. Or cheap.

So all that efficiency you gain by using less land? Gone, gone, gone, and then some, before you’re even ready to start making your fuel.

As for the statement at 2:20 that CO2 used to grow algae offsets the CO2 used when it’s burned, well I agree. Algae does photosynthesis, which means it takes in CO2 and sunlight, and makes more algae and oxygen. Then when you burn it, CO2 is given back off. Its the same for every plant. Keep that in mind, because people seem to suddenly forget that fact when they talk about ethanol.

A lot of people seem to support algae biofuels but at the same time are against corn ethanol because they think it takes more energy to make and gives off more greenhouse gasses than oil. I disagree with those claims, but would just like to point out that algal biofuels take significantly more energy (and thus more GHGs) than ethanol to make.

Bottom line, fuel from algae is inefficient and costly to make. So much so that we haven’t figured out how to do it yet. Ethanol, on the other hand, is very efficient and relatively cheap to make. So why does algae get all the media love?

(ps: yes, a couple months ago I promised a post about why I think the anti-corn ethanol arguments are wrong. I haven’t forgotten. I’m working on it. Actually them. It’s going to be a multi-part series. Because this is my blog and I’ll nerd out if I want to damn it)

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The other day, I made the very simple point that ethanol is good for the country because, unlike oil, it does not involve the use of carrier battle groups. Spencer Ackerman illustrates my point perfectly (emphasis mine):

What keeps the U.S. Navy’s top officer awake at night? “The Strait of Hormuz,” Adm. Jonathan Greenert confessed during a speech on Tuesday morning. Greenert meant that he’s worried Iran will close one of the planet’s most strategically important waterways, through which about 20 percent of the world’s oil flows. The Iranians have spent weeks threatening to do just that.

If anything, Iran’s closure of the strait would probably play like its old enemy Saddam Hussein’s 1990 decision to invade Kuwait. Before the invasion, world governments might not have liked Saddam, but most of them didn’t consider him an implacable threat to regional stability (and, hence, their economic interests). Afterward, the world viewed him as a rogue who needed to be confronted.

Foreign Policy gets in on the fun:

When Iran’s vice president, Mohammad Reza Rahimi, declared on Dec. 27 that “not a drop of oil will pass through the Strait of Hormuz” if Western countries followed through with threats of escalated sanctions over its nuclear program, the world sat up and took notice. Since then, tensions have run high in the Persian Gulf, with Iran holding naval exercises and U.S. Secretary of Defense Leon Panetta warning Iran that closing the strait would be a “red line” for the United States.

Newspaper headlines are warning of a possible conflict breaking out over one of the most important shipping lanes on the planet, through which almost 20 percent of the world’s oil passes each day.

The Iraq war was awesome! Can we do it again? But remember, ethanol is an expensive boondoggle!

I’ll just repeat this:

These guys defend corn fields in Iowa:

And these guys defend oil fields in the middle east:

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